David Ostrove, ex-Schechter School CFO, stole $8.4M from school to fund 'lavish lifestyle,' prosecutor says

A former Williston Park private school chief financial officer stole $8.4 million in school revenue to fund a “lavish lifestyle” for himself and his family, a Suffolk prosecutor said during opening arguments at his criminal trial Monday.

David Ostrove, 52, of West Islip, is charged with first-degree grand larceny and first-degree money laundering in the trial before state Supreme Court Justice John Collins in Riverhead.

An 11-year employee of the Schechter School of Long Island, Ostrove is accused of diverting the funds over an eight-year period from school PayPal and Stripe accounts into personal banking platforms and using the money to buy three luxury vehicles, sports collectibles, historical memorabilia, coins and five homes on Fire Island.

“The Schechter School administration put complete trust in [Ostrove] to conduct financial transactions on behalf of and in the best interest of the Schechter School and its students,” Assistant Suffolk County District Attorney Jessica Lightstone told the jury of seven women and five men during her opening argument. “ … The defendant violated that trust and made numerous financial transactions using the school's money, which was not in the best interest of the Schechter School and its students.”

Lightstone said Ostrove made 786 transfers from business accounts he established in the name of Schechter School, a K-12 Jewish day school educating more than 250 students, to his personal PayPal and bank accounts from 2014 to 2022. The school is funded largely through tuition payments and charitable gifts.

After PayPal froze the school’s account over concerns about the transfers, Ostrove continued to make transfers from a school Stripe account to another personal bank account, Lightstone said.

“The school completely relied on the defendant … and they got burned for it,” Lightstone said. “As all the while, he was stealing millions of dollars out from under them.”

The Suffolk County District Attorney’s Office launched its investigation after being notified by PayPal officials of a potential fraud involving the school, Det. Investigator George Bean testified Monday. Bean, the only witness to take the stand on the trial’s first day, said his investigation revealed not only that Ostrove had exclusive access to both the school and personal PayPal accounts, but that he later moved the funds into bank accounts in his name.

Bean said his investigation led him to connect the purchase of five Fire Island five homes between 2018 and 2021 with funds from Ostrove’s personal bank accounts to corporations registered to his home address. The corporations have also been charged with second-degree money laundering.

Lightstone said Ostrove used school funds to make “top-of-the-line” upgrades to the properties, which earned him more than $600,000 in rental income between 2018 and 2022.

Bean told the jury he first approached Ostrove in March 2022 at a school business office, where a “calm and cooperative” Ostrove told him the homes were purchased as “personal investments.” A month later, after Bean brought his findings to the former head of school and school board president, Ostrove was suspended from his job as chief financial officer and chief technical officer, the detective testified. He was arrested in July 2022, court records show.

Defense attorney Ralph Franco Jr., of Manhattan, in his own opening argument, questioned how one school official could be the sole person blamed for such a substantial alleged theft at a private school that is part of a “multinational” day school network.

“The prosecution is suggesting that for a period of roughly eight years, Mr. Ostrove would have stolen in excess of $1 million a year and nobody knows,” Franco told the jurors. “Just think about that.”

Franco said the theft would have gone unnoticed by a handful of other employees and administrators at the school working closely with Ostrove, an 11-member budget and finance committee, a 22-member school board of directors and an independent accounting firm that conducted annual audits of the school’s finances.

“And there were no red flags,” the defense attorney said, adding that in addition to his school job, Ostrove had income from a private accounting practice and from trading in collectibles.

In a separate civil claim filed in January, Schechter School of Long Island accused Ostrove of stealing $11.7 million from the school, even more than alleged in the criminal case, which is expected to continue for five weeks. Schechter School is seeking a monetary judgment of “not less than $35,100,000 representing compensatory and punitive damages,” according to its notice. 

Bean will continue his testimony when the trial resumes Tuesday.

By Grant Parpan

grant.parpan@newsday.com@GrantParpan

Grant Parpan covers Suffolk County courts and federal courts for Newsday. A Long Island native, he joined Newsday in 2022.