Sheepshead Area Day Cares Shut Down In Fraud Sting

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Eleven people have been arrested in an alleged fraud ring in which 38 day care centers collected $18 million in public funds since 2007, with several of the day cares located in Sheepshead Bay.

In all, four day care operators and seven city workers were charged with conspiring to pay or receive bribes; all but one were charged with conspiracy to commit fraud. Each of the defendants faces a maximum sentence of 20 years in prison on the mail fraud conspiracy charge, and a maximum sentence of 5 years in prison on the bribery conspiracy charge, as well as fines of up to $250,000 or twice the gross gain or loss from the offense.

The complaint charges that a ring of 38 day care operators known as “The Congregation” paid bribes to city workers from three city agencies: the Department of Health and Mental Hygiene, the Human Resources Administration and the Administration for Children’s Services.

The Congregation, allegedly controlled by Sheepshead Bay resident Liudmila Umarov, was exploiting the city’s Day Care Subsidy Program, which covers the costs of care for children from low-income families so that parents can obtain jobs. Umarov and her associates – Lyudmila Grushko, Yana Krugly and Rimma Volovnick – paid city workers for names and social security numbers of children who qualified for the program, and began billing the city for care they were not providing. Bribes were also paid to inspectors to overlook infractions, which included unqualified staff, lack of background checks, and not enough space per child. In at least one instance, hard alcohol was found in the refrigerator next to student lunches.

Among the Sheepshead Bay area day cares named in the complaint are: Paragon II Day Care, Inc., Learning Center Paragon, Amazing World Day Care Center, Banner Learning Center, Inc., and Sesame Street LMN Day Care. All of these centers are on Banner Avenue, just off Coney Island Avenue, though the full reach of the ring went as far as Staten Island.

Investigators hinted that more day care centers may be involved, and that the investigation will burrow further into this “massive fraud and bribery scheme.”

“We were concerned about the potential safety risk associated with letting this type of fraud go on,” Preet Bharara, the United States attorney in Manhattan, said in a statement yesterday. “It is fair to say that today’s events mark the end of just the first chapter in a very active and ongoing investigation.”

View the Justice Department’s criminal complaint.
[via The New York Times]