Princeton Review Settles Claims in U.S. Civil Fraud Suit

Education Holdings 1 Inc., the school testing-preparation company formerly known as Princeton Review Inc., settled a U.S. fraud lawsuit claiming it repeatedly submitted false claims for reimbursement for tutoring services.

The U.S. Justice Department today announced the settlement of a suit filed in May in Manhattan federal court. The Justice Department claimed that Framingham, Massachusetts-based Princeton Review received tens of millions of dollars in federal funds for tutoring services to New York City school children that it didn’t provide. The U.S. said the settlement amount is as much as $10 million.

“The fraud here happened on a massive scale -- through the repeated and systematic subversion of the goals of a federal program intended to provide essential tutoring services,” U.S. Attorney Preet Bharara in New York said in a statement today.

Robin Weinberg, a spokeswoman for Education Holdings 1, didn’t immediately return a call seeking comment on the settlement.

Another company, TPR Education LLC, is now doing business as The Princeton Review. TPR Education, which purchased Princeton Review’s Higher Education Readiness division on May 18, wasn’t sued in the case, it said in a statement today. TPR Education didn’t buy Princeton Review’s Supplemental Educational Services division.

The scheme is alleged to have run from 2006 to 2010 in the Supplemental Educational Services division. Princeton Review closed the unit in 2010, it said in May.

False Entries

Princeton Review began participating in 2002 in a federally funded program to provide after-school tutoring to disadvantaged children in underperforming schools, according to the complaint. The company was paid a fixed hourly amount for each student it tutored.

According to the complaint, many of the company’s site managers routinely falsified entries on daily student attendance forms to make it appear as if more students were present for classes than actually attended.

The settlement was approved yesterday by a Manhattan federal judge. Education Holdings 1 “admitted, acknowledged and accepted responsibility for engaging in fraudulent conduct” while it was doing business as Princeton Review, Bharara said in his statement.

The case is U.S. v. Princeton Review, 12-cv-6876, U.S. District Court, Southern District of New York (Manhattan).