Sentencing dates for the two defendants will be set at a later date.
Two of the 15 defendants accused of stealing federal program money back in May have pleaded guilty to federal fraud charges.
Fahima Egeh Mahamud, 50, of Minneapolis, and Jillaine Mertens, 42, of Hamel, each entered guilty pleas Thursday as part of agreements with prosecutors.
Prosecutors say Mertens collected more than $400,000 in fraudulent claims across three childcare centers in Ramsey, Rochester and Kasson.
Mahumud is accused of taking $5.5 million in taxpayer money through her daycare, Future Leaders.
Both will be sentenced at a yet-to-be-determined future date.
Top federal officials came to Minnesota in May to announce the charges against the 15 defendants.
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PAYROLL & HR CONTROLS (PREVENTING “GHOST” SCHEMES)
Payroll fraud is often the hardest to detect because it “looks” like a normal business expense.
- Segregation of Duties (SoD): The person who adds new employees to the system must not be the same person who approves the monthly pay run.
- Mandatory Vacation Policy: Require all financial and HR staff to take 5–10 consecutive days of leave annually. Fraud often surfaces when the perpetrator isn’t there to “hide” the trail.
- Ghost Employee Audit: Perform a quarterly “Headcount Reconciliation” where managers must physically verify every name on their payroll list exists.
- Self-Pay Blocking: Ensure the payroll software has a hard-coded block preventing administrators from editing their own salary or bank details.