50-plus charged in child care fraud ring

Oakland Tribune, Feb 8, 2008 by Linda Deutsch

LOS ANGELES -- More than 50 people have been charged in a massive child care fraud ring operated in part by a federal prison inmate and his wife that bilked taxpayers out of at least $3 million and preyed on welfare recipients, prosecutors said Thursday.

Los Angeles County District Attorney Steve Cooley identified the ringleader as Demetrius Eugene, 36, of Palmdale, an employee of the California Department of Corporations, who is accused of establishing six bogus child care facilities under the name Home Sweet Home Daycare Inc.

Other groups, including one named Grandma and Grandpa Family Child Care, were set up and received licenses from state agencies, authorities said.

The convict, who was serving a federal sentence for narcotics trafficking, was identified by authorities as Kmond Day, 32, of Los Angeles.

He received a child care license from Community Childcare Licensing, a state agency that employed his wife, Darneicea Day, 28, who operated the phony child care facility while he was in prison, according to prosecutors.

She was charged with making child care applications for herself, collecting money for care of her own children, and being a co- conspirator in the operation, which received more than $400,000.

James Baker, assistant head deputy district attorney in the welfare fraud division, said such scams are widespread and have been uncovered in other parts of the country.

"Hundreds of millions, if not billions, have been lost here in Los Angeles County," he said.

In the current case, he said the scam was launched after Eugene inherited one Home Sweet Home Day Care Center from his mother and began to expand the operation.

Authorities said defendants hired people to find welfare recipients and offer them monetary kickbacks to apply for subsidized child care.

They approached people on the street with children or went to domestic violence centers to find likely prospects. In some cases, children listed as being cared for by Home Sweet Home did not even live in California, authorities said.

Some parents are suspected of signing attendance sheets for their children and receiving kickback checks for the care of each child.

Baker said the operation undermined federal welfare-to-work programs administered by the state because many parents chose the kickback scheme rather than seeking legitimate employment.

Some were falsely listed as maintenance workers at Home Sweet Home and were issued paychecks and employment verification forms, according to authorities.

Of those named in five complaints, 20 were arrested Thursday in various locations, including Tyler, Texas, Las Vegas and Pennsylvania, according to district attorney spokeswoman Sandi Gibbons.

The majority were charged with grand theft, conspiracy, perjury and receiving aid by misrepresentation, she said.

Eugene was charged with 74 counts.

The largest losses were attributed to state programs, which get little oversight, Cooley said.

Cooley said he has been lobbying in Sacramento for action on child care fraud. Los Angeles County Supervisor Don Knabe sponsored a Senate bill to address fraudulent activity in child care programs, but it never came to a vote.

Cooley said programs funded by the California Department of Education get little oversight.

"In these tough budgetary times, it is critical that government put an immediate stop to public assistance fraud," Cooley said. "We investigate and prosecute hundreds of cases a year, but by the time they reach that stage, the damage is done."

Baker said a number of parents who participated in the scheme were among those charged, although they are also victims.

"They did not get child care. They did not get work. They got paychecks for kickbacks," he said.