Martin Handler has been sentenced to 58 months in prison for defrauding the federal Head Start program, misappropriating over $1 million from his federally-funded childcare company, and tax evasion.
Handler pled guilty before U.S. District Judge Jennifer H. Rearden on March 15, 2024. Judge Rearden imposed today’s sentence.
According to the Indictment, public court filings, and statements made in court proceedings:
Handler participated in two related schemes involving the federal Head Start program and a third scheme to commit tax evasion.
First, between 2017 and August 2021, Handler secretly “owned” and exercised control over a non-profit entity, Project Social Care Head Start Inc., that until recently operated in the New York City area. The U.S. Department of Health and Human Services, which administers the Head Start program, annually granted to PSCHS millions of dollars that were to be used exclusively on the Head Start program and from which earning a profit is prohibited by law.
Through this control over PSCHS, Handler conspired to submit multiple fictitious documents to HHS that fraudulently asserted PSCHS had an independent board and had in place controls to guard against fraud, waste, and abuse.
In truth, PSCHS had neither an independent board nor sufficient controls in place, and Handler used his control over PSCHS to impermissibly direct PSCHS’s Head Start funding to his own for-profit companies through rampant undisclosed self-dealing. Indeed, through Handler’s “ownership,” he was able to secretly “sell” control over the proceeds of PSCHS’s federal funding streams for $4.7 million to a co-conspirator.
Second, between April 2019 and January 2023, as majority owner of New York City Early Learning Co., a for-profit entity that also received Head Start grants, Handler misapplied and misappropriated NYCELC’s corporate treasury funds to, among other things, repay personal loans and finance the leasing of luxury vehicles for the benefit of two members of NYCELC’s statutorily-required Head Start board.
Under the Head Start Act, members of that board owed a fiduciary duty to the Head Start program and were prohibited from having a financial conflict of interest with NYCELC. Handler corrupted NYCLEC’s Head Start program through his actions.
Third, in 2021 and 2022, Handler falsely reported to the Internal Revenue Service $2,000,000 in charitable contributions, thereby evading taxes of at least $740,000 for tax year 2021.
In addition to his prison sentence, Handler, 50, of Brooklyn, New York, was sentenced to three years of supervised release, ordered to pay a fine of $200,000, to forfeit $1,156,068.10, and to pay restitution of $1,156,068.10 to HHS, and to pay restitution of $740,000 to the IRS.
