A school executive was arrested for allegedly stealing $8.4 million — the second highest school theft sum ever on Long Island — and using the money to buy five homes on Fire Island, Suffolk County prosecutors said.
A grand jury indicted on July 5 David Ostrove, the chief financial officer of Williston Park-based Schechter School of Long Island, charging him with first-degree grand larceny and first-degree money laundering, both felonies. He pleaded not guilty during his arraignment in county court on July 25.
“This defendant was trusted to oversee and safeguard the funds of this institution; however, he violated that trust and instead stole money earmarked to educate children to fund his own lavish lifestyle,” said Suffolk County District Attorney Raymond Tierney. “These alleged violations are clearly not only a breach of the trust between an employee, employer, and students, they are against the law.”
The sum he’s accused of stealing is $3 million shy of the record $11 million Roslyn school theft scandal in 2004. The HBO movie “Bad Education” dramatization of that theft starring Hugh Jackman was released in 2020.
In the Schechter case, prosecutors said the 51-year-old West Islip man used the school’s PayPal and Stripe accounts to transfer school funds into his own personal PayPal account during his 11-year tenure as CFO and director of operations between March 2014 and April 2022. He allegedly transferred the school’s funds into multiple bank accounts at Bank of America and TD Bank where he was the sole account holder in a failed attempt to conceal the thefts, authorities said.
He then used shell corporations to purchase homes on FI — including two on Surf Road, one on Wilmot Road and another on Dehnhoff Walk in Ocean Beach — and pay $1.4 million to renovate the homes, ultimately generating $600,000 in revenue renting the homes between 2018 and 2021, according to investigators and reports. The shell corporations, incorporated within days of each sale, initially shielded Ostrove from being identified as the owner of the homes, prosecutors said. A half dozen of his shell corporations, including F.I., Inc., and Bayview Rentals Inc., were also indicted on money laundering charges.
Ostrove’s Huntington-based attorney John LoTurco released a statement to multiple local news outlets maintaining his client’s innocence.
“David Ostrove adamantly denies the allegations against him, and we will vigorously defend him through trial if necessary,” the statement read. “In the meantime, we will closely scrutinize the District Attorney’s evidence and financial records by retaining an independent forensic auditor to assess the accuracy of the prosecutor’s claims. It should be noted that Mr. Ostrove is presumed innocent, has no prior arrests, and has the love and support of his family who is endeavoring to post the disappointing exorbitant bail set by the court today. We will therefore represent our client zealously throughout the pendency of the criminal case and civil forfeiture matter to ensure the best possible outcome on behalf of our client.”
Prosecutors said Ostrove also allegedly used the stolen school money to buy a 1965 Mustang, a 2021 Lincoln Navigator and two Mercedes Benzes registered to his wife and daughter. In addition, he allegedly used the funds to pay his daughter’s college tuition, travel expenses, make home equity payments for his West Islip home, and buy expensive sports memorabilia and collectible coins that he auctioned off for profit, authorities said. That’s in addition to purchases at high-end clothing and jewelry stores, limousine trips and more than $1 million in cash withdrawals, according to investigators.
The school released a statement stating that Ostrove has been fired as a result of the charges, but said it was limited on how much it could say as a result of the ongoing investigation.
“We can say that the Schechter School of Long Island is financially sound, has always met and will continue to meet its fiscal responsibilities, and is looking forward to welcoming our growing student body back in September for the start of 2022-2023 academic year,” the statement read. “Moreover, in response to the serious issues raised by the investigation, the school has revamped its internal financial operations and has brought in a credentialed outside accounting firm with a specialty in schools to assist us through this transition, ensuring that our changes are effective, systematic, and reflect ‘best practices’ in a digital era. The school and its future will be better protected by this new model with improved reporting, oversight, and accuracy.
The statement was attributed to Head of School Dr. Scott Sokol, Board of Trustees President Bram Weber, Board of Trustees President-elect Jeffrey Shlefstein, and Elizabeth Kahn, director of Institutional Advancement.
Ostrove faces up to 25 years in prison, if convicted. Judge John B. Collins set Ostrove’s bail at $500,000 cash or $2 million bond, neither of which was posted as of this story. He is due back in court Sept. 19.
