The largest provider of after-school tutoring services for city public schools pupils, Champion Learning Center LLC, has been under investigation since last summer by the Manhattan U.S. attorney’s office, the Daily News has learned.
The federal probe came to light this week after City Controller John Liu refused to approve a new $4.5 million contract the Department of Education awarded the company in November.
“There is sufficient reason to believe that the proposed contractor is involved in corrupt activity,” Liu said in a Jan. 11 letter to the Department of Education, a copy of which The News obtained under a Freedom of Information request.
The firm, Liu noted in his letter, has twice been found to be improperly billing the city for its services — once by the department itself and once by Liu’s auditors. As a result, Champion has been forced to repay more than $6 million since 2009.
In addition, Liu said, the firm revealed in an Oct. 9 update to the city’s VENDEX system that it is the target of an ongoing federal civil probe.
Kenneth Fisher, an attorney for Champion, declined to discuss that investigation. He said the company informed department officials about it before the latest contract was awarded.
Ellen Davis, a spokeswoman for Manhattan U.S. Attorney Preet Bharara, would not confirm or deny any federal investigation.
According to Fisher, the company’s previous mistakes resulted from poor administration, not fraud.
“Champion took several steps to improve its internal controls last year, and on that basis the DOE determined to continue its relationship with the company,” Fisher said.
Officials at Tweed initially sought a much larger three-year renewal contract for Champion last September, but they dropped that plan after the press began questioning the company’s track record.
In November, the DOE won approval from the Panel for Educational Policy for a one-year, $4.5 million renewal for Champion, but none of the documents submitted to the PEP mentioned any federal probe.
Since Champion’s founding in 2005 by Abraham Sultan — then a 22-year-old college grad — the company has mushroomed into the city’s biggest provider of tutoring for at-risk children.
Between 2006 and 2012, it received a whopping $87 million from the DOE. At one point, it was serving about one fourth of the 80,000 public school students who qualified for tutoring under the No Child Left Behind Act.
Champion “is proud of having successfully helped tens of thousands of New York City schoolchildren and of being the preferred choice of parents,” Fisher said.
In March 2009, this column reported that Champion was paying many of the college students it hired as part-time tutors as little as $15 to $17 an hour, while it was charging the DOE $79 an hour.
The payments to tutors were far lower than the “contracted rates,” DOE spokeswoman Connie Pankratz said. “We confronted them, and they agreed to pay the $5.2 million difference.”
A separate 2012 audit by Liu found that Champion had submitted incomplete, unsigned or possibly inaccurate bills to the tune of $859,000, and ordered restitution.
“Our taxpayers were overcharged and our students were shortchanged,” Liu said in a statement. “We simply cannot reward bad behavior with multi-million-dollar contracts.”
Now DOE officials must decide whether to press forward with the Champion contract in the face of Liu’s rejection.
