Guilty pleas resolve fraud cases against three Minneapolis day care centers

Wednesday, January 04, 2017

The last of the three Minneapolis child care centers charged with fraudulent billing of a taxpayer supported program has pleaded guilty, Hennepin County Attorney Mike Freeman announced Wednesday.

Ummah Child Care Services, Inc., 2505 Fifth Ave. S, as a corporation, pleaded guilty to theft by swindle Tuesday morning. The company was fined $10,000 and ordered to pay $37,000 in restitution to the state Child Care Assistance Program.

In October, Children’s Choice Center, Inc., 2700 Summer St. NE, pleaded guilty and agreed to a $10,000 fine and $28,267 in restitution. In November, Minnesota Child Care Service, Inc, 2500 Minnehaha Ave., pleaded guilty and agreed to a $50,000 fine and $103,000 in restitution.

As part of the negotiated settlement, the billers for all three centers agreed to sign disqualification agreements barring them from working with state licensed child care providers for two years. In return, the county attorney’s office agreed not to charge them criminally. The three centers also agreed to forfeit any Child Care Assistance Program payments they claimed they were owed by the state and the Minnesota Department of Human Services agreed not to pursue additional money from the centers through administrative actions.

“This is a good result to a long and complicated investigation and prosecution,” Freeman said. “These small companies must pay significant amounts of money in fines and restitution. Some of their people are banned from their line of work for two years. And the message has been sent that the taxpayer’s money will be protected and those who try to steal it will pay a price.”

The investigation began in 2013 when the human services’ Office of Inspector General noticed unusually large billings from Minnesota Child Care Service to the Child Care Assistance Program. The department asked the Minnesota Bureau of Criminal Apprehension to assist them in the investigation.

The assistance program helps about 30,000 Minnesota children each month, with another 5,300 on a waiting list. The program provides a subsidy to low-income parents so that they pay little or nothing for child care while the parents are at work or school.

According to the criminal complaint, investigators installed hidden video cameras outside the doors to the child care centers. Investigators also did surveillance, counting how many children entered the centers on a given day.

After checking the billings to the state for the same time period, they found that the centers were claiming many more children were attending the child care centers than were actually present. For instance, in a two-week billing cycle in late November into early December of 2014, Minnesota Child Care Center claimed 2,183 had attended and the center should be paid for them. A review of the video, however, found that no more than 1,233 children actually attended, or a difference of 950 children.  That would mean about one-third of the company’s billing to the state was for phantom children, the complaint states. In September 2015, investigators executed search warrants at the child care centers.

In August, the Hennepin County Attorney’s Office put Minnesota Child Care Center on trial. After four days of deliberation, the judge declared a mistrial because the jury could not reach a verdict. The county attorney’s office had decided to try the case again, but that became unnecessary when the company agreed to plead guilty in November.  A fourth child care center was investigated but never charged.

Two executives of Minnesota Child Care Center, Ibrahim Osman and Abdirizak Gayre, were also charged with one count each of theft by swindle. Those charges were dismissed as part of the agreement on the company guilty pleas.