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February 27, 2024

New York State Comptroller Dinapoli and Manhattan District Attorney Bragg announced the guilty plea of former NYU director of finance for major fraud

On February 26, 2024, New York State Comptroller Thomas DiNapoli and Manhattan District Attorney Alvin L. Bragg Jr. announced the guilty plea of Cindy Tappe for orchestrating an approximately $3.5 million 6-year fraud relating to two New York University [NYU] programs. Tappe used her position as the Director of Finance and Administration for NYU’s Metropolitan Center for Research on Equity and Transformation of Schools [the “Metro Center”] to divert approximately $3.5 million intended for minority and women owned businesses. 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 in Connecticut and an $80,000 swimming pool.

Tappe pleaded guilty to one count of Grand Larceny in the Second Degree. Under the terms of the plea, Tappe will be sentenced to five years’ probation, sign a written waiver of right to appeal, and provide full restitution in the amount of $663,209.07 in advance of sentencing. She will be sentenced on April 16, 2024.

“Cindy Tappe shamelessly used her high-ranking position at NYU to steal more than $660,000 in state funds,” New York State Comptroller Thomas P. DiNapoli said. “Her actions cheated MWBEs out of critical funding opportunities and deprived student programs of key resources meant to aid children with special needs and young English Language learners. I thank District Attorney Bragg for his partnership in uncovering her wrongdoing and for holding her accountable.”

“Cindy Tappe took advantage of her position as the NYU Director of Finance and Administration by diverting funds that were intended to benefit students for her own personal gain. Her fraudulent actions not only threatened to affect the quality of education for students with disabilities and multilingual students, but denied our city’s minority and women owned business enterprises a chance to fairly compete for funding,” said District Attorney Bragg. “In Manhattan, we will continue to root out fraud committed at the expense of our students and businesses. I thank the New York State Comptroller’s Office for its partnership in this investigation.”

According to court documents, statements made on the record in court, and as admitted in the defendant’s guilty plea, 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:

1. The Regional Bilingual Education Resource Network (“RBE-RN”), which helps school districts improve results for English language learners, and

2. The Technical Assistance Center on Disproportionality (“TAC-D”), which addresses disproportionality in special education.

The RBE-RN and TAC-D agreements required that a certain percentage of subcontractors on grant-related projects be awarded to certified minority and women owned business enterprises (“MWBE”), in accordance with state law.

Between February 2012 and December 2018, Tappe was the Director of Finance and Administration for Metro Center. Tappe arranged for three certified MWBE subcontractors to receive the overwhelming majority of MWBE 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% and 6% 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. [High Galaxy], and PCM Group Inc.[PCM].

A portion of the funds were then used to pay legitimate grant-related expenses, and to reimburse NYU employees for expenses 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 a new $80,000 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 RBE-RN and TAC-D 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 D.A.’s Office for prosecution.

Assistant D.A.s Adam Maltz and Jaime Hickey-Mendoza are handling the prosecution of this case under the supervision of Assistant D.A.s Michael Ohm (Deputy Chief of the Rackets Bureau), Judy Salwen (Principal Deputy Chief of the Rackets Bureau), and Jodie Kane (Chief of the Rackets Bureau and Acting Chief of the Investigation Division). Former Assistant D.A. Gilda Mariani, Trial Preparation Assistant Shriya Shinde, and Rackets Investigator David Caban assisted with the investigation.

Comptroller DiNapoli’s Division of Investigations conducted the investigation for the Office for the State Comptroller.

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