Fraud Found in Federal Day Care System

The federal government is paying millions of dollars to empty lots and vacant buildings that are supposed to be providing day care services for the children of the working poor, Agriculture Department investigators have found.

Roger Viadero, the Agriculture Department inspector general, told a Senate panel Wednesday he has increased auditing of day care centers after uncovering cases in several states where millions in federal funds have been ripped off for nonexistent services or spent subsidizing daycare centers in substandard buildings.

In one case, investigators found 20 children in a windowless basement room measuring 10 feet by 15 feet. Other facilities were found lacking basic safety equipment like smoke detectors and fire extinguishers, and one home was heated by a kitchen oven.

Then, there was the $1.7 million in payments for daycare services supposedly provided to 200 children. That was the empty lot.

“It’s absolutely incredible,” Viadero told the Senate Agriculture nutrition subcommittee Wednesday.

He said frauds involving vacant day care centers are so rampant, “we get excited when we visit and find children there.” His agency is increasing audits of other centers nationwide. “This is something we’ve got to get fixed right away,” he said.

“This is an outrage,” said Sen. Peter Fitzgerald, R-Ill., the subcommittee’s chairman, who convened the hearing to discuss fraud in Agriculture Department programs. Under the Clinton administration’s welfare reform bill, Congress allocated $88 million in special funds for states to hire auditors to monitor subsidies paid the daycare centers, but Viadero said many states have used the funds for other purposes.

Viadero said some of the operators running phony daycare centers have been operating for a decade, and never had anyone check their books until now.

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