Jewish school in Brooklyn admits fraud, agrees to repay $5 million to federal government

The largest private Hasidic Jewish school in New York State has agreed to pay $5 million in fines after it stole millions from a federal school lunch program for needy children.

The New York Times reports that the operators of the school, the Central United Talmudical Academy (CUTA), which serves more than 2,000 boys in the Williamsburg section of Brooklyn, acknowledged that they illegally diverted money from government programs for school lunches, technology and child care.

They also admitted to setting up no-show jobs for some employees while paying others in cash and coupons so the employees could qualify for welfare, according to prosecutors.

In all, the school agreed to pay $5 million in fines in addition to the more than $3 million it had already paid in restitution as part of a deal to avoid prosecution.

As part of the fraud, school officials took money intended to feed children and instead used it to subsidize parties for adults, the federal authorities said Monday.

“Today’s admission makes clear there was a pervasive culture of fraud and greed in place at CUTA," says Michael J. Driscoll, Assistant Director in Charge of the FBI's New York Field Office. "We expect schools to be places where students are taught how to do things properly.  The leaders of CUTA went out of their way to do the opposite, creating multiple systems of fraud in order to cheat the government."

The federal investigation into the school’s use of government funding stemmed from a criminal case in which two former school leaders, Elozer Porges and Joel Lowy, pleaded guilty in March 2018 for their roles in the conspiracy to defraud the government.

Since that case, the school has replaced its executive management team and developed a new set of controls, among other changes, federal authorities say.