U.S. sues Princeton Review for fraud

NEW YORK (CNNMoney) -- Princeton Review, the company behind the test prep books, is being sued by the U.S. government for allegedly bilking a federal program for underprivileged children.

According to a civil lawsuit filed Tuesday by the U.S. Attorney in New York, Princeton Review was paid "tens of millions of dollars" to provide after-school tutoring for students at troubled New York City schools from 2002 to 2010.

The lawsuit alleges that the company and a former employee, Ana Azocar, falsified records for services rendered in order to inflate the amount of money Princeton Review was paid under the tutoring program.

"The Princeton Review and its employees were supposed to tutor needy students, not cheat a federal program," said Manhattan U.S. Attorney Preet Bharara, in a statement.

Prosecutors said Princeton Review employees forged student signatures, falsified sign-in sheets, and provided false certifications in order to increase the company's payment as a provider of Supplemental Education Services (SES).

The company closed its SES division in 2010 and most of its current management came on board after the alleged activity occurred, according to a Princeton Review spokesperson.

"We are working closely with the U.S. Attorney's office to resolve this matter expeditiously," the spokesperson said.

According to the lawsuit, Princeton Review gave bonus payments to Azocar, a director at one of the company's tutoring locations, totaling more than $16,000 over two years because her employees consistently reported high attendance.

Attempts to identify and contact a lawyer for Azocar were unsuccessful.

Prosecutors charged that Princeton Review's daily attendance forms and invoices were "replete with falsifications."

In particular, Princeton Review was paid for services on days when official records show that students were absent or school was closed, according to the lawsuit.

On New Year's Day in 2008, Princeton Review is accused of billing the New York Department of Education for tutoring 74 students at a middle school in the Bronx when the school was closed and there were no SES classes.

In another example, a student was signed in as present at a Princeton Review tutoring class for four days when the student was actually on vacation in Mexico, according to prosecutors.

The alleged activity was brought to Princeton Review's attention in 2006, but the company failed to take action to correct the misconduct, according to prosecutors.

Princeton Review (REVU) provides test preparation services for college entrance exams and publishes study guides. It is not affiliated with Princeton University.