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The six-year fraud by Fairfield County resident Cindy Tappe, age 57, of Westport, related to two NYU programs, Manhattan District Attorney Alvin Bragg and New York State Comptroller Thomas DiNapoli announced this week.
Tappe used her position as the director of finance and administration for NYU’s Metropolitan Center for Research on Equity and Transformation of Schools to divert approximately $3.5 million intended for minority and women-owned businesses, the DA said.
She ultimately routed $3.3 million to bank accounts held by two shell companies Tappe created, using some of the funds for NYU payments and employee reimbursements, but keeping more than $660,000 to pay for personal expenses, including renovations to her home and an $80,000 swimming pool, according to the DA.
Tappe has been charged in a New York State Supreme Court indictment with:
- One count of first-degree money laundering,
- One count of second-degree grand larceny,
- Two counts each of first-degree offering a false instrument for filing,
- One count of falsifying business records.
According to court documents and statements made on the record in court:
Between 2011 and 2018, the New York State Education Department awarded NYU $23 million for the Metro Center to administer two New York State programs:
- The Regional Bilingual Education Resource Network, which helps school districts improve results for English language learners, and
- The Technical Assistance Center on Disproportionality, which addresses disproportionality in special education.
The agreements required that a certain percentage of subcontractors on grant-related projects be awarded to certified minority and women-owned business enterprises, in accordance with state law.
Between February 2012 and December 2018, Tappe arranged for three certified subcontractors to receive the overwhelming majority of the payments. In total, NYU paid the three companies approximately $3.527 million to provide services related to the grants.
To justify the payments, the companies submitted fictitious invoices drafted by Tappe and pasted on their letterhead.
None of the companies performed work on the contracts. Instead, they functioned as pass-throughs, taking between 3 percent and 6 percent of the invoice amounts as “overhead,” and sending the remainder of $3.352 million to two fictitious shell companies created by Tappe: High Galaxy Inc., and PCM Group Inc.
A portion of the funds was then used to pay legitimate grant-related expenses and to reimburse NYU employees for costs incurred or services rendered without any NYU oversight.
Moreover, Tappe used the High Galaxy and PCM accounts to steal at least $660,000, by using that money to pay her personal expenses. She used the accounts to pay for home renovations – including the new swimming pool – and her ordinary living expenses.
In September 2018, an NYU program director confronted Tappe about the payments being made to the MWBE subcontractors. In response, she emailed the head of the programs explaining the role those companies played – without mentioning High Galaxy, PCM, or her relationship with the MWBE subcontractors.
Instead, she falsely stated that NYU had “developed good working relationships with these companies,” and that she had “found no other companies that offer the same suite of services for price.”
Soon thereafter, NYU reported the theft to the New York State Department of Education, which relayed the allegations to the Comptroller’s Office. After conducting an investigation, the Comptroller’s Division of Investigations referred the case to the Manhattan DA’s Office for prosecution.
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