NEW YORK — Federal authorities charged a dozen people Tuesday with fraudulently collecting more than $10 million in government child-care payments in San Diego County when the operators had few or even no children attending their facilities.
The charges, jointly announced in San Diego by the Justice Department and the criminal investigations division of the Internal Revenue Service, are the latest effort by the Trump administration to investigate and charge alleged cases of fraud and waste in government programs.
The 12 defendants said they were operating licensed, at-home child-care facilities in the San Diego area, submitting attendance records and documenting when each child attended and for what times, in order to collect payments from government child-care subsidy programs. However, federal prosecutors allege these at-home facilities rarely, if ever, had children. Defendants…
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.