FOR three years, Board of Education headquarters officials ignored red flags signaling irregularities in the awarding of $6 million in computer contracts in a Queens school district, a Post investigation has found.
If the board officials hadn’t bungled their jobs, they very likely would have uncovered a suspected bid-rigging scheme involving District 29 Superintendent Celestine Miller and developer Thomas Theodore Kontogiannis that cheated students out of sorely needed computers.
A Queens grand jury is now hearing evidence to determine whether Miller steered three contracts to Kontogiannis’ associates in exchange for thousands of dollars in gifts and payoffs made through a series of real-estate deals.
Board of Ed officials also turned a deaf ear to a courageous businessman who tried to blow the whistle on the scandal – sending him away and ultimately into the arms of goons who beat him.
“They let Miller do whatever she wanted,” a well-placed investigative source said. “Controls broke down, and the bidding processes were circumvented and never clearly monitored.”
Another source added, “They did not even see that the equipment was totally outdated and virtually useless from the day it was installed.”
A spokeswoman for Schools Chancellor Harold Levy declined comment because of the pending investigation.
Here – gleaned from public records and interviews with government sources and Kontogiannis – is an anatomy of the scandal, which investigators say raises serious questions about how the Board of Ed polices the $11 billion it spends annually.
Business dealings between District 29 in Rosedale and Kontogiannis date back to 1989, when the local board leased offices at 1 Cross Island Plaza, built in 1985 by Kontogiannis and owned by his wife.
Miller, appointed in 1992, ran the district with an iron fist, but treated herself with kindness – leasing a Cadillac with district funds, sources said.
About the time of Miller’s appointment, Kontogiannis ran afoul of the law. He and an official at the U.S. Embassy in Athens were arrested by the FBI for taking bribes to provide phony U.S. visas.
Both pleaded guilty, and Kontogiannis was sentenced to five years’ probation.
He told The Post recently he was only trying to help a Greek national visit his dying mother in the U.S. Sources said his motive was pure greed.
As for his first dealings with Miller, he said he and wife Georgia befriended the “very pushy” schools superintendent to help her and the district’s students.
“Just doing good deeds,” he said.
Kontogiannis told The Post he convinced Miller to hire him to rehabilitate a number of classrooms for $150,000 without going through the laborious bidding process.
He said he did such a good job, Miller turned to him again in February 1996, when she had a $1.2 million computer contract to award – even though he knew nothing about computers.
“I said, ‘Why don’t you give the job to one person to take care of everything,'” he recalled, adding that he recommended his lawyer, Raymond Shain, a computer fanatic.
Miller sidestepped normal Board of Ed procedures by declaring an “emergency need” for the computers. Her use of the rarely invoked clause should have caught the attention of the Board’s Office of Procurement Management, but it did not, investigative sources say.
Then she named Shain as an unpaid consultant.
He obtained four bids – and three turned out be phony, investigators said.
The winning bidder was BIT Technology, a company owned by Kinson Tso, a friend and business associate of Shain and Kontogiannis.
The three men split the $1.2 million, with Shain creating his own company with his wife to work as subcontractor and Kontogiannis paid 20 percent as consultant, according to sources, and Kontogiannis himself.
“We are not the cheapest people in town, but if you want someone to get it done, we are the guys,” he told The Post.
In December 1996, Miller purchased her first piece of property with Kontogiannis’ financing.
The house at 179-31 Anderson Road in Jamaica was purchased for $108,000 using a $97,200 mortgage from one of his companies.
Investigators believe Miller never paid a down payment or a monthly fee during the year she owned the house, which she sold for a tidy $32,000 profit.
Investigators said they believe the profit was a payoff for the 1996 contract.
In March 1997, Miller bought four more houses valued at nearly $1 million from Kontogiannis with virtually no down payments.
Around the same time, Miller had a second contract to award – for $2.2 million.
This one caught the attention of the Office of Procurement Management because money was paid out before a bid had been accepted, investigative sources say.
Miller claimed the contract was an extension of the 1996 “emergency” contract, the sources say.
Because children were preparing to return to school, OPM inspectors rubber-stamped the project, the sources said.
“They felt they were in a no-win situation,” a source said. “The contract was already in the works, and if they stopped the project, the parents might scream.”
As with the first contract, the $2.2 million deal went to Tso, Shain and Kontogiannis – and the other bids were phonies, investigators said.
It was the third $2.9 million contract that officials could no longer ignore.
Five bids were received. Two were phony. One was high and submitted by a company owned by a friend of Tso.
The low bid was submitted by Frank Mosco’s Web Wide World.
But before the bids were opened, a Mosco business associate was warned to stop seeking the contract by a man claiming to be Shain, sources said.
Mosco ignored the warning, but Shain and Miller ultimately convinced OPM there were technical flaws in his bid.
The contract went to Tso, with Shain and Kontogiannis getting part of the action as paid consultants.
Mosco complained to the Board of Ed.
“We believed the work started even before the bid was given,” Mosco told The Post.
OPM and other school officials brushed him aside.
“I complained to everyone,” he said. “There was just no response. Just a stonewall.”
Mosco finally called the city’s Department of Investigation, which steered him to Special Schools Investigator Edward Stancik.
Stancik mounted a two-year probe with Queens District Attorney Richard Brown.
Miller, through her lawyer, denied any wrongdoing. Tso declined comment, and Shain did not return calls.
After Brown issued grand-jury subpoenas a few months ago, Mosco was attacked by four goons, who dragged him into a van and warned him to “keep your mouth shut” before dumping him on the pavement.
“My hope is that the bad guys go to jail and my story that we are the good guys comes out,” Mosco said.