Misconduct, Crimes and Conflict of Interest At The DOE

Juan Gonzalez exposes more into the Judith Hederman/DOE/outside consultant scandal. Investigators are now aiming at not only the outside consultants who marked up bills to the DOE by as much as 600% but also "DOE officials" connected with the company:

A top Department of Education official who quit after admitting to an affair with a consultant she supervised passed him inside information - and approved a $60,000-a-year raise for him, records show.

Judith Hederman, the $168,000-a-year executive director of the DOE's division of financial operations, resigned May 4.

That was day the Daily News revealed that an unidentified DOE official told the office of Special Commissioner on Investigation Richard Condon she had a "personal relationship" with a top executive of Future Technology Associates, a Florida-based firm she supervised.

DOE officials later confirmed Hederman was the unnamed official.

FTA, which has received nearly $100 million in city contracts, mostly to service the DOE computer system, has been under investigation for more than a year.

In recent weeks, city Controller John Liu has launched an audit of the firm's work.

Condon's probers believe FTA's two owners, Tamer Sevintuna and Jonathan Krohe, used a web of secretly owned subsidiaries in the U.S. and Turkey to supply programmers to themselves.

The two then "profited from enormous markups" on those consultants to the DOE, according to papers Condon's deputies filed in Manhattan Supreme Court last week.

Some programmers employed in Turkey by a Sevintuna and Krohe subsidiary, for example, were paid only $3,000 a month, but FTA billed the DOE more than $22,000 a month for their work.

No criminal charges have been filed against the firm or its owners.

Condon's office has had to reveal details of the ongoing probe in a civil court case, where Sevintuna and Krohe tried to quash a subpoena for them to be questioned under oath.

The latest court papers, filed by Condon's deputy Gerald Conroy last Friday, claim SCI's probe is "focused on misconduct, crimes and conflict of interest ... not only by persons affiliated with FTA, but by DOE officials."

"On Jan. 20, 2008, the DOE official used proprietary DOE information to warn the person [in FTA] with whom the official was involved about a DOE deputy chancellor's inquiry into FTA's increased expenditures charged to the DOE," the papers say.

Two DOE sources familiar with FTA said Hederman's relationship was with Krohe, who owns 40% of the company. Sevintuna owns the other 60%.

Neither Krohe nor Hederman, whose husband also works for the DOE, returned calls for comment.

Krohe's lawyer Gordon Mehler said he has advised his client against any interviews.

In court papers Mehler filed last week, he withdrew any objections to his client speaking to Condon's investigators.

Krohe and Sevintuna have also received hefty individual salaries from the DOE for years.

Under a previous no-bid contract that began in 2006, Krohe was paid $245,000 annually.

In September 2009, the DOE's Panel for Educational Policy approved a new $43 million contract for FTA.

Krohe's salary in the new contract jumped to $306,250 - a $61,000 hike, DOE records show.

Hederman was the official who submitted that contract for approval and praised FTA's performance.

"One of the many unanswered questions about the [personal] relationship is whether it affected the DOE's purported pleasure with FTA performance," Conroy wrote.

So far, Hederman seems to be the only DOE official connected to the case and under investigation.

But the court papers filed last Friday say the Special Commissioner of Investigation's probe is "focused on misconduct, crimes and conflict of interest ... not only by persons affiliated with FTA, but by DOE officials" which seems to indicate there may be at least one additional DOE official involved.