Taxpayer Money Was Meant for Private Special Education School
TRENTON – Attorney General Christopher S. Porrino announced that the founder and director of the School for Children with Hidden Intelligence (“SCHI”) in Lakewood, N.J., was indicted today on charges that he misappropriated over $630,000 in public tuition funds, using a purported fundraising foundation for the school in his alleged schemes to steal and launder money.
The private school’s founder and director, Rabbi Osher Eisemann, 60, of Lakewood, was indicted along with the purported fundraising foundation for the school, Services for Hidden Intelligence, LLC, on second-degree charges of theft by unlawful taking, misapplication of entrusted property and property of government, and money laundering. The state grand jury indictment also charges Eisemann with second-degree misconduct by a corporate official. The indictment is the result of an ongoing criminal investigation by the Division of Criminal Justice Corruption Bureau, assisted by the Division of Criminal Justice Financial & Computer Crimes Bureau.
SCHI receives approximately $1.8 million per month in tuition from the Lakewood School District and other public school districts that send special needs students to the school. The tuition rate is set using a state formula that is based on the “reasonable, ordinary and necessary” costs to educate the students, and all tuition funds must be used strictly for operating expenses of the school. It is alleged, however, that Eisemann used the fundraising foundation, Services for Hidden Intelligence, to steal approximately $430,000 in public tuition monies for a personal business venture, and to misappropriate an additional $200,000 in a money laundering scheme intended to make it appear that he was repaying debts he owed to the school using personal funds.
“By allegedly stealing public funds that were strictly earmarked for the education of special needs students, Rabbi Eisemann broke the law, violated the public’s trust, and betrayed the vulnerable population of children served by SCHI,” said Attorney General Porrino. “He had a duty to use every tuition dollar for the benefit of the children at the school, but instead he allegedly diverted hundreds of thousands of tuition dollars to gamble on a personal business venture.”
“We’re actively continuing our investigation of Rabbi Eisemann and his alleged use of the school’s fundraising foundation in schemes to siphon money away from the school for his personal use,” said Director Elie Honig of the Division of Criminal Justice. “We urge anyone with information relevant to this case to contact us confidentially so that we can thoroughly investigate all leads.”
The investigation by the Division of Criminal Justice revealed that the fundraising foundation, Services for Hidden Intelligence, was actually receiving money from its purported beneficiary, SCHI, rather than providing money to the school. It is alleged that Eisemann used accounts of the foundation to fund a number of enterprises with which he was associated that had no relationship to the school. The investigation into alleged misappropriation of public tuition funds from SCHI is continuing.
The indictment returned today alleges Eisemann stole approximately $430,000 in operating funds from SCHI – specifically, public tuition funds entrusted to the school to educate special needs children – that he invested in a now-defunct clothing business, TAZ Apparel, LLC, that was operated by a business associate. This was a personal investment of Eisemann. Neither the school nor the fundraising foundation had any ownership interest in TAZ. The investigation uncovered contracts between Eisemann and the business associate in which Eisemann agreed to finance the business up to $550,000, while the partner would manage its daily operations. Eisemann allegedly transferred the funds he stole for the private investment from SCHI’s operating account into accounts of the fundraising foundation. He then allegedly used funds in the foundation accounts to transfer approximately $277,000 to TAZ via checks and wire transfers, and to pay approximately $153,000 in AMEX expenses accrued by TAZ.
In the money laundering scheme, Eisemann allegedly transferred an additional $200,000 in public tuition funds from SCHI to the fundraising foundation. The stolen funds then allegedly were transferred through several unrelated entities and individuals, including TAZ, and ultimately into Eisemann’s personal bank account. Eisemann subsequently paid the money back to the school from his personal account. Through this scheme, which was completed in six days, Eisemann allegedly obscured the origin of the money, so that he could use the school’s own money to create the false appearance that he was using personal funds from independent sources to repay debts he owed to the school.