Babbage Net School, Inc. v. Board of Education of the City of Chicago

2022 IL App (1st) 172032-U
CourtAppellate Court of Illinois
DecidedApril 8, 2022
Docket1-17-2032
StatusUnpublished

This text of 2022 IL App (1st) 172032-U (Babbage Net School, Inc. v. Board of Education of the City of Chicago) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Babbage Net School, Inc. v. Board of Education of the City of Chicago, 2022 IL App (1st) 172032-U (Ill. Ct. App. 2022).

Opinion

2022 IL App (1st) 172032-U

FIFTH DIVISION April 8, 2022

No. 1-17-2032

NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1).

IN THE APPELLATE COURT OF ILLINOIS FIRST JUDICIAL DISTRICT

BABBAGE NET SCHOOL, INC., a corporation, ) Appeal from the Circuit Court of ) Cook County. Plaintiff-Appellee, ) ) v. ) ) 16 L 10351 BOARD OF EDUCATION OF THE CITY OF ) CHICAGO, ) ) Honorable Patrick J. Sherlock, Defendant-Appellant. ) Judge Presiding.

JUSTICE CONNORS delivered the judgment of the court. Presiding Justice Delort and Justice Hoffman concurred in the judgment.

ORDER

¶1 Held: Trial court did not abuse its discretion when it refused to admit the facts to which plaintiff pled guilty in a federal criminal case to show modus operandi; plaintiff’s witness did not open the door to evidence of the facts to which he pled guilty; trial court did not abuse its discretion when it refused to instruct the jury on fraudulent misrepresentation; affirmed.

¶2 After a trial, a jury found that defendant, the Board of Education of the City of Chicago

(Board), breached its contract with plaintiff, Babbage Net School, Inc. (Babbage). Babbage was No. 1-17-2032

awarded damages of $375,620.27, which were later reduced to $354,358.75. On appeal, the

Board contends that the trial court improperly refused to admit evidence of Babbage’s

nationwide scheme to defraud school districts. The Board asserts that the trial court should have

(1) admitted the facts to which Babbage and its president/CEO, Kabir Kassam, pled guilty in a

federal indictment as evidence of modus operandi, (2) allowed the Board to impeach Kassam

with the facts to which he pled guilty, and (3) instructed the jury on the Board’s affirmative

defense of fraudulent misrepresentation. We affirm. 1

¶3 I. BACKGROUND

¶4 In September 2014, Babbage filed a complaint for breach of a contract under which

Babbage was paid to provide a tutoring program to students in Chicago Public Schools (CPS).

Babbage alleged that the parties entered into the contract in October 2013, but the Board did not

pay for all of the services provided, leaving a balance of over $354,000. The contract between

Babbage and the Board, which was attached to the complaint, stated that the contract ran from

October 23, 2013, to June 30, 2014, unless it was terminated sooner. If, at any time during the

contract term, the Board determined that the services provided by Babbage were no longer in its

best interest, the Board had “the option to terminate this Agreement on thirty (30) calendar days

prior written notice to [Babbage] and the State Superintendent of Education.” The Board also

had the discretion to terminate the agreement on written notice to Babbage and the State

Superintendent of Education when, in the opinion of the Board’s Chief Teaching and Learning

Officer, Babbage was unable to meet certain academic achievement goals and timetables.

1 The Board’s brief was filed on June 22, 2018. On September 25, 2018, this court entered an order granting the Board’s motion to take the case on the Board’s brief only. The case was not designated as ready until September 13, 2021. The court regrets this delay, which was not the fault of the author or panel members. -2- No. 1-17-2032

¶5 In its answer and affirmative defenses, the Board asserted that Babbage did not perform

in accordance with the contract, and the Board was engaged in an authorized audit to prevent

potential fraud. Because of allegations that Babbage engaged in fraudulent and illegal behavior

relative to other, similar contracts, and because of a pending criminal indictment in the United

States District Court for the Northern District of Illinois, the Board had requested detailed

information for an audit. Because that information had not yet been tendered to the Board,

Babbage’s lawsuit was premature.

¶6 Babbage, Kassam, and others were indicted in federal court on April 24, 2014, several

months before Babbage filed its breach of contract complaint. In part, the indictment stated as

follows. Babbage and a subsidiary were approved as supplemental educational services (SES)

providers in Illinois and 18 other states during the 2008-2009 and 2009-2010 school years.

Beginning around July 2008 and through at least February 2012, Kassam and Babbage’s director

of operations, Jowhar Soultanali, fraudulently obtained over $33 million from more than 200

public school districts by misrepresenting the nature of the tutoring services provided by

Babbage and its subsidiary, providing substandard materials, falsely inflating invoices, and

creating and distributing false and misleading student progress and improvement reports.

Babbage and Kassam caused a computer programmer to create programs that generated false

progress reports and false pre- and post-test assessment scores for students. Kassam directed the

programmer to configure the program so that the posttest scores were always higher that the

pretest scores. In 2009, Babbage and Soultanali caused a billing administrator to create

spreadsheets with false tutoring time summaries, which were then used to falsely bill school

districts. When school districts questioned the fraudulent bills, Soultanali falsely stated that the

overbilling was a mistake. Kassam, Soultanali, and others also paid state and school officials,

-3- No. 1-17-2032

including in Texas and New Mexico, to obtain students, approve invoices, and obtain federal and

state funds.

¶7 On August 23, 2016, Kassam and Babbage pled guilty in the federal case. In Cook

County, the court denied the Board’s motion to stay the breach of contract case until Kassam and

Babbage were sentenced.

¶8 Before trial, the Board filed a motion in limine to allow testimony about Babbage’s

indictment and the allegations within the indictment. The Board stated that the allegations

included the same tutoring services, billing and invoice practices, contracts, state and school

approvals, and assessment exams that were provided to the Board. The Board withheld payment

to Babbage because of the indictment, and the allegations showed that the Board was justified in

not paying Babbage and its agents. In another motion in limine, the Board asserted that it should

be able to present that Babbage and its agents pled guilty to the same exact type of services that

were provided to CPS. The indictment listed Illinois as one of the states where Babbage and its

agents conducted the same classes, sessions, and programs. The Board acknowledged that

Kassam’s and Babbage’s guilty pleas related to schools in Texas and New Mexico.

¶9 At a subsequent hearing, the Board noted that the indictment did not involve CPS, but

stated that the Board had the right to explain why it withheld payment, which was because the

indictment was issued in April 2014 and the Board was waiting for an investigation. The Board

stated that it would not pay money to a company that pled guilty to the same fraudulent practices

that were provided to CPS. The Board asserted that it “should be able to tell the jurors: Hey,

look, this is the SES program, the same exact one. Their billing purposes, their testing, the way

they test these students, it’s all exactly the same.” Meanwhile, Babbage asserted that because “a

conviction has been entered,” Illinois Rule of Evidence 609 (eff. Jan. 1, 2011) applied, wherein a

-4- No. 1-17-2032

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