Manhattan District Attorney Alvin Bragg and New York State Comptroller Thomas DiNapoli today announced the indictment of CINDY TAPPE, 57, for orchestrating an approximately $3.5 million 6-year fraud relating to two New York University (“NYU”) programs. TAPPE used her position as the Director of Finance and Administration for NYU’s Metropolitan Center for Research on Equity and Transformation of Schools (the “Metro Center”) to divert approximately $3.5 million intended for minority and women owned businesses. She ultimately routed $3.3 million to bank accounts held by two shell companies TAPPE created, using some of the funds for NYU payments and employee reimbursements, but keeping more than $660,000 to pay for personal expenses, including renovations to her home in Connecticut and an $80,000 swimming pool. TAPPE is charged in a New York State Supreme Court indictment with one count of Money Laundering in the First Degree, one count of Grand Larceny in the Second Degree, and two counts each of Offering a False Instrument for filing in the First Degree and Falsifying Business Records in the First Degree.¹

“Our multilingual learners and students with disabilities deserve top-notch services, and these funds should have gone directly to their schools,” said District Attorney Bragg. “Instead, we allege, the funds meant for student programs were used purely for personal gain by an NYU Director of Finance, who renovated a home in Connecticut and bought a swimming pool with the money. This $3.5 million fraud also negatively impacted our city’s minority and women owned business enterprises by denying them the chance to fairly compete for and secure the funding. I thank the New York State Comptroller’s Office for its work on this investigation and look forwarding to continuing our partnership to root out fraud committed at the expense of our students and businesses.”

“Cindy Tappe used her high-ranking position at NYU to divert more than $660,000 in state funds to companies she controlled to fund a lavish lifestyle,” New York State Comptroller Thomas P. DiNapoli said. “I thank my Division of Investigations and the Manhattan District Attorney’s Office for their work uncovering her wrongdoing and making her answer in court.”

According to court documents and statements made on the record in court, between 2011 and 2018, the New York State Education Department awarded NYU $23 million for the Metro Center to administer two New York State programs:

• the Regional Bilingual Education Resource Network (“RBE-RN”), which helps school districts improve results for English language learners,
• and the Technical Assistance Center on Disproportionality (“TAC-D”), which addresses disproportionality in special education.

The RBE-RN and TAC-D agreements required that a certain percentage of subcontractors on grant-related projects be awarded to certified minority and women owned business enterprises (“MWBE”), in accordance with state law.

Between February 2012 and December 2018, TAPPE was the Director of Finance and Administration for Metro Center. As alleged, TAPPE arranged for three certified MWBE subcontractors to receive the overwhelming majority of MWBE payments. In total, NYU paid the three companies approximately $3.527 million to provide services related to the grants. To justify the payments, the companies submitted fictitious invoices drafted by TAPPE and pasted on their letterhead.

None of the companies performed work on the contracts. Instead, they functioned as pass-throughs, taking between 3% and 6% of the invoice amounts as “overhead,” and sending the remainder of $3.352 million to two fictitious shell companies created by TAPPE: High Galaxy Inc. (“High Galaxy”), and PCM Group Inc. (“PCM”). A portion of the funds were then used to pay legitimate grant-related expenses, and to reimburse NYU employees for expenses incurred or services rendered without any NYU oversight.

Moreover, TAPPE used the High Galaxy and PCM accounts to steal at least $660,000, by using that money to pay her personal expenses. She used the accounts to pay for home renovations – including a new $80,000 swimming pool – and her ordinary living expenses.

In September 2018, an NYU program director confronted TAPPE about the payments being made to the MWBE subcontractors. In response, she emailed the head of the RBE-RN and TAC-D programs explaining the role those companies played – without mentioning High Galaxy, PCM, or her relationship with the MWBE subcontractors. Instead, she falsely stated that NYU had “developed good working relationships with these companies,” and that she had “found no other companies that offer the same suite of services for price.”

Soon thereafter, NYU reported the theft to the New York State Department of Education, which relayed the allegations to the Comptroller’s Office. After conducting an investigation, the Comptroller’s Division of Investigations referred the case to the Manhattan D.A.’s Office for prosecution.

Assistant D.A.s Adam Maltz and Jaime Hickey-Mendoza are handling the prosecution of this case under the supervision of Assistant D.A.s Michael Ohm (Deputy Chief of the Rackets Bureau), Judy Salwen (Principal Deputy Chief of the Rackets Bureau), and Jodie Kane (Chief of the Rackets Bureau), and Executive Assistant D.A.s Christopher Conroy (Senior Advisor to the Investigation Division) and Susan Hoffinger (Investigation Division Chief). Former Assistant D.A. Gilda Mariani, Trial Preparation Assistants Eleanor Bock and Shriya Shinde, and Rackets Investigator David Caban assisted with the investigation.

D.A. Bragg thanked the Comptroller’s Office for its partnership in the investigation.

Defendant Information:

CINDY TAPPE
Westport, CT

Charged:

• Money Laundering in the First Degree, a class B felony, one count
• Grand Larceny in the Second Degree, a class C felony, one count
• Offering a False Instrument for Filing in the First Degree, a class E felony, two counts
• Falsifying Business Records in the First Degree, a class E felony, two counts

1 The charges contained in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty. All factual recitations are derived from documents filed in court and statements made on the record in court.