Audit Finds Bilingual SEIT and Preschool Billed State Improperly The owners of a fast-growing Queens company that teaches toddlers with disabilities took nearly $1.5 million from a public preschool program, paying themselves inflated salaries and rent, and billing the government for their cars, children's furniture and even cosmetics, a state audit has found. The company's owners, who were once married, also violated tax regulations, gave the wife's sister a no-show job and wrongly billed the state for utility expenses incurred by a private day care business they operate on the side, investigators said. Investigators for the state comptroller, Thomas P. DiNapoli, referred their findings in the audit, to be released Thursday, to prosecutors in the Queens district attorney's office, his office said, and may also alert state tax authorities. State records show that billings by the company, Bilingual SEIT and Preschool, based in Flushing, exploded over the last decade, to more than $15 million in the 2010-11 school year, from $808,935 in 2002-3. Most of its revenue comes from employing "special education itinerant teachers," or SEITs, who work one-on-one with children in their homes or in nursery schools. But auditors examining just two years of the company's records said they found a wide array of overcharges and improper accounting: The executive director, Cheon Park, overpaid his wife, Hyun Ham, by more than $100,000 over that period, calling her an assistant executive director when she was really a payroll clerk. The two began paying themselves and other employees as independent contractors, avoiding payment of hundreds of thousands of dollars in taxes. And Ms. Ham, who owned the buildings where their company ran preschools, charged the state for the interest on her mortgages. Auditors said the couple, who have two school-age children, also billed the state during the 2007-8 and 2008-9 school years for a minivan and a Mercedes, for doll chests and expensive children's bedroom furniture, and for purchases from Club Libby Lu, a chain, now closed, that offered makeovers to girls ages 4 to 12. "Special education services are critical for thousands of children, and every tax dollar meant for them should be spent on them," Mr. DiNapoli said. Sadly, my auditors have found that has not been the case at Bilingual SEIT and Preschool. Mr. Park and Ms. Ham divorced in 2010, but auditors said they remained in business together. A lawyer for the company, Pamela Madeiros, declined to comment. The audit is the fourth of 18 under way examining the $2 billion preschool special education program, which relies on contractors to deliver services to more than 60,000 children ages 3 to 5 with physical, learning, developmental and other disabilities. Four contractors have been arrested. The program, whose costs are split between state and local governments, is far more expensive in New York than in other states, The New York Times reported last month. The number of children in the program is rising slowly, but expenditures have climbed rapidly as children receive more expensive services. Spending growth has been steepest in the SEIT program, which sends teachers out to work individually with toddlers, many of them autistic children who are given intensive behavioral therapy, as much as 35 hours a week in the most severe cases. In New York City, preschool special education costs annually have surpassed $1 billion, nearly double the amount six years ago. City officials say they are prevented from controlling costs by state regulations, and state officials complain that influential lobbyists for private contractors have blocked reforms in Albany. Contractors insist that malfeasance is relatively rare, and that the program makes financial sense because early intervention by specialists can avert more serious problems later. But auditors say the system encourages abuse. The rate at Bilingual SEIT, calculated by the state to cover the company's costs, has been $49 per half-hour, but that could be lowered as a result of the audit.