Falling Through the Cracks

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The Michigan Department of Education’s Child Development and Care program helps low-income families afford day care costs, so they can keep working. While several different state agencies are involved in evaluating day care providers to make sure they are not fleecing taxpayers, today’s fraudster may have fallen through the cracks. A day care owner from Grand Rapids, Michigan committed child care fraud by overbilling the state for more than $177,000 in child care services that were never provided.

Today’s fraud article explains that the Michigan Department of Health and Human Services (MDHHS) determines if parents are eligible to participate in the Child Development Care Program, which pays child care providers. The MDHHS Office of Inspector General (OIG) investigates providers for potential fraud and misuse of subsidies. Another agency – Department of Licensing and Regulatory Affairs – licenses Michigan’s 9,000 child care providers. (They’re supposed to communicate with each other to protect the citizens they are serving.)

The Grand Rapids day care owner excessively overbilled the state for hours when she was absent. She also improperly rounded hours and kept incomplete attendance records.  (Apparently, none of the agencies were working together as intended to shut this woman’s scam down.)

And, it’s important to share that the woman had been involved in three prior investigations by the MDHHS for excessive overbilling. (So, this latest incident was not her first time around the fraud block. Yet, she was allowed to keep her business open.) Apparently, the lines of communication were not working properly, and previous reviews did not indicate a pattern of intentionality. (Wouldn’t you think that the first three incidences of overbilling might have raised a red flag?)

Eight years after the day care center operator was caught overbilling the first time, she had her license revoked. The licensing agency reported that the child care center owner had violated rules that required caregivers be of “good moral character,” “suitable” to care for children, and have the “administrative capacity” to operate and “maintain an accurate record of daily attendance.” (Well, I’d say she failed on all accounts.)

The center, which is allowed to care for up to 89 children, is now under new management. (Let’s hope the replacement meets the requirements previously listed.) Today’s 67-year-old fraudster pleaded guilty to child care fraud and has agreed to pay back restitution of $32,746. (To her credit, she has already paid back 88 percent of the overages, or $129,628.)

According to the article, the Child Development and Care program has put multiple fraud detection tools in place since a 2008 state audit found the agency’s controls to be lacking. Since last year, the OIG has conducted 269 investigations involving the program and found $1.3 million in fraud. (That’s a good start to preventing more cases like today’s from falling through the cracks in the system.)

Today’s “Fraud of the Day” is based on an article entitled, Day care owner caught overbilling state by $178K,” posted on WOODTV.com on August 15, 2018.

GRAND RAPIDS, Mich. (WOOD) — Over the course of 10 years, a Grand Rapids day care owner billed the state $177,695 for care she didn’t provide, according to documents obtained by Target 8.

A Kent County judge will sentence Janice Rhodes, 67, Thursday afternoon on two counts of misdemeanor welfare fraud. She has already pleaded guilty in the case and agreed to pay restitution of $32,746, the amount she overcharged the state between November 2015 and October 2016.

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.