New York State Comptroller Thomas P. DiNapoli and Queens District Attorney Richard A. Brown today announced that a self-described investor in Island Child Development Center, once one of New York City’s largest providers of special education services to preschoolers with disabilities, has pleaded guilty for his participation in a scheme that stole millions of dollars in city and state funding between 2005 and 2012 – money that was intended for special needs students between ages three and five.
"More than $1 million in funds intended for special needs preschoolers was instead used by Daniel Laniado to buy diamonds and stock his private supermarket shelves until our auditors and investigators exposed his crime," State Comptroller Thomas P. DiNapoli said. "I thank District Attorney Brown for this fourth and final guilty plea in the $12.4 million swindle of the Island Child Development Center."
"Government funds are not free money and those who treat such funds as their own personal piggy bank will be brought to justice and held accountable for their actions, as was the case of this defendant and his three co-defendants," said District Attorney Brown. "The public funds provided to Island Child Development Center were earmarked for special needs pre-schoolers with disabilities, making them the real victims of this fraud."
Island Child Development Center (ICDC), a private not-for-profit company that is now defunct, was located at 1854 Cornaga Avenue in Far Rockaway, Queens, and primarily provided services to pre-school children in Far Rockaway in Queens and Williamsburg and Borough Park in Brooklyn.
The District Attorney identified the defendant as Daniel Laniado, 44, of Brooklyn. Laniado appeared yesterday afternoon before Queens Supreme Court Justice Joseph Zayas and pleaded guilty to first-degree identity theft. Additionally, Laniado will pay $82,000 in restitution to the New York City Department of Education (DoE) at the time of sentencing, sign a confession of judgment for an additional $1,391,023.15 to DoE, forfeit nearly $8,000 in seized assets and complete a financial disclosure form prior to sentencing, which is scheduled for June 29, 2017. Laniado is expected to be sentenced to a three-year conditional discharge. However, if he fails to pay the $82,000 in restitution in full at sentencing, he will be sentenced to one year’s incarceration.
Laniado and his three co-defendants – Rabbi Samuel Hiller, 59, of Far Rockaway, Ira Kurman, 54, of Hewlett, and Roy Hoffmann, 53, of Woodmere – were indicted on the alleged thefts in 2014. All were accused of illegally diverting millions of dollars of the $27 million ICDC received in state funding to their relatives, their for-profit businesses and for personal expenses including jewelry, a family wedding and home renovations.
Hiller had been ICDC’s former assistant director; Kurman had been ICDC’s Executive Director; and Hoffmann had been hired by ICDC to serve as its independent auditor as required by the state.
Hiller, Kurman and Hoffman all previously pleaded guilty to first-degree grand larceny for their roles in the scheme. The three defendants are presently awaiting sentencing, which will include restitution. Hiller has agreed to repay $5 million, Kurman will pay $650,000 and Hoffman will pay $180,000.
Hiller is also expected to be sentenced to one to three years in state prison. However, if he fails to honor all of the terms of the negotiated sentence, he will be immediately sentenced to two to six years in prison.
District Attorney Brown pointed out that New York State’s Education Law requires that the State Education Department meet the physical and educational needs of children with disabilities. Additionally, within the city of New York, the Department of Education contracts with private service providers to deliver services for those who require them, including Special Education Itinerant Teachers (SEIT) who provide education services in children’s homes and other venues.
The thefts were discovered after the Office of New York State Comptroller Thomas P. DiNapoli notified ICDC and specifically, Ira Kurman, that it planned to conduct a routine audit of SEIT funds provided to ICDC. When state auditors arrived for the meeting, in July 2012, they were informed that Kurman had left his position and had taken his books and records with him. After further investigation, the auditors referred the case to the Queens District Attorney’s Office.
The investigation was conducted by the District Attorney’s Detective Bureau and his Economic Crimes Bureau and by Comptroller DiNapoli’s Division of State Government Accountability and Division of Investigations.
The District Attorney thanked the New York City Department of Education (DOE) and the DOE Deputy and Assistant Auditors General for their assistance in the investigation.
Assistant District Attorneys Eleonora B. Rivkin and Charissa Ilardi, of the District Attorney’s Economic Crimes Bureau, are prosecuting the case under the supervision of Gregory C. Pavlides, Bureau Chief, and Kristen A. Kane and Christina Hanophy, Deputy Bureau Chiefs, and under the overall supervision of Executive Assistant District Attorney for Investigations Peter A. Crusco.
DiNapoli has identified fraud and improper use of funds in a recent series of audits of special education providers. In addition to this case, his investigations have resulted in multiple criminal convictions and the recovery of more than $9 million in stolen public funds. His office has conducted 91 audits of pre-school special education providers, finding nearly $59 million in unsupported or inappropriate charges.
State law, proposed by DiNapoli, now mandates audits of the more than 300 pre-school special education providers in the $1.4 billion program by March 31, 2018.
Since taking office in 2007, DiNapoli has committed to fighting public corruption and 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.