Medical school administrator charged in $3.5 million fraud scheme during previous NYU job

Staff journalists

Hedy Tung, staff photographer

Yale School of Medicine administrator Cindy Tappe was fired Dec. 22 after allegedly embezzling $3.5 million from a New York state grant she used to cover her personal expenses, including an $80,000 swimming pool and nearly $600,000 in renovations to his home in Westport, Connecticut.

Tappe was charged by the Manhattan District Attorney’s Office on December 19. She was accused of stealing the $23 million grant money – designed specifically to improve minority and women-owned businesses – while she was an administrator at New York University. After NYU management confronted her in 2018, Tappe left the school, according to NYU spokesman John Beckman. She was hired by Yale in 2019, where she worked as the School of Medicine’s director of operations until her layoff.

The University initially placed Tappe on leave following his indictment before eventually terminating his employment.

“Our multilingual learners and students with disabilities deserve top-notch services, and these funds should have gone directly to their schools,” Manhattan District Attorney Alvin Bragg wrote. statement. “…This $3.5 million fraud has also negatively impacted women- and minority-owned businesses in our city by denying them the opportunity to compete fairly and obtain funding.”

The courts charged Tappe with one count of first-degree money laundering, one count of second-degree robbery, two first-degree counts offering a false instrument of deposit and two counts of forgery. first degree commercial documents. Tappe pleaded not guilty to all four counts and his attorney did not respond to requests for comment.

The indictment comes after a four-year investigation by the New York State Comptroller into Tappe’s alleged embezzlement while serving as director of finance and administration at NYU. Metropolitan Center for Research on Equity and School Transformationalso known as Metro Center.

According to Beckman, the New York State investigation began in 2018 after NYU implemented a new electronic payment system and detected “suspicious activity” by Tappe. NYU reported the theft to the Department of Education and the State Comptroller following an internal audit.

“We are deeply disappointed that an employee abused our trust in her in this way, and we are pleased that we were able to help end this misuse of taxpayers’ money,” Beckman wrote to the News.

According to university spokeswoman Karen Peart, when Tappe was hired, “like all Yale employees, she underwent pre-employment screening, including reference and background checks.”

The grants that Tappe was allegedly misappropriated were for New York State Department of Education programs that are administered by NYU. The programs – the Regional Bilingual Education Resource Network and the Disproportionality Technical Assistance Center – were designed to increase access to education for minorities and people with disabilities.

As part of the grant, NYU pays money to contractors, who receive and use grant funding. NYU agreed to a state requirement that a certain percentage of contractors be Minority and Women-Owned Businesses, or MWBEs.

The DA’s office alleges that Tappe arranged for three subcontractors, these subcontractors were not billed, to receive funding from the MWBE-designated grant. NYU paid these three companies approximately $3.5 million, but none of them fulfilled their contract. Instead, the three companies took 3-6% overhead and transferred the remaining $3.25 million to “two fictitious shell companies” created by Tappe: High Galaxy Inc. and PCM Group Inc. three companies also submitted fictitious invoices designed by Tappe to justify the payments.

The prosecutor’s office further alleges that Tappe used the two shell companies to steal at least $660,000 to pay for home renovations, including a “new $80,000 swimming pool” at her Westport home.

In 2018, an NYU program director confronted Tappe about payments being made to contractors. According to the comptroller’s office, Tappe then emailed the managers of the two education programs, explaining the work being done by MWBE’s contractors and “falsley” claimed that no other company could offer the same. services.

According to Emeritus Professor Steven Duke of Yale Law School, in situations like this, the state first tries to recover the money without resorting to litigation. When the state is unable to recover the money without prosecution, an indictment is served to compel the return of the funds.

“Once there is an indictment, unless the defense can show that the charges are wrong or extremely weak, refunding lost money will rarely result in the charges being dismissed,” Duke wrote to the News. “The state will insist on a plea, perhaps to reduce the charges.”

NYU was founded in 1831.