Submitted By syui07
Roslyn Free United School District
The Case begins…. In late 2002, words got out that one of the high officials of the Roslyn school district was stealing money from the school. The allegedly culprit was determined to be the assistant superintendent (who played almost the same role of a chief financial officer in the school district sytem) Pamela Gluckin. The total amount was believed to be $223,000. The board, however, decided not to press criminal charges against Gluckin and just accepted her resignation and restitution of $250,000. The reason, as later explained by the board was that board members desired not to damage the school’s reputation. The final decision was also recommended and supported by superintendent Tasson, as he reckoned that Gluckin was making roughly $160,000 a year; if the board had prolonged the investigation and the process of bringing the case to court, the Roslyn school district would have lost more money paying for Gluckin’s high annual salary. And so it seemed the theft had ended, and Roslyn did not suffer too much of a financial crisis. They only learned, however, 2 years later, that was not entirely the case.
The Truth unveils…..
In early 2004, rumors got out that the Roslyn fraud case from more than a year ago did not just result in a loss of a few hundred thousand grants. Eventually, the Nassau County District Attorney decided to carry out a full-out investigation. The New York State Comptroller’s Department performed a thorough audit from the period January 1, 1996 through June 14, 2004.
After reviewing 57,000 checks and tens of thousands computer records, State Controller’s Officer auditors has identified $11.2 million that was misused by school employees, their friends and families (mostly for unnecessary personal benefits)
Criminal charges were brought against six individuals, all of whom eventually pledged guilty.
Altogether, the audits detailed the misappropriation and misuse of the funds amount to $11,251,365, which were made on 74 credit cards and covering more than 54 accounts, for the period of 1996 to 2004. Auditors, however, were only be able to link a loss of $8 million to the defendants.
Figure [ 1 ] New York State Office of Comptroller
The stolen funds were used for a variety of goods and services, ranging anything from direct cash payments, purchase of items for individual uses such as jewelry, meals, entertainment to excessive expense such as foreign travel and hotel. Tassone allegedly used the fund to pay for two trips to London on the Concord, one for $20,000 and another for $30,000, including a $1,800 per night suites, and a half-dozen jaunts to Las Vegas with his friends.
Among the beneficiaries, Gluckin took more than $4 million, Tassone took more than $2 million and Gluckin’s niece took approximate $780,000.
Stephen Signorelli, supposedly the CEO of WordPower, received more than $800,000 over many years for word processing works (“reviewing, editing, and printing handbooks”). However, as later examined by auditors, the Signorelli’s company’s address matched Tassone’s Manhattan apartment.
In most cases, the companies working with or for the district were held by close relatives of many high officials in the school.
Figure [ 2 ] New York State Office of Comptroller
Due to the hit of the school fraud, a budget increase, the State Comptroller’s Officer, which had historically little to do with school district, undertook auditing of all 710 school districts throughout New York State by 2010. A budget increase of over $5 million annually provided for the hiring of over 80 new auditors.
New York also adopted the Fiscal Accountability Act of 2005, which provides that: * District must solicit competitive bids for independent audit services at least every 5 years * Districts must have an audit committee * Districts must appoint an internal auditor; this maybe an employee, or the task maybe contracted to an outside individual firm * Every school board member must receive 6 hours of financial training.
As for the defendants, Superintendent Frank Tassone was sentenced to 4 – 12 years in prison. At the time of his sentencing, he had repaid about $1.9 million (of the $2.2 million spent on unnecessary luxurious services) to the District, and had promised to repay the rest.
Tassone was allegedly the guiltiest of the fraud case. He was considered to be a close friend with board members and parents, had lunch with students and brought foreign languages system to the elementary school system. He had, in some ways, manipulated and betrayed both the parents and board members, said a past Parent-Teacher Organization (PTA) president. What upset the residents even more was the fact that he had been scheduled to sentencing nine times since 2005, and he had failed to show up to all of them, reasoning that he had an illness and was in hospital. When Judge Honorof issued a bench warrant against Tassone and warned his lawyer that the next time Tassone failed to show up to court, he will subject to a full grand larceny: 8 and a third to 25 years in prison.
Tassone, however, was granted an early release in February 2010. Roslyn residents showed considerable frustration. They expressed their anger toward the lenient of the term, even when Tassone was sentenced up to a maximum of 12 years. Most of this disappointment was traced back to the fact that Tassone was a very well-loved, respected Superintendent. However, another fact that was surprisingly shocking was that he received an annual State pension of $173,495.04, in monthly installment of approximately $18,000 while he was in prison, and he will continue to receive them.
Assistant Superintendent for Business Pamela Gluckin was sentenced to 3 – 9 years to prison, she had repaid over $2 million. Gluckin was release on May, 2011, but remained on parole until September 17, 2015, according officials from the State Department of Correction
Account Clerk Deborah Rigano received a sentence of 2 – 6 years, and had repaid about $75,000.
Two non-employees also pleaded guilty. Stephen Signorelli was sentenced to 1 – 3 years in prison . John McCormick (Pamela Gluckin’s son) was sentenced to 5 years probation and 100 hours of community service.
Andrew Miller, the District’s CPA, pled guilty and was charged of first-degree tampering with public records. Although he was never accused of stealing money for himself, Miller did not fully disclose the case as he wanted to protect his business. His action, however, resulted in a great loss to the public. He was sentenced to four months in jail and five years probation. He also surrendered his CPA license.
Miller was the first to pursue a whistleblower’s tip in 2002 indicating that Pamela Gluckin was stealing money from the school. He had, indeed, uncovered part of the embezzlement. However, in October 2002, at the closed board meeting, Miller did not reveal that Superintendent Frank Tassone has asked him to curtail his investigation of Gluckin’s theft, which totaled up to millions of dollars. He then personally changed computer records so that unauthorized checks issued to pay mortgages and personal bills for Gluckin and Tassone were made to look as though they had been paid to authorized school vendors.
His firm – Miller, Lilly, and Pearce – although initially did not get charged with any wrongdoings, its business was rapidly crashing and by April of 2005, the firm got disbanded. Later information reviewed that the District filed a claim against the firm and the final settlement totaled $925,000.
Weaknesses and Lessons learned from Roslyn case… * System deficiencies: insufficient policies and procedures * Extensive top management fraudulent activities * Lack of internal control system or system was not properly followed * Ineffective oversight and review (oversight board, audit committee) * No segregation in transaction * Incompetent external auditor (the CPA firm had about 5 staff members but perform audit services over 50 school districts annually).
Bierstaker, James L., Inshik Seol, and Ronald J. Huefner. "Local Government Fraud: The Roslyn School District Case." Management Research Review 33.3 (2010): 198-209. Print.
Office of the New York State Comptroller “Roslyn Union Free School District: Anatomy of a Scandal: Report of Examination January 1, 1996 – June 14, 2004”, Division of Local Government Services and Economic Development, March.
Office of the New York State Comptroller, “Roslyn Union Free School District: Independent Audit Services: Report of Examination July 1, 2001 – June 30, 2003”, Division of Local Government Services and Economic Development, January.
New York State Society of Certified Public Accountants (NYSSCPA) E-zine issue, “Four indicted in Roslyn Schools Scandal”, June 9, 2005
Archer, J. (2005). In New York, Auditors Comb School Districts' Books.Education Week, 25(9), 1-24.
Colson, R. H. (2004). Public Accountability: An Interview with New York State Comptroller Alan Hevesi. CPA JOURNAL, 74, 18-22.
[ 1 ]. The Office of the State Comptroller Alan G. Hevesi, Press release March 2, 2005
[ 2 ]. NYSSCPA, E-zine issue June 9, 2005
[ 3 ]. The New York Times "Former Schools Cheif of Rosyln Gets 4 to 12 Years in Fraud", Paul Vitello, October 11, 2006
[ 4 ]. The New York Times, "Roslyn Waits, and Waits Again, for Schools Leader's Sentencing", Paul Vitello, October 5 2006
[ 5 ]. Newsday, "Ex-school official in $11M fraud paroled", Joie Tyrrell, October 28, 2011
[ 6 ]. New York Guides, "The Bad Superintendent", Robert Kolker, September 27, 2004 Issue
[ 7 ]. The New York Times, "Accountant is sentenced for Hiding Roslyn Thefts", Paul Vitello, January 26, 2006
[ 8 ]. Huefner, R. J. (2010). Local government fraud: the Roslyn School District case. Management Research Review, 33(3), 198-209.…...