Couple charged in $2.5 million preschool scam

Federal prosecutors on Friday charged a New York City couple with stealing at least $2.5 million in federal funding meant to finance nutritious lunches for preschoolers in the city.

From the New York Post:

The feds say that Joanna Fan and Ziming Shen, who are administrators of a nonprofit organization that runs "Red Apple" nursery, preschool, and kindergarten educational programs in Manhattan, Brooklyn, and Queens, misappropriated millions of tax dollars between between January 2004 – June 2010 that were provided by the US Department of Agriculture.

According to prosecutors, of the $2.7 million in government money received by a Red Apple subsidiary between June 2005 and March 2010, only $24,000 was spent for food. Court documents say that Fan "stole approximately $1.8 million of [nutrition] program funds in 2008 and 2009" alone. Fan allegedly used $200,000 to make payments on three condos in Manhattan. $156,800 was wired to a furniture company Shen owns in Shanghai, China.

The New York Times reports that Red Apple Child Development Center runs six preschools in Queens, Brooklyn, Manhattan and Staten Island, and is a large provider of prekindergarten services to the Asian community. In 2008, Red Apple had around $11 million in revenue, with about half that money coming from the federal government.

Robert Nardoza, a spokesman for the United States attorney for the Eastern District of New York, told the Times the couple's alleged crime “amounts to one of the largest lunch money thefts in history."

The couple plead not guilty on Friday in United States District Court in Brooklyn. They posted bail of $750,000 each, and were ordered to surrender their passports.

“They’re going to defend this vigorously, and obviously all the facts have not come out,” Shen's lawyer Barry Agulnick said.

After the couple posted bail, Shen got into an altercation with a press photographer. According to the Post, Shen "karate chopped and kicked wildly, bloodying one photographer," and had to be arrested by police a second time.