Federal investigators arrested 11 people, including seven city employees, after discovering what they say is a widespread corruption scheme. At a press conference, U.S. Attorney Preet Bharara says four day care operators, who call themselves "The Congregation," bribed officials at three city agencies to approve vouchers for childcare services that were never provided.
"Over a three year period "The Congregation" defendents received more than $18 million in subsidy payments," Bharara says. "Some for children who never even set foot in a day care center."
The alleged leader of the scheme, Ludmilla Umaraov, operates or is associated with, more than 30 daycare centers in Brooklyn, Manhattan and Staten Island. Six day care centers have been closed so far, but officials hinted that more closures could be expected as the investigation continues.
According to Department of Investigation commissioner Rose Gill Hearn the day care owners bribed officials at three agencies, Human Resources Administration, Department of Health and Administration for Childrens Services. Each of these agencies plays a different role in certifying and subsidizing daycare centers, as well as ensuring that the children attending these centers come from low-income families. Agency employees also make sure the day care centers receive a steady stream of "clients." In many cases, however, the children supposedly enrolled in the centers were in fact "ghost children" -- good on paper but never in actual attendance.
"'The Congregation' defendants used cash and jewelry to cultivate the corrupt stream of vouchers to their centers, and the signoffs that the city employees could make happen and that were crucial to carry out the criminal activity," Hearn says.
The city agency workers have been charged with accepting $100,000 in bribes. The Department of Health says it has already started changing its internal procedures, so that such schemes can't be repeated. Calls to four of the day care centers were not answered.