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Settled with federal prosecutors for $250,000.

The company Virtual Education Resources Network Inc. (Vernet), contracted by the Department of Education (DE) to provide tutoring and other services, entered into an agreement with the federal government to pay $250,000 in damages for collecting federal funds for services it never rendered.

In exchange, the Federal Prosecutor's Office reserves any charges against Vernet for possible criminal conduct, violations of the federal Internal Revenue Code, and even exclusions from participating in federal programs, according to documents filed last Thursday.

“This agreement is neither an admission of liability by Vernet nor a concession by the United States (the federal prosecutor's office) that its claims are not well founded,” the document states.

Vernet was one of the DE's providers for the Supplemental Educational Services (SES) program, an initiative in which the company Rocket Learning was also involved, which was criminally charged by federal authorities for running a fraud scheme to profit from federal funds of that program between 2011 and 2013.

The contract in question was awarded in 2012 for Vernet to provide services under the SES program consisting of tutoring after the school period and other remedial academic services. According to the lawsuit filed by the federal government, the investigation carried out by both the federal Department of Education and the Office of the Comptroller of Puerto Rico (OCPR) revealed that several of the invoices submitted by Vernet were for services that were never provided because the students did not attend the sessions.

Specifically, the plaintiffs state that it was a scheme that resulted in the submission of 45 false invoices to the DE. Each individual invoice constitutes civil damages and penalties that can be assigned fines ranging from $5,500 to $11,000. However, in mid-May of this year, Vernet and the federal government reached an agreement to pay only $250,000 in total civil damages and penalties in installments.

The agreed-upon amount, however, is far from the original amount of the contract, which was in effect until June 2013 and had a cap of $6,980,443.

The SES program has been the subject of several civil and criminal actions and was even the program that led to the scandalous arrest warrant from the Federal Court against former secretary Julia Keleher for the agency's failure to deliver documents for the Rocket Learning case.

Vernet was incorporated in 1999 by Manuel Figueroa Collazo and Jorge G. Diaz Rivera. Figueroa Collazo identifies himself as president of Vernet, is part of the Board of Directors of Triple-S Management Corp, and also of the Board of Directors of the Iniciativa Tecnológica Centro-Oriental (INTECO).

Díaz Rivera, for his part, is president of the company Camera Mundi, the local firm that provided the educational materials to the company Joseph & Edna Josephson Institute of Ethics for the “Tus Valores Cuentan” program. The reinstatement of that program, which was taught during and after the administration of Luis Fortuño, generated a controversy last year, particularly because it was a $16.9 million contract for five months of service at the DE.

The contracts that the DE made to reinstate the “Tus Valores Cuentan” program lie within the scope of the federal authorities' investigation against the agency. The actions of former secretary Keleher also remain under federal investigation, as they point to the alleged award of federal funds to benefit associates of the then secretary and the removal of trusted personnel who made allegations to that effect.

See here the lawsuit and the agreement with Vernet: