Daycare with a Twist

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We’ve heard of drug rings and prostitution rings, but child care rings? Yes…they exist too. According to The Mercury News, a California man was found guilty of six counts of perjury and five counts of grand theft in connection with a case involving home-based child care centers that defrauded taxpayers of more than $1 million.

The article notes that the man used home-based child care centers to provide monetary kickbacks to over three dozen welfare recipients. Here’s how the scam worked? he set up four home-based child care centers and listed family members and friends as child care providers for each of the centers. The article noted that investigators found that many of the child care centers were licensed to serve up to 14 children; however, they were only sufficient to serve up to six. (Amazing that there were any children at all.? In addition, they found some of the children which were allegedly being cared for did not even live in the state of California. (Imagine that…someone using phony information to perpetrate fraud? Either that or out-of-state commuting is all the rage in child care these days!)

So how exactly did he provide proof of attendance? He operated his scam from an office in South Los Angeles, where those individuals who received the aid could sign an attendance sheet and pick up their paychecks.

It is interesting to find the child care ring system to be so faulty – perhaps it was the long distance commuting that tipped off authorities? Now the man is facing up to 14 years in prison. (Maybe he can think of it as his own personal daycare…with a twist.)

Source: Today’s ”Fraud of the Day” is based on an article entitled, ”Palmdale Man Convicted in Child Welfare Fraud Case” by The Associated Press, published by The Mercury News, December 29, 2011.

LOS ANGELES—A former state employee was convicted Thursday of masterminding a child care fraud ring that depleted public coffers of more than $1 million, Los Angeles County prosecutors said.

Jurors found Demetrius Eugene, 40, of Palmdale, guilty of six counts of perjury and five counts of grand theft. Following the verdict, Eugene pleaded guilty to three other grand theft charges and admitted an allegation that he took more than $500,000, according to a statement from the district attorney’s office.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.