School Consultant Pleads Guilty to Kickback Conspiracy Connected to Covid-Era Programs Designed to Help Schoolchildren Access the Internet

 

Principal of Long Island-Based Consulting Firm Steered Contracts Worth Millions to Vendors in Exchange for a Secret Share of the Profits

Earlier today, in federal court in Brooklyn, school consultant Richard Bernstein pleaded guilty to conspiracy to defraud the United States in connection with his agreement with others to steer federal funds to school vendors in exchange for a share of the vendors’ profits.  The proceeding was held before United States District Judge Ramon E. Reyes, Jr.  When sentenced, Bernstein faces up to five years’ imprisonment.

Joseph Nocella, Jr., United States Attorney for the Eastern District of New York, and Fara Damelin, Inspector General, Federal Communications Commission (FCC), announced the guilty plea.

“Bernstein’s scheme enriched himself and his co-conspirators at the expense of schools and schoolchildren,” stated United States Attorney Nocella.  “Kickback schemes that illegally syphon public funds into private pockets are an insidious form of corruption, and our Office is committed to disrupting and prosecuting such conduct.”

“This case demonstrates the continuing pattern of procurement fraud and kickbacks between consultants and vendors that threaten the integrity of FCC’s ECF and E-Rate programs. The defendant, an active consultant in this industry, used his status to defraud these programs, stated FCC Inspector General Damelin.  “We will continue to identify and vigorously investigate bad actors who exploit FCC programs for personal gain to the detriment of students that these programs are meant to serve.  I am proud of the outstanding work of our investigative and analytics teams as well as our law enforcement partners at the U.S. Attorney’s Office-EDNY, Office of Inspector General, Homeland Security Investigations, NASA, and the New York City Police Department.

As set forth in the complaint, criminal information, and as discussed in court proceedings, Bernstein was the founder and Chief Executive Officer of E-Rate Consulting, LLC and the president of E-Rate Management Solutions Inc. (together, EMS), both of which are located in Woodmere, New York.  EMS offered services to schools in New York and elsewhere related to the E-Rate and Emergency Connectivity Fund (“ECF”) programs.

Both the E-Rate and the ECF programs are operated by the Universal Service Administrative Company (USAC), with oversight from the FCC.  The E-Rate program provides discounts to help eligible schools and libraries in the United States obtain affordable telecommunications and internet access. The ECF program provided funding to schools and libraries to assist them in supporting remote learning for students, staff, and library community members during the COVID-19 pandemic.   

Bernstein acted as an agent for schools seeking access to resources under both the E-Rate and ECF programs.  Bernstein agreed with vendors to steer the schools he served to work with those vendors; he simultaneously entered into secret side agreements with the vendors to share as much as half of their profits with him. For example, Bernstein provided consulting services to a school located in Nassau County (School #1) in 2021 and 2022. Bernstein connected that school with a vendor (Vendor #1), and School #1 agreed to receive equipment from Vendor #1. Vendor #1 purchased 130 Lenovo Chromebooks and 40 Lenovo laptops for School #1, and sought reimbursement for these purchases from USAC.  USAC ultimately paid $68,000 to Vendor #1 on January 28, 2022.  A few days later, EMS submitted an invoice to Vendor #1 for $11,500, representing 50% of Vendor #1’s profits for the equipment provided to School #1.  Vendor #1 paid EMS $11,5000 on or about February 8, 2022.

In total, EMS received more than $100,000 in kickbacks from vendors funded through the E-Rate and ECF programs.  Bernstein has agreed to forfeit $137,576.64. This amount corresponds to the illicit proceeds he received from the scheme.           

The government’s case is being handled by the Office’s Public Integrity Section. Assistant United States Attorneys Laura Zuckerwise and Eric Silverberg are in charge of the prosecution with assistance from Special Agent Anthony Cunder and paralegal specialist Daniel Arakawa.