Audit reveals daycare centers defrauded state

In an audit released July 2, state Comptroller Thomas DiNapoli recommended that the New York State Office of Children and Family Services (OCFS) seek the recovery of over $2 million from state-funded daycare centers across the city.
The audit, which covered the period of May 1999 through May 2007, found numerous cases in which contractors fraudulently misspent OCFS funds, and overwhelmingly failed to achieve the stated goal of creating and preserving childcare slots for low-income families across the city. Additionally, the contracts have not served the locations identified as most in need of childcare, according to the report.
In one audit test, 34 contract grantees only created 821, or 53 percent, of the 1,545 childcare slots they had been paid to create. Additionally, grantees failed to retain 330 of 1,888 slots that should have been preserved.
In another audit test, 39 of 55 grantees misspent over $1.5 million.
Flushing Meadows was listed among the ten communities earmarked for state-funded childcare, yet no contracts were awarded in the neighborhood.
DiNapoli named 19 daycare centers, five of which are located in Queens, that have been referred to local law enforcement for suspected fraud. While the audit did not link particular centers with specific violations, it mentioned various methods employed by grantees to defraud the state: some altered and fabricated documents, utilized faulty invoices and diverted funds for personal use such as the purchase of plane tickets and cell phones and the payment of credit card bills. One grantee established a checking account for a childcare center that was never opened, receiving $95,000 to create 30 slots.
“These daycare dollars are supposed to expand services in the city and help working families by providing a safe, caring environment for children,” DiNapoli explained in a statement. “Instead, we’ve seen 47 cents on every dollar in this expansion effort simply disappear. It’s deplorable that individuals would seek to exploit these programs.”
A woman who answered the phone at Kids Choice Day Care, Inc. in Queens Village deflected allegations, insisting vehemently “I am not one of them,” before hanging up the phone.
Brigette O’Reilly, whose Little Rascals Infants and Toddlers Day Care Services in Flushing was named in the audit said, “I am in touch now with the District Attorney’s office and have no comments at this time.”
A representative of Queens Child Guidance Center, Inc. in Jamaica, which is also listed in the audit, said the center had no comment. Women of Faith, Inc. in Jamaica could not be reached and the phone number of a fifth Queens location, Nu Image Family Center, Inc. of Jamaica had been disconnected.
Dinapoli’s team concluded that the fraud perpetuated by grantees “may have been substantially minimized if OCFS had provided effective program outreach, contract proposal evaluation and contract oversight.”
In spite of OCFS’ shortcomings, DiNapoli has recommended that the agency seek nearly $2.2 million for misspent funds and slots not created.
OCFS Commissioner Gladys Carrin was receptive.
“These recommendations will go a long way toward assuring that past abuses are not repeated under my watch,” she said, underscoring her goal of assuring that allocated funds “are spent as effectively and efficiently - and honestly - as possible.”
The 19 cases have been referred by DiNapoli to the District Attorney of their respective borough. Queens District Attorney Richard Brown’s office could not comment, as the investigation is ongoing.
“New York’s children and families deserve better, and so do taxpayers,” DiNapoli said.

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