As many as seven city workers, including health department inspectors, have been arrested for allegedly taking bribes from child daycare operators in an $18-million scam stretching across 30 day care centers, federal and local officials said Tuesday.
The city workers are accused of taking payoffs in exchange for turning a blind eye when the child care centers lied about the number of children they were caring for in order to overbill the government, investigators said.
Investigators said the scheme exploited a voucher system meant to help poor families find daycare so the parents could go to their job. Voucher payments go straight from the city to the daycare center once a child is 'enrolled.'
Dubbed "Operation Paycare," Immigration and Customs Enforcement Agents joined Department of Investigation investigators in making the arrests.
The 30 centers banded together in the scheme allegedly called themselves "The Congregation."
The corruption also included offers of jewelry to city workers, officials said. Among those charged Liudmila Umarov who is accused of orchestrating the scheme. Umarov allegedly paid bribes which at times allegedly included $5000 dollar payments. Inspector Dionne Rivers-Ettu is one official accused of taking payments from Umarov and her associates, prosecutors said.
"The New York City officials charged today allegedly betrayed the public's trust, taking bribes to look the other way and grease Umarov's gravy train," said U.S. Attorney Preet Bharara.
Umarov, who runs 30 centers in Brooklyn and Staten Island, allegedly paid bribes to officials at the Human Resources Administration, the Administration for Children's Services as well as the Health Department. Her family centers include Paragon II and Amazing World Day Care Centers along Banner Avenue. Attempts to reach the day centers for comment were unsuccessful.
Officials said Leonid Gutnick at the city's Human Resources Administration accepted more than $100,000 in corrupt payments over the years.
A Department of Health Spokeswoman pointed out that thhey notified the DOI when they first learned of suspicious activity and the DOH "is taking swift action to protect children from the consequences of these unlawful activities and to ensure that systems are in place to prevent such incidents from occurring in the future "
Lawyers and relatives gathered at the 5th floor arraignment courtroom today declined to discuss the allegations.
"No comment at this time," said attorney Tony Mirvis who is representing Gutnik. The grown son of one of those charged said,"This must be a mistake,"but declined to give his name.
Another day care operator, Yana Krugly, allegedly made a $2,800 payment to Gutnik. In exchange, Gutnik used his position to enter into a computer and approve the enrollment of additional children in her day care program even though who never attended, investigators said. But the government allegedly paid Krugly to care for the non-existent children.
"The defendants chose payoffs and profit over their promise to serve the best interest of children," said DOI Commissioner Rose Gill Hearn.
ICE Specials Agent-In-Charge James Hayes Jr. added, "Individuals in positions of public trust must be held accountable when they abuse their authority for personal gain."
Officials said bribes were also paid so inpsectors would overlook violations at the centers. Prosecutors said employees at many of the centers were not trained properly -- some did not even have basic CPR training. In one center, officials said open hard alcohol bottles were stored next to children's lunch bags