Who among us wouldn’t like to be sitting poolside with a cool beverage at a beachfront resort? Now…what if the trip was paid for by defrauding taxpayers and, specifically, pocketing money intended for needy children? Now it doesn’t sound quite so good. Unfortunately, today’s “Fraud of the Day,” which comes from a report in The Press-Enterprise, is about a District Attorney in Riverside County, Calif., who is prosecuting seven people in connection with a case allegedly involving $500,000 in child care fraud – one of which allegedly used the money to take “exotic” vacations.
The woman the article refers to as the “ringleader” of the scheme was a former employee of the Riverside County office of education. Prosecutors allege that she and another education office employee responsible for approving and issuing checks to child care providers “altered documents, making it difficult to detect the fraud.” The county uses state and federal funds to pay child care providers for needy families, who may choose licensed daycare facilities or in-home care by a relative. The defendants allegedly created fake child care providers and fake children, by altering the names of actual children who were no longer part of the program. (And then went on real vacations with real taxpayer dollars.) The alleged ringleader also is alleged to have altered documents such as birth certificates and payroll stubs to steal funds. And…this may have been a family affair. Four of the defendants charged in the case are related. (Sounds like a close-knit bunch. Maybe they will all be in prison together.) The article cites one example in which a relative of the alleged ringleader was listed as a child care provider for nine fake children for whom prosecutors said he fraudulently received funds, a total of $314,000.
How were the defendants caught? The scheme was discovered by the alleged ringleader’s husband when they were getting divorced; he discovered altered documents and cash and told family members. They reported the incident to the education office, and ultimately set in motion investigations by the Department of Public Social Services and the Office of the District Attorney.
But the fraud allegedly took place from 2001 to 2009. What’s changed? According to the article, the education office is taking measures to make the system more difficult to defraud, such as internal, state, and random audits, as well as and visits to child care sites. They have also instituted case file rotation. (Still not enough!)
In discussing the case against one of the defendants the District Attorney referred to it as “’a crime of opportunity.’” It should be noted that the defendants are innocent until proven guilty. That said, if the facts of the case are true and “opportunity” knocked once, it has probably knocked before and will again. So here’s the question of the day…what kind of “opportunity” is awaiting potential fraudsters at your agency?