Jewish Schools Win Slice of $18M Settlement

Contractor Overcharged for Food Services in New York

By Seth Berkman

Published September 19, 2012.
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Four Jewish schools in New York City will receive part of an $18 million settlement after the state Attorney General’s office found that a food contractor overcharged clients for seven years.

From 2003 to 2010, Compass Group USA received various rebates from food vendors, but did not disclose or pass on those savings to more than 39 New York schools, which is required by law. As a result, schools were “charged more than was permitted for the food provided by Compass,” according to a press release issued by Attorney General Eric T. Schneiderman’s office.

Manhattan Day School, Magen David Yeshiva, Ramaz School, and Salanter Akiba Riverdale Academy are four of the five city schools that will receive settlement funds. Westchester Day and Westchester Summer Day will also receive compensation. In addition to the settlement, Compass will institute a nutritional code of conduct to comply with the Healthy, Hunger-free Kids Act passed by Congress on January 25. Measures of the code include partnering with local food suppliers to ensure a higher quality of healthy food delivered to students.

Compass must also provide quarterly disclosures to its educational clients in New York state, as well as semi-annual reports of its sales and rebating practices.

“Compass improperly profited by overcharging New York’s taxpayers and shortchanging our schools. There are no excuses for this kind of misconduct,” Attorney General Schneiderman said in a statement, also noting that Compass would be “held accountable for siphoning funds meant to benefit students.”

Each school’s contract is negotiated directly with Compass, based on state and federal regulations. The school’s can decide whether or not to continue business with Compass, who as part of the settlement, must establish a hotline for questions concerning rebates and pay for an independent auditor’s review of its rebating practices.

Compass issued a statement to the Forward, which said that “a misinterpretation of the New York contracts,” caused the company “to neglect to complete proper reconciliation of operating costs to the K-12 schools. “ The company said that K-12 contracts in New York are “distinct and unique“ and that once they were made aware of the transgressions, Compass immediately offered to pay what was due to the schools.


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