The executive director of special education provider IncludED Educational Services pleaded guilty in Manhattan Supreme Court today to grand larceny charges stemming from an audit and investigation by State Comptroller Thomas P. DiNapoli. Morton Kramer agreed to pay $418,000 in restitution as part of his plea agreement and is banned for life from providing special education services for the state.

"Today’s guilty plea shows that those who rip off taxpayers and students will not get away with it," DiNapoli said. "I would like to thank Manhattan District Attorney Cyrus Vance for prosecuting this case and bringing this wrongdoer to justice. Waste, fraud and abuse that shortchange children from getting critical services cannot be tolerated in our special education. My office will continue to do everything it can to root it out."

"Preschool students with special developmental needs require particular attention and care," said District Attorney Cyrus Vance. "Instead of providing these young children with the special education services they needed, the defendant stole hundreds of thousands of dollars in taxpayer money and used it to line the pockets of his relatives, with no benefits for the intended recipients. I thank Comptroller DiNapoli for working with my office to ensure that fraud and theft do not compromise New York’s education system or its students."

Kramer admitted that the now-defunct IncludEd, based in Cedarhurst, Nassau County, inappropriately charged New York City’s Department of Education (DoE) and other school districts for salaries paid to his sons and other relatives as discovered in an in-depth review by DiNapoli’s auditors and investigators.

Kramer agreed to repay $418,000 paid to six of his relatives who performed little or no work for the special education programs over a three-year period.

IncludED provided special education services to children between the ages of three and five. The DoE and other school districts paid tuition to IncludED using rates set by the State Education Department (SED). These rates are based on costs from financial reports that special education providers, such as IncludED, submit to SED. The costs included on the reports must fully comply with the guidelines in SED’s Reimbursable Cost Manual.

As part of his plea agreement, Kramer will serve five years on probation and will have to divest his ownership of IncludEd.

DiNapoli’s audits and investigations of the special education sector have so far resulted in ten felony arrests and five guilty pleas with more than $3 million in ordered restitution. DiNapoli’s office is currently working with various prosecutors on other criminal referrals stemming from audits of special education providers.

For a copy of the original audit, visit: http://www.osc.state.ny.us/audits/allaudits/093012/10s59.pdf

DiNapoli encourages the public to help fight fraud and abuse. New Yorkers can report allegations of fraud involving taxpayer money by calling the toll-free Fraud Hotline at 1-888-672-4555, by filing a complaint online at [email protected], or by mailing a complaint to: Office of the State Comptroller, Division of Investigations, 14th Floor, 110 State St., Albany, NY 12236.