Non-Profit Executive Sentenced to 27 Months for Federal Fraud and Obstruction
A former executive affiliated with a New York City-based non-profit organization has been sentenced to 27 months in prison for his role in a scheme to defraud the federal Head Start program and obstruct a federal investigation.
Arie Rangott, 54, of Toms River, New Jersey, was convicted of conspiracy to defraud the government, submitting false documents, and obstructing a federal administrative investigation. His sentencing was handed down by U.S. District Judge Jennifer H. Rearden following a two-and-a-half-week trial.
The case centered around Project Social Care Head Start Inc. (PSCHS), a non-profit entity that received millions in federal funding through the U.S. Department of Health and Human Services (HHS) to support early childhood education for low-income families. Prosecutors argued that rather than ensuring the funds were used as intended, Rangott and his co-conspirators engaged in fraudulent practices to direct money to for-profit entities under their control.
According to court filings and trial evidence, between 2021 and January 2023, Rangott, acting as the shadow executive director of PSCHS, submitted fictitious documents to HHS to create the false appearance that the organization had an independent board of directors and adequate financial oversight. In reality, the organization lacked proper governance, and its leadership allegedly funneled funds to affiliated businesses through undisclosed self-dealing.
The fraudulent activities came under scrutiny when HHS sent a letter in December 2021 outlining concerns about financial mismanagement and self-dealing within PSCHS. Prosecutors stated that Rangott and his co-conspirators responded with a report containing false statements denying the allegations. In August and September 2022, when the HHS Office of the Inspector General launched an investigation, Rangott and his associates allegedly attempted to obstruct the inquiry by coordinating their responses and submitting false documents.
Several co-conspirators have already been convicted in connection with the case. Martin Handler and Menachem Lieberman, both of whom played key roles in steering federal funds to for-profit companies they controlled, pleaded guilty in March 2024. Handler received a 58-month prison sentence in October 2024, while Lieberman is awaiting sentencing. Another co-conspirator, Isidore Handler, pleaded guilty in September 2023 and was sentenced to 18 months in prison in December 2024 for his involvement in falsifying documents submitted to HHS.
In addition to his prison term, Rangott was sentenced to two years of supervised release.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service – Criminal Investigation, and the HHS Office of the Inspector General. Additional support was provided by the U.S. Department of Agriculture Office of the Inspector General and the New York City Department of Investigation.
The prosecution was handled by the Public Corruption Unit of the U.S. Attorney’s Office for the Southern District of New York, with Assistant U.S. Attorneys Jacob R. Fiddelman, Catherine Ghosh, Stephanie Simon, and Daniel H. Wolf leading the case.