Hennepin Co. Attorney: 4 Arrested, 3 Child Care Centers Charged In Fraud Case

MINNEAPOLIS (WCCO) -- Four people have been taken into custody and three child care centers face charges in connection to the fraudulent billing of Minnesota's Child Care Assistance Program, which is likely to surpass $1 million, the Hennepin County Attorney's Office announced Tuesday.

After a search warrant was executed Tuesday, the attorney's office filed charges against and froze $219,000 in the bank accounts of Minnesota Child Care Services, Inc., Children's Choice Center, Inc. and Ummah Child Care Services, Inc. – all located in Minneapolis.

A fourth child care center, Minnesota Childcare Academy, Inc., in St. Louis Park, was searched Tuesday but no charges were filed. However, Hennepin County Attorney Mike Freeman says the investigation is continuing and charges against Minnesota Childcare Academy and against individuals owning or working at all four centers are likely in the future.

The arrests and charges are the result of the Operation Kids Count investigation that began 18 months ago when the Minnesota Department of Human Services Office of Inspector General noticed unusually large billings from Minnesota Child Care Services to the Child Care Assistance Program, the attorney's office said. The department then asked the Minnesota Bureau of Criminal Apprehension to lead the investigation.

Investigators became suspicious of how much Minnesota Child Care Services and the other three child care services were billing to the state. That's when investigators obtained warrants and installed hidden cameras to monitor how many children entered the centers.

According to the criminal complaint, an investigation revealed that the centers were claiming many more children than were actually attending. For example, in a two-week billing cycle in late November to early December, Minnesota Child Care Services claimed that 2,183 children attended when, in fact, no more than 1,233 children actually attended – a difference of 950 children. So, one-third of the company's billing to the state was for nonexistent children, the complaint said.

The money was then used for the benefit of the company and its owners, according to the complaint.

The three companies are expected to make their first appearance in court on Oct. 28 at 1:30 p.m.

The four people arrested have not yet been identified.

The assistance program is designed to provide low-income families with subsidies so that their child care will be free or at a very low cost, so the parents can work, the attorney's office said.