Attorney General Christopher S. Porrino announced that the founder and director of the School for Children with Hidden Intelligence (“SCHI”) in Lakewood, was indicted today on charges that he misappropriated over $630,000 in public tuition funds, using a purported fundraising foundation for the school in his alleged schemes to steal and launder money.
The private school’s founder and director, Rabbi Osher Eisemann, 60, of Lakewood, was indicted along with the purported fundraising foundation for the school, Services for Hidden Intelligence, LLC, on second-degree charges of theft by unlawful taking, misapplication of entrusted property and property of government, and money laundering.
The state grand jury indictment also charges Eisemann with second-degree misconduct by a corporate official.
SCHI receives approximately $1.8 million per month in tuition from the Lakewood School District and other public school districts that send special needs students to the school. The tuition rate is set using a state formula that is based on the “reasonable, ordinary and necessary” costs to educate the students, and all tuition funds must be used strictly for operating expenses of the school.
It is alleged, however, that Eisemann used the fundraising foundation, Services for Hidden Intelligence, to steal approximately $430,000 in public tuition monies for a personal business venture, and to misappropriate an additional $200,000 in a money laundering scheme intended to make it appear that he was repaying debts he owed to the school using personal funds.
The investigation by the Division of Criminal Justice revealed that the fundraising foundation, Services for Hidden Intelligence, was actually receiving money from its purported beneficiary, SCHI, rather than providing money to the school.
It is alleged that Eisemann used accounts of the foundation to fund a number of enterprises with which he was associated that had no relationship to the school. The investigation into alleged misappropriation of public tuition funds from SCHI is continuing.
The indictment returned today alleges Eisemann stole approximately $430,000 in operating funds from SCHI – specifically, public tuition funds entrusted to the school to educate special needs children – that he invested in a now-defunct clothing business, TAZ Apparel, LLC, that was operated by a business associate. This was a personal investment of Eisemann. Neither the school nor the fundraising foundation had any ownership interest in TAZ.
The investigation uncovered contracts between Eisemann and the business associate in which Eisemann agreed to finance the business up to $550,000, while the partner would manage its daily operations. Eisemann allegedly transferred the funds he stole for the private investment from SCHI’s operating account into accounts of the fundraising foundation. He then allegedly used funds in the foundation accounts to transfer approximately $277,000 to TAZ via checks and wire transfers, and to pay approximately $153,000 in AMEX expenses accrued by TAZ.
In the money laundering scheme, Eisemann allegedly transferred an additional $200,000 in public tuition funds from SCHI to the fundraising foundation. The stolen funds then allegedly were transferred through several unrelated entities and individuals, including TAZ, and ultimately into Eisemann’s personal bank account.
Eisemann subsequently paid the money back to the school from his personal account. Through this scheme, which was completed in six days, Eisemann allegedly obscured the origin of the money, so that he could use the school’s own money to create the false appearance that he was using personal funds from independent sources to repay debts he owed to the school.