Education Firms That Serve Hasidic Schools Are Barred Amid Fraud Inquiry – The New York Times

New York City education officials have stopped doing business with 20 companies that provide education services in private schools amid concerns about fraud in the industry.

In emails sent over the past few weeks, the city education department instructed employees to block the hiring of the companies to provide special education or child care services.

The move marks a sharp change in the city’s approach to education contracting, particularly in cases of parents of private school students with disabilities seeking city-funded services. While parents must go through a legal process and ask a hearing officer to order the funding, the city has for years had a policy of fast-tracking approvals of most such requests. Now, the city will fight requests for it to pay a significant number of companies.

Together, the companies received $60 million to provide special education alone last year. All of them primarily serve students in private Jewish schools, known as yeshivas, especially in the fervently religious Hasidic community.

The new policy comes after an executive at some of the city’s top-earning special education providers, Martin Handler, was arrested last month and charged with stealing millions of dollars in public money intended to pay for early education for low-income children. Mr. Handler has pleaded not guilty.

Officials say the 20 firms all have ties to Mr. Handler or one or more of his four co-defendants or their families.

“Obviously the allegations in the indictment are very serious and New York City Public Schools is taking a close look at the issues they raise,” said Nathaniel Styer, a spokesman for the city education department, in a statement.

Mr. Handler’s attorney did not respond to a request for comment, nor did representatives of many of the companies now shut out of funding.

The indictment, and the ensuing city order, followed a New York Times article in December that revealed that many special education providers in the Orthodox Jewish and Hasidic communities had received a windfall of taxpayer money in recent years for services that were sometimes not needed, or even provided. In response to the article, city officials say they are scrutinizing requests more closely.

The Times had reported in September that scores of Hasidic boys’ yeshivas across Brooklyn and the lower Hudson Valley have collected about $1 billion in taxpayer money in recent years while failing to provide their students with a basic secular education.

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