Education Holdings: Invented Lessons, Real Bonuses

Education Holdings, formerly The Princeton Review, agreed to pay up to $10 million in a tutoring settlement that included admissions of forged student signatures, false attendance records and invoices for lessons never delivered. The company admitted that pressure to meet attendance quotas ran through its New York City tutoring operation, while directors earned bonuses tied to the attendance their teams reported. If you worked with the sign-in sheets, attendance totals or invoices, this case shows how a record of a child’s supposed lesson became a claim for federal money.

This page follows the company’s admitted conduct and the payment terms it accepted after selling the Princeton Review brand. Our broader account of education fraud cases and settlements compares the different ways school and vendor records bring in public funds. Here, the important unit was an hour of tutoring for an individual student, and the company supplied the paperwork that said the hour had happened.

What Did Education Holdings Admit About Tutoring Attendance?

Education Holdings admitted that site managers routinely falsified attendance sheets, including by forging student signatures, and that the company used those sheets to prepare false invoices. The court-approved settlement agreement covers August 2006 through June 2010, when the company operated as The Princeton Review. Its Supplemental Educational Services program provided after-school tutoring to underprivileged students attending underperforming public schools in New York City.

The public funding path ran from federal Title I money through New York State to the New York City Department of Education, which paid the company a fixed amount per hour for each student tutored. The payment unit made attendance a financial record. Reporting an extra student at a session increased the tutoring hours the company could put on an invoice.

The company’s daily forms were supposed to record students signing in and out, and payment required a certification that the attendance records were accurate. Site managers oversaw the tutoring operation day to day. Their supervisors, called directors, repeatedly demanded daily attendance quotas and pressured them to maintain high numbers. The company admitted that some site managers were terminated or had their pay cut for failing to maintain high attendance.

The directors had a financial reason to keep that pressure on. The agreement describes the bonus arrangement in the company’s own admissions:

That arrangement rewarded the reported attendance moving up the management chain. The same attendance sheets then supplied the invoices moving to the public payer. The paperwork attended every class.

The Attendance Sheets Contradicted the School Day

The Justice Department’s account of the complaint and settlement describes attendance sheets on which students’ own names were misspelled and children appeared as present when their parents confirmed they were absent. It also describes payments for tutoring on days when city records showed the students absent from school or the school closed. Those examples put the billing record beside people and records outside the tutoring company’s own reporting chain.

For an insider, that is a concrete comparison: the student shown on the form, the date of the supposed lesson and what the school or family knew about that day. A site manager’s attendance total could look complete while the underlying entries told a different story. The company separately admitted using falsified attendance sheets to prepare invoices certifying their information as true and accurate, obtaining millions of dollars in federal payments for thousands of tutoring hours never provided.

A Warning Reached the Vice President

The corporate admission also reached above the directors. Education Holdings acknowledged that the vice president in charge of its New York City tutoring program had been put on notice of the attendance falsifications, failed to take adequate remedial action and allowed them to continue.

That puts the response to a warning alongside the original attendance record. Someone who raised a discrepancy may know when management learned about it and what happened to the reporting afterward. The settlement’s account joins those decisions to the same false invoices.

The Princeton Review Brand Had Already Been Sold

The defendant identified in the agreement was Education Holdings 1, Inc., formerly The Princeton Review, Inc. In May 2012, it sold its Higher Education Readiness division, including the Princeton Review name and brand, to an unaffiliated third party.

The company also certified that it had terminated its Supplemental Educational Services division in 2010. By the settlement, its sole operating division and business asset was a distance-learning company offering online degree and vocational programs in the United States and abroad. That remaining business matters because the settlement tied much of the promised money to a later sale or change in control.

For someone who knew the business before the sale, the familiar brand and the legal company are different parts of the story. We connect the attendance records, invoices and management decisions to the entity responsible for them at the time.

What Did the Contingent Settlement Require?

The settlement required an initial payment followed by payments tied to the company’s remaining business. The federal court approved it on December 19, 2012, and the Justice Department announced it the following day. The initial payment was due within five business days of court entry. Most of the promised money depended on a later sale or other change in control and the proceeds it brought in.

In the settlement agreement, Education Holdings said its financial condition and dependence on third-party lenders limited what it could pay. The United States relied on those representations. We see a small payment due outright against the millions the company admitted taking for undelivered tutoring. Most of the repayment needed a deal.

In the civil settlement, Education Holdings also agreed to stay out of federal contracts and other federal funding transactions for three years. Before returning to those transactions, the company had to notify the United States and implement a compliance program acceptable to it.

Which Records Connect Tutoring Attendance to Payment?

The connection runs from the lesson and attendance sheet through the company’s certification to its invoice and the city’s payment. In this case, the agreement identifies the people who controlled the attendance entries, the supervisors who demanded the numbers and the executive who received notice of falsification. Each position offered a view of a different decision behind the same claim.

A person working at the tutoring site could know whether the student attended and who entered the signature. A supervisor could know what attendance target was demanded and how reported totals affected bonuses. Someone involved in invoicing could know how those sheets became charges to the city. We work with the insider’s view of those records to connect the service reported to the public money paid.

The comparison becomes more revealing when the records disagree. An internal message about a discrepancy can connect the false attendance to a decision to keep using it, rather than leaving the story at a suspicious signature.

Our approach to connecting school records to public payments follows those changes and decisions through to the claim. For a tutoring vendor, that means understanding what service the contract paid for, who recorded it and how the company converted that record into an invoice. A person who knows the attendance system may see the false hour long before the invoice reaches the payer.

TestQuest Shows Why a Signature Needs a Lesson Behind It

TestQuest admitted a parallel attendance-to-invoice scheme in a separate tutoring case. Its settlement stipulation describes tutors and aides collecting student signatures in cafeterias and at sports activities, forging signatures and certifying tutoring that had not occurred. The company used the records to generate hourly invoices per student and obtained federal funds passed through state and city authorities.

The cafeteria signatures make the problem particularly clear. Even a signature obtained from the student could be attached to a claim for instruction the student never received. Education Holdings’ admitted quota and bonus system shows another part of the same pattern: management had reasons to want the attendance total higher, and the company used the resulting records to bill for services. Each case connects what happened around the tutoring session to what the public payer was told.

Do False Tutoring Hours and False College Attendance Involve the Same Claim?

False tutoring hours can support an invoice for purchased instruction, while false college attendance can affect student aid and the amount a school must return after withdrawal. Education Holdings’ invoices charged the city for hours of tutoring. The neighboring discussion of college attendance and grade changes follows academic records into a different payment system.

The Whistleblower Case Behind the Corporate Admission

A private whistleblower brought the False Claims Act case, and the United States later joined it against Princeton Review. The U.S. Attorney’s Office for the Southern District of New York handled the civil case with assistance from the Education Department’s Office of Inspector General. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know Whether the Tutoring Happened

If the attendance sheets or invoices you worked with claimed lessons that never happened, speak with our whistleblower experts about what you saw. We build the case with you, bring in education fraud whistleblower lawyers who understand publicly funded tutoring, and stay beside you as the case moves from your account of the lessons to the government’s claim for its money.