Posted on Sun, Jan. 4, 2009

School consultant target of probe

Martin Friedman, who heads a Broomall consulting firm, advised schools in Pa. and N.J. on technology services.

By Martha Woodall
Inquirer Staff Writer

A consultant who helps schools obtain discounts on technology is under investigation for allegedly steering contracts in Pennsylvania and New Jersey to select vendors in exchange for kickbacks.

Martin Friedman, the principal of Alemar Consulting Inc. of Broomall, acknowledged that his company is under a federal investigation. He declined to comment further.

John S. Summers, the attorney for Alemar, confirmed that federal agents searched the company's offices and Friedman's home last month.

"Alemar flatly denies any wrongdoing and is confident that a full examination of the facts on the record will demonstrate that the government's suspicion was misplaced," said Summers.

Joseph Muoio Jr., assistant chief of the Justice Department's Antitrust Division in the region, is overseeing the investigation. Muoio referred all questions to a Justice Department spokeswoman in Washington, who declined to comment.

In mid-December, 11 technology firms that have worked with 31 school districts and charter schools in New Jersey and Pennsylvania received subpoenas from a federal grand jury in Camden, officials at several of the firms said.

All the schools had contracts with Alemar, which provided advice on technology and helped school administrators navigate the application process. The Atlantic City Press first reported news of the investigation.

The inquiry centers on a federal program known as Education Rate, or E-Rate, which the Federal Communications Commission established in 1997 to provide discounts for Internet, telephone and related technology services for schools and libraries.

E-Rate was designed to help reduce technology costs for schools and libraries, especially those in low-income and rural areas. Funding, which amounts to $2.25 billion a year, comes from fees paid by telecommunication subscribers.

Schools receive discounts ranging from 20 percent to 90 percent on certain services. The size of the discount is based on the number of low-income students who qualify for free or reduced lunches under the federal meals program.

Among the casualties of the investigation are technology improvements at schools that were counting on E-Rate discounts. As a result of the inquiry, the federal program has frozen E-Rate funding for three years for more than 20 charter schools in Philadelphia and some school districts in Cape May and Atlantic Counties.

In addition to operating a consulting business, Friedman has a full-time job as technology coordinator at Imhotep Institute Charter High School in East Germantown. He was paid $89,900 in 2006-07, according to the school's latest nonprofit tax filing.

Christine Wiggins, Imhotep's founder and chief executive officer, said Friedman was being targeted because he had tried to expose serious flaws in the federal program.

"The only thing I know in reference to Martin is that he blew the whistle on some inappropriate things," she said last week. "He is a salaried staff member here, and I have known him to be a man of integrity."

Wiggins did not elaborate. She said federal investigators had not contacted Imhotep.

The subpoenas were served on businesses that provide e-mail, Web hosting and related services to schools. Among them is ComTec Systems Inc. of Vineland, N.J. Federal agents also visited Geoffrey P. Deans of Wynnefield, who provides technical support for several charter schools.

"They were asking questions as to possible improprieties that might have happened," Deans said. "Nothing was concrete. They were looking into possibilities of wrongdoing."

He and the other vendors have been ordered to provide all documents - including correspondence, records and financial statements - related to Alemar and its efforts to obtain E-Rate discounts. The firms also have been directed to produce communications they have had with one another and to deliver all materials to the U.S. District Courthouse in Camden by Jan. 13, several vendors said.

Michael Vertolli, president of ComTec Systems, said E-Rate officials had not come up with any "credible evidence" against the schools during the three years their discounts have been frozen.

"From everything I know, there hasn't been any indication or allegation of wrongdoing against any of the schools or districts," said Lawrence F. Jones, chief executive officer of the Richard Allen Preparatory Charter School in West Philadelphia.

He said his middle school, which has 400 students, has had a contract with Friedman for at least four years. The contracts, Jones said, "were pretty small. A few thousand dollars a year."

His school received E-Rate discounts once but not in recent years, Jones said. Last year, he said, the school received some discounts for cell phones and Internet service.

He estimated that his school had lost out on between $300,000 and $400,000 from the E-Rate program for technology costs, including wiring and Internet servers.

Several Philadelphia charters that contracted with Friedman banded together a few months ago to try to figure out what had happened to their E-Rate applications. They tried to contact Universal Service Administrative Co., the not-for-profit corporation in Washington that oversees the E-Rate program for the FCC.

"They say, 'We don't talk to the schools,' " said Wiggins, who estimated that Imhotep might have missed out on discounts as high as $600,000.

She and other charter officials were shocked when they learned that Friedman's company was being investigated and that this was the reason their schools' discounts were on hold.

"At the end of the day, the way this whole thing is being done has harmed children," Wiggins said. "Children lose out on the use of technology, and that was the whole spirit of the E-Rate."

The Atlantic City Press reported last month that the Alemar probe had resulted in the withholding of about $30 million in technology funding from the charters and several New Jersey school districts, including Atlantic City, Pleasantville, Wildwood and Asbury Park.

The Justice Department's Antitrust Division has prosecuted several E-Rate cases across the country. Two weeks ago, Justice officials announced that an Atlanta businessman was sentenced to five years in federal prison after he was convicted of bribing the technology director of the Atlanta Public Schools to obtain contracts through the E-Rate program. The former technology director received a three-year sentence after pleading guilty to conspiracy and bribery charges in May 2007.

The Philadelphia charter schools on the subpoenas received by technology vendors are Discovery; Eugenio Maria de Hostos; Folk Arts-Cultural Treasures; Franklin Towne; Germantown Settlement; Harambee Institute of Science Technology; Imani Education Circle; Imhotep Institute; Khepera; Maritime Academy; Mastery (all four schools); Mathematics, Civics and Sciences; Nueva Esperanza; People for People; Philadelphia Electrical and Technology; Raising Horizons Quest (now known as Global Leadership Academy); Renaissance; Richard Allen Preparatory; Universal Institute; and World Communications.

Pennsylvania Leadership, a cyber charter based in West Chester, which provides online instruction to students across the state, also was listed.

Contact staff writer Martha Woodall at 215-854-2789 or martha.woodall@phillynews.com.

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