Boston Business Litigation: U.S. v. Princeton Review

Boston business litigation attorneys know that sometimes in large corporations, decisions may be made of which top officials may have no knowledge. teach.jpg

Yet, when Boston business lawsuits are filed, it is ultimately those individuals who may be held responsible.

And that is who the federal government is going after in its business litigation, alleging a multi-million dollar fraud scheme by the Boston-based Princeton Review (U.S. v. Princeton Review, 12-cv-6876). The government is alleging civil fraud against the company, which is well-known for providing preparatory guides for students getting ready to take tests like the GRE, SAT and GMAT.

Here’s what we know of the case so far:

The government had contracted with the Princeton Review to provide after-school tutoring to underprivileged children in poorly-performing schools in New York City between 2002 and 2010.

The city had been given federal grant money for the program, and paid out between $35 to $75 hourly per student for the service. But then in 2006, the government says aides and managers of the program started billing the schools for sessions that never took place. Students would fail to show up for the sessions, but the government was billed anyway.

In all, the company billed the city nearly $40 million. It’s not exactly clear though how much of that was allegedly fraudulent.

The managers and aides worked for a segment of the company that no longer exists – the Supplemental Educational Services division. That arm of the firm was closed two years ago.

In one instance, the government alleges the company charged the city for a tutoring session with some 75 children at a school in the Bronx. The problem was, that session reportedly took place on New Year’s Day. There were no classes that day.

Other cases reportedly showed that some instructors forged the signatures of students, fudged sign-in sheets and submitted phony certifications in order to carry on the ruse.

It is not clear what the higher-ups in the organization actually knew of the alleged fraud, but the government says an internal investigation was launched back in 2006. The findings of that probe, they said, did uncover discrepancies, but nothing was ever done to address them, the government says. In fact, the site director of the program reportedly encouraged other administrators within the company to commit the same fraud. These administrators were paid bonuses, depending on how many students attended the classes.

Attorneys for the government are seeking to be compensated three-fold for the damages, as well as an imposition of civil penalties.

While it’s going to be important for this company to hire an experienced business litigation attorney, the case also underscores the importance of having an attorney on retainer who can regularly examine the business activities for any potential legal pitfalls – and alert top administrators of the things they may not recognize as being a problem.

A Boston business law firm, The Brown Law Firm, LLC, has offices in Belmont and Boston. For a free and confidential consultation, call 617-489-0817 or contact us through this website.

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