On Top of Things

Blue pacifier on the background of money.

Missouri’s Child Care and Development Fund offers daycare subsidies for low-income families with parents who work or are receiving job training. The owner of a Kansas City, Missouri daycare center signed up to be a provider under the Children’s Division of the Missouri Department of Health and Senior Services, then stole more than $550,000 from the government program through a child care fraud scheme involving two child care center locations.

The owner of the Missouri daycare center, a naturalized U.S. citizen from Somalia, established his business under two names at the same location with the same employees. But, one of them had a straw owner. For nearly three years, the owner and his child care center director conspired to submit false claims to the state of Missouri, inflating the number of hours and children who received services at the child care centers. (That’s so he could receive more money from the government.)

State authorities uncovered the child care fraud scheme during a nationwide sweep. To get a better look of what was going on at the Kansas City-based child care centers, pole cameras were installed nearby. The cameras captured images of children, their parents and employees entering and exiting the building. Investigators compared the footage with timesheets and submitted claims and determined that something was amiss. The cameras also revealed that fire evacuation records were falsified to indicate that fire drills were performed, when they weren’t. (The bottom line is that the daycare center failed the state’s minimum health and safety standards for operation.)

At the point when the child care center was being shut down for failure to comply with the state’s standards for health, safety and record keeping, the owner opened the second child care center under a straw owner so the government would not detect his child care fraud scam. (That’s how the fraudster eluded the state’s oversight and received a license to operate.)

It’s a good thing that the state was on top of things. During a compliance review of the daycare center’s billing over two months, there were some attendance records missing. It turns out that 14 out of 15 families that had children at the daycare center also had a parent employed there. (Basically, the parents were caring for their own kids and getting paid by the government to do so.)

This was not the only scam that was perpetrated by the daycare center owner. He also committed Section 8 fraud by misrepresenting his income and assets. (He received more government assistance from the Department of Housing and Urban Development to the tune of $40,000.)

The former daycare owner pleaded guilty to child care fraud for fraudulently receiving more than $556,000 in federal benefits he did not deserve, not to mention aggravated identity theft. The 41-year-old from Olathe, Kansas was sentenced to four years and 10 months in prison without parole. His former child care center director also pleaded guilty to child care fraud. The 48-year-old woman from Kansas City, Missouri is awaiting sentencing.

Today’s “Fraud of the Day” is based on a Department of Justice press release, Kansas City Day Care Owner Sentenced for $556,000 Fraud Scheme, published on August 8, 2019.

KANSAS CITY, Mo. – The owner of a Kansas City, Missouri, day care center was sentenced in federal court today for his role in a conspiracy to fraudulently receive more than $556,000 in federal benefits.

Sharif Karie, 41, of Olathe, Kan., was sentenced by U.S. District Judge Brian C. Wimes to four years and 10 months in federal prison without parole.

On Jan. 11, 2019, Karie was convicted at trial of participating in a conspiracy to steal government property, theft of government property, three counts of aggravated identity theft, three counts of wire fraud, 15 counts of money laundering, and six counts of mail fraud.

Previous articleDefining Necessary
Next articleLacking Vision
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.