School tech consultant target of contract probe

(Published in The Press of Atlantic City on Friday, Dec. 19, 2008.)

The federal government is investigating a technology firm for allegedly steering southern New Jersey and Philadelphia school contracts to favored vendors in exchange for kickbacks.

Consultant Martin Friedman on Thursday confirmed his firm, Alemar Consulting, of Broomall, Pa., is a target of an investigation that has led the Federal Communications Commission to freeze about $30 million in technology funding for schools in Atlantic City, Pleasantville, Wildwood, Asbury Park, Philadelphia and Salem County.

Investigators have focused on projects funded by the Federal Communications Commission’s E-Rate program, which funds technology upgrades for poorer schools through a telephone bill surcharge. All the affected schools have retained Friedman to manage their E-Rate applications, or hired one of four technology firms that win most of their contracts at Friedman’s schools.

The four firms did about 90 percent of their E-Rate work from 2002 through 2007 at schools where Friedman was E-Rate manager, according to an analysis of FCC data by The Press of Atlantic City. The FCC has not funded a single one of their E-Rate projects during the past two years.

FBI agents interviewed one of the firms, ComTec Systems of Vineland, last week. The other vendors are Micro Technology Groupe, Final Mile Technologies and Geoffrey P. Deans.

Friedman denied any wrongdoing. Although he refused to speak by telephone, he e-mailed the following response to a list of questions:

“ALEMAR is a leader and trusted source of E-Rate consulting. The government appears to be investigating it for allegedly steering contracts to certain vendors in exchange for kick-backs. The allegations are categorically false. ALEMAR has never done this and never would. The company is confident that after a full investigation, the government will conclude that these allegations are without basis.”

Federal agencies have declined comment on the investigation.

In 2003, Friedman’s recommendations to the Atlantic City School District led a competitor, RelComm, to sue and win a $1.3 million settlement over allegations of bid-rigging. RelComm had done about $4 million worth of Atlantic City’s E-Rate work before losing a 2003 bid to Micro Technology.

Atlantic City’s former technology coordinator, John Jones, lost his job after he objected to his school district hiring ComTec and Friedman. Jones later won more than $1 million in a whistle-blower lawsuit against the district.

The state fined Atlantic City schools for hiring Friedman and ComTec via no-bid contracts. Superintendent Fredrick Nickles said he thought the contracts did not need to be publicly bid.

ComTec President Michael Vertolli said Tuesday that investigators told him ComTec was not a target of the investigation. Vertolli could not be reached for comment Thursday.

Micro Technology Groupe Vice President Steve Katsman declined comment on the investigation but said that, in his experience, Friedman had proved an honest man.

“I would hope that this gets cleaned up, because this is not what E-Rate is supposed to be about,” Katsman said. “It’s supposed to be about helping kids.”

The E-Rate program has been susceptible to fraud in part because it’s so complicated. That complexity has forced many school districts and independent schools, particular smaller ones, to hire outside consultants who specialize in the program.

“In all my years in education, there’s nothing more complicated than E-Rate funding,” Nickles said Tuesday.

Representatives for each of the New Jersey schools affected by the FCC funding freeze said they knew nothing of an investigation.

Dave Bailey Jr., executive director of Ranch Hope for Boys in Salem County, said Friedman had told him the school’s $2.25 million in funding was being held up on appeal because it was a small school.

“My disappointment would be, why didn’t they tell the school districts?” Bailey said Wednesday.

Wildwood School Business Administrator Greg Rohrman was similarly stymied. He and Bailey praised ComTec’s work. Each dealt with Friedman rarely, typically when E-Rate applications are due.

Wildwood and Pleasantville have begun costly technology upgrades in anticipation of E-Rate funding. Each paid 10 percent of the project costs in anticipation of a 90 percent reimbursement from the FCC’s Schools and Libraries Division that would be sent through Friedman.

The schools could be responsible for the full costs, according to Vertolli.

Pleasantville replaced Friedman last week, and its state-appointed monitor, John Deserable, said an audit would be done if necessary. Asbury Park now has an in-house technology coordinator, and several Philadelphia charter schools no longer have Friedman listed as their E-Rate contact, according to the SLD database.

“Something just doesn’t feel right,” Deserable said.

Staff writer Lynda Cohen contributed to this report.

E-mail Daniel Walsh:

E-Rate work and Friedman

Four companies have done most of their E-Rate work at schools where Martin Friedman is the consultant. This chart shows how much of their work was at Friedman’s schools. The FCC has frozen about $30 million in funding to area schools on contracts handled by these firms.

Total    At Friedman’s

Company       E-Rate work  schools     Percentage

ComTec Systems        281    256                91

Micro Technology Groupe 276    206                75

Final Mile Technologies 96     91                95

Geoffrey P. Deans 45     45                100

Totals                698    598                86

Source: FCC Schools and Libraries program data

Press graphic