May 30, 2024
Finance

Former NYU finance director pleads guilty to $3.5M fraud scheme targeting minority and woman-owned businesses to fund her lavish lifestyle and $660K in renovations at her Connecticut home



By Noa Halff For Dailymail.Com and Associated Press

18:19 28 Feb 2024, updated 19:16 28 Feb 2024

  • Cindy Tappe, 57, of Westport, Connecticut, used her position at the Manhattan school to divert money intended for minority and women owned businesses
  • Tappe pleaded guilty Monday to grand larceny and has agreed to five years probation and $663,209 in restitution, according to the offices



A former finance director at New York University pleaded guilty to a $3.5 million fraud scheme targeting minority and woman-owned businesses that helped fund her lavish lifestyle and $660,000 in renovations at her Connecticut home. 

Cindy Tappe, 57, of Westport, used her position at the Manhattan school to divert money intended for businesses, the offices of Manhattan District Attorney Alvin Bragg and state Comptroller Thomas DiNapoli said in a joint statement Monday.

Tappe pleaded guilty Monday to grand larceny and has agreed to five years probation and $663,209 in restitution, according to the offices.

‘Her fraudulent actions not only threatened to affect the quality of education for students with disabilities and multilingual students, but denied our city’s minority and women owned business enterprises a chance to fairly compete for funding,’ Bragg said in a statement.

Bragg and DiNapoli’s offices say Tappe improperly routed $3.3 million to two shell companies she created while serving as director of finance and administration for NYU’s Metropolitan Center for Research on Equity and Transformation of Schools.

Cindy Tappe , 57, of Westport, Connecticut, used her position at the Manhattan school to divert money intended for minority and women owned businesses, the offices of Manhattan District (Pictured in April, 2023)
More than $660,000 was used to pay for Tappe’s personal expenses, including renovations to her home in Connecticut (pictured) and an $80,000 swimming pool
Tappe’s home in Westport, Connecticut, with the swimming pool she paid for with stolen cash, prosecutors claim

Some of the diverted funds were used to cover NYU-related expenses, including employee reimbursements, but more than $660,000 was used to pay for Tappe’s personal expenses, including renovations to her home in Connecticut and an $80,000 swimming pool, the offices said.

The diverted funds were related to $23 million in state Education Department grants awarded to the Metropolitan Center between 2011 and 2018, according to Bragg and DiNapoli’s offices.

Tappe’s lawyer Deborah Colson said her client has accepted responsibility, ‘strongly regrets her misconduct’ and plans to pay the required restitution in full prior to her sentencing on April 16.

‘After that, she looks forward to putting this case behind her,’ Colson said in a statement.

NYU said Tuesday that its internal audit office had investigated Tappe and turned over its findings to state officials, leading to the criminal charges.

Tappe pleaded guilty Monday to grand larceny and has agreed to five years probation and $663,209 in restitution, according to the offices (Pictured in April, 2023)
Cindy Tappe appears in Manhattan Supreme Court on fraud charges for stealing nearly $3.5 million dollars in school funds (April, 2023)
Tappe’s lawyer Deborah Colson said her client has accepted responsibility, ‘strongly regrets her misconduct’ and plans to pay the required restitution in full prior to her sentencing on April 16. The pair is seen in the courthouse after a pretrial hearing in April, 2023

‘We are deeply disappointed that Ms. Tappe abused the trust we placed in her in this way; she stole from everyone — the taxpayer, the University, the people the Metro Center is supposed to help,’ university spokesperson John Beckman wrote in an email. ‘NYU is pleased to have been able to assist in stopping this misdirection of taxpayer money, and glad that the case has been brought to a close.’

Tappe was put on leave from her new job at Yale in December 2022, after being indicted for embezzling millions in funding for the Manhattan school on personal expenses.

She had since started work as an operations manager at the Yale’s School of Medicine, but was suspended Monday after staffers learned of the charges.

In 2022, Tappe pleaded not guilty to using the stolen money to fund what prosecutors labeled a ‘lavish lifestyle’, with at at least $660,000 in renovations to her sprawling Connecticut home, and the aforementioned pool. 

Billed as having ‘excellence in the Comprehensive knowledge of financial and grants and has effective leadership and team-building skills’ on the Yale website, Tappe faced six counts of money laundering, grand larceny, and fraud for the alleged six-year scheme, and was released at the time without bail.

A spokesperson for Yale  – situated in New Haven, not far from Tappe’s two-acre, multimillion-dollar property in Westport – confirmed then that ‘Ms. Tappe has been placed on leave,’ but would not specify whether that leave was paid or not.

The elite school – which employed Tappe as an operations manager in 2018 despite staffers at NYU at that point uncovering her alleged misdeeds – insisted in a statement that Tappe was vetted before being hired.

The cash was to be spend on controlling two state programs: one to assist school districts in improving results for students learning English, and another to ensure that students in special education received fair treatment
State prosecutors maintain that instead of donating the money to minority and woman-owned businesses as she was supposed to, she lined her own pockets, spending at least $660,000 in renovations to her sprawling Connecticut home – including the aforementioned pool
Bragg and DiNapoli’s offices say Tappe improperly routed $3.3 million to two shell companies she created while serving as director of finance and administration for NYU’s Metropolitan Center for Research on Equity and Transformation of Schools

‘All potential employees are subject to reference and background checks,’ wrote spokesperson Karen Peat.

Following her indictment, NYU spokesman John Beckman said the school – which reported Tappes scheme to police upon uncovering it in 2018 – was ‘deeply disappointed that an employee abused the trust we placed in her.’

Beckman said that the school discovered the ‘suspicious activity’ from their senior staffer in 2018, leading to Tappe to hand in her resignation after being confronted. 

‘We are pleased to have been able to assist in stopping this misdirection of taxpayer money,’ Beckman said Monday.

In Manhattan district court , New York State comptroller Thomas DiNapoli asserted that Tappe stole the money to ‘fund a lavish lifestyle.’ 

Both DiNapoli and Manhattan District Attorney Alvin Bragg, alleged she concocted her scheme over six years from 2012 to 2018 with an elaborate system of shell companies to steal the cash. 

In Manhattan district court, New York State comptroller Thomas DiNapoli asserted that Tappe stole the money to ‘fund a lavish lifestyle,’ including host of renovations to her Westport home
According to Bragg¿s office, Tappe funneled the money – rung from $23 million in grant money awarded to an N.Y.U. center where she worked – using two companies she constructed, as well as by drafting false invoices for three subcontractors, who received a cut for no-show without doing the work

According to Bragg’s office, Tappe funneled the money – rung from $23 million in grant money awarded to an N.Y.U. center where she worked – using two companies she constructed, as well as by drafting false invoices for three subcontractors, who received a three to six percent cut for no-show jobs without doing the work. 

The cash was to be spend on controlling two state programs: one to assist school districts in improving results for students learning English, and another to ensure that students in special education received fair treatment.

The cash was to be spend on controlling two state programs: one to assist school districts in improving results for students learning English, and another to ensure that students in special education received fair treatment.

Under the terms of the grants, a certain percentage had to go to women- and minority-owned businesses, which would then administer those programs.  

Tappe took the $3.5 million, and instead of distributing it, sent it to the small group of subcontractors, who took a small cut and then sent roughly $3.4 million to the shell companies that she created.

Using those shell companies – High Galaxy and PCM Group – she then spent the money, including the hundreds of thousands of dollars that went to her own personal expenses.

A program director learnt of the scheme in 2018, and confronted her.

‘Our multilingual learners and students with disabilities deserve top-notch services, and these funds should have gone directly to their schools,’ said Bragg. 

‘Instead, we allege, the funds meant for student programs were used purely for personal gain by an NYU Director of Finance, who renovated a home in Connecticut and bought a swimming pool with the money. 

‘This $3.5 million fraud also negatively impacted our city’s minority and women owned business enterprises by denying them the chance to fairly compete for and secure the funding.’

She emailed the directors told them that the school had ‘developed good working relationships’ with the companies – but she was ultimately fired, and the case referred to DiNapoli’s office.

A N.Y.U. spokesman said they were ‘deeply disappointed’ by Tappe’s actions. They reported their staffer’ suspicious activity’ to police in 2018, but Tappe was still hired by
Alvin Bragg, the Manhattan DA, said that Tappe’s actions ‘negatively impacted our city’s minority and women owned business enterprises by denying them the chance to fairly compete’

NYU, meanwhile, maintains they were and are ‘deeply disappointed’ that a staff member could act in such a way.

The school added that when confronted, Tappe misled school officials about her relationship with the subcontractors and shell companies, before ultimately leaving the school.

The missing funds were then reported to the Manhattan’s DA office, who launched a more than three-year investigation culminating in Tappe’s arrest in 2022.

The probe, prosecutors sad, determined that the fraud began in 2012 when Tappe was promoted to director of finance and administration at NYU’s Metropolitan Center for Research on Equity and Transformation of Schools, and persisted until school officials confronted her in September 2018.

When contacted Tuesday, Tappe’s lawyer, Deborah Colson, declined to comment on her client’s case. If convicted, Tappe could face more than 25 years in state prison.



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