BY STEPHEN MCGUIRE

Computers were without software, printers were without ink and the nearly half the district’s contract money went into the pockets of six people indicted this week for the "financial rape" of School District 29, according to prosecutors.

"They cheated all of us," said District Attorney Richard Brown just prior to the Wednesday, Nov. 1 arraignment of former District 29 Superintendent Celestine Miller, her husband William Harris and four others on charges that they pocketed Board of Ed funds.

Among those charged were:

• Thomas Kontogiannis, a prominent businessman and owner of 11 of the 14 corporations indicted. Kontogiannis is also the landlord of 1 Cross Island Plaza, the building that houses School District 29’s offices.

• Ray Shain, an attorney and principal of R.J. Computer Consultants, which along with his law firm was named in the indictments.

• Kinson Tso owner of Business Innovative Technology (BIT), the corporation awarded the computer contracts

• Eric Ruland a paralegal for Shain’s law firm

According to the charges, in 1996, School District 29 sent forth a proposal for bids on a $1.2 million dollar contract to install computers at four separate district schools and allegedly submitted false bids which made it possible for Miller to award contracts to BIT– the computer corporation owned by Tso.

Millions were stolen from funds that should have put computer labs in schools, according to Board of Education Special Investigator Edward Stancik (left), District Attorney Richard Brown (center) and Board of Education Chancellor Harold Levy. PRESS Photo By Ira Cohen

Investigators said, soon after the first awarded contract of $1.2 million, BIT opened a bank account at a European American Bank in Massapequa NY where records indicated that the company deposited contract payments and began issuing checks to Kontogiannis and Shain.

In 1997, Miller allegedly awarded a second computer contract worth over $ 2 million to BIT for computer labs at five District 29 schools.

Authorities said that it was soon after that Miller and her husband were given the deeds to four houses in Southeast Queens by Kontogiannis, who allegedly tried to cover up the transfer of the homes by creating paper mortgages to make it look like that Miller and her husband bought the property.

In 1998, BIT was again allegedly awarded a third contract worth over $2 million.

Investigators said that soon after, Miller and her husband received checks as well as payments on the couple’s American Express bills that were reportedly paid by Kontogiannis.

"Together the three contracts totalled $6,364,570," said Brown who added that the defendants Kontogiannis and Shain received over $2 million of the contract money and that Miller and Harris received bribes amounting to $925,000.

All of the defendants – except for Harris who faces 15 years if convicted – could be sentenced to 25 years in jail if found guilty.

Schools Chancellor Harold Levy called the indictment a very serious and painful matter.

"I hope this will make it clear that fraud will be found and dealt with," said Levy.

"Brazen does not even describe the role Miller played," said Edward Stancik, the special commissioner of investigation for the New York City School District.

The taxpayers and the students were the losers," Stancik added explaining that the computer equipment installed as part of the awarded contracts was faulty and in many instances went unused, or remained idle or broken.

" I was filled with a sense of outrage," said Terri Thomson, Queens’ Board of Education member after hearing the news of the indictments.

Calling the case one of the worst the Board of ed has ever seen, Thomson said it would be a "tragedy" if the allegations prove to be true.

"There is no place in this system for actions like this." Thomson added.