Fraud charges are filed in alleged child-care scheme
More than 50 people were charged in a $3 million child-care scam that involved bogus corporations and child-care facilities set up to receive state welfare funds, the Los Angeles County district attorney said Thursday.
In what prosecutors described as the largest such fraud case in the state, and possibly the nation, alleged ring-leader Demetrius Eugene, 36, created six bogus child-care facilities under the name of Home Sweet Home Day Care Inc. and listed family members and friends as care providers.
According to Los Angeles County Dist. Atty. Steve Cooley, Eugene and fellow defendants recruited individuals qualified for state “welfare-to-work” programs, which provide child-care support for welfare recipients transitioning into employment.
One arm of Eugene’s corporation provided false employment to parents, while the other claimed to provide child-care to those parents to collect state funds, prosecutors said.
The “welfare-to-work” candidates signed fake time cards for themselves and attendance sheets for their children at the operation’s headquarters in Los Angeles, and received roughly $300 per child per month in return, authorities said. At most of the facilities, there was no evidence that child-care services were ever provided.
Cooley said the case was an indication of a complete lack of accountability and verification in the welfare transition program run by the state Department of Education.
“It’s not just this crime, the way they perpetrated it, or how much money they got. It’s really about the fact that it could have been prevented,” Cooley said. “It will occur again and we won’t be able to detect it.”
Dist. Atty. James Baker, who worked on the case, said the ring is one of hundreds of child-care fraud operations that are referred each year to the county Department of Public Social Services.
“This might be one of the most sophisticated,” he said. “They were able to fool the child-care agencies that they were legitimate.”
The 55 defendants named in five separate complaints include nearly 50 parents, most of whom said they knew about the scheme, prosecutors said.
Eugene, a former employee of the California Department of Corporations, had little difficulty turning the day care center he inherited from his mother into a corporation, Baker said.
Most of the fraud alleged in the complaints occurred between 2000 and 2004, Baker said.
Among those charged in the case was Kmond Day, 32, who received his child-care license from a state agency and set up a facility shortly before he was convicted of drug trafficking. But even after Day was sent to prison, the state continued to provide welfare funds to his care center.
Day and his wife received more than $400,000 in state funds, authorities said.
“He surely wasn’t there taking care of children, he was in federal prison.” Cooley said.
About 20 people were arrested Thursday in connection with the fraud scam. Five people were picked up in Nevada, Texas and Pennsylvania and will be extradited, officials said. Letters were sent to many of the parents, ordering them to appear for arraignment.