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Grifting the Government
February 5, 2013 permalink
Over a two year period the managers of Community Care Resources in Middleton Wisconsin diverted a third of their funding from the Department of Children and Families for personal use. An audit by Ron Hermes found that Dan and Mary Simon charged $6.1 million in personal expenses to the taxpayers.
$3.1 million was transferred from Community Care Programs, a related nonprofit that provided foster care programs for counties in Wisconsin, to Community Care Resources, a for-profit company. These payments were charged by the for-profit for "administrative services" such as paying office staff and social workers and reimbursing their expenses, but there's no documentation of those charges.
Dan and Mary Simon received more than $500,000 in inflated salaries.
Their company billed the state for $64,000 in personal travel, including multiple trips to Alaska and Hawaii, and one case in which Mary Simon competed in the Boston Marathon and had her travel expenses covered.
The couple used $123,000 for everything from remodeling and landscaping of their homes to six vehicles and three boats, including a $43,000 2010 Lexus RX350.
They received hundreds of thousands of dollars for miscellaneous expenses that lacked proper documentation.
A news article is enclosed, here is the letter from Ron Hermes as images.
Foster care agency owners unapologetic over allegations of massive overbilling
After a review accused them of charging taxpayers millions of dollars in inflated salaries, expensive trips and maintaining a fleet of personal vehicles, boats and homes, the owners of a Middleton foster care agency shot back that they were grossly underpaid and proposed to “upwardly adjust” their salaries.
Dan Simon’s response is contained in a 27-page fiscal review of Community Care Resources charges over three years released Monday to the State Journal.
The state Department of Children and Families is seeking to revoke the company’s license, alleging Simon and his wife, Mary, overcharged taxpayers $6.1 million between 2009 and 2011, or roughly $1 of every $3 in public funds the company received.
Dean Simon vigorously denied the allegations, and an appeal of his license revocation is pending.
Also Monday, DCF spokeswoman Sara Buschman said the department’s ongoing review of foster care providers resulted in two providers surrendering their licenses after the state pursued revocation. She did not name the providers but said “neither was on the scale of the current issues with CCR.”
According to the state, Dan Simon earned just over $1 million in salary during the three-year period while Mary Simon, the company’s program director, earned $382,047 — an amount the state alleges is at least $531,000 too much for their positions.
In his response, Simon said the pay he and his wife received is “inordinately low” compared with similar positions elsewhere and does not take into account the couple’s extensive experience and broad responsibilities.
Simon claimed some of the questioned expenses were legitimate, such as $19,424 for outings to Noah’s Ark for foster children and parents that he described as “therapy.” In other instances he told state reviewers that he reported “unallowable” expenses, such as insurance on six cars and three boats, but did not charge the state for them.
The state rejected those arguments.
Community Care Resources is a 24-year-old for-profit company that has 30 employees and contracts with county social-service agencies, other agencies and one tribe in 25 counties. As of Jan. 23, the company was overseeing placement of about 120 children in 57 licensed foster homes, according to DCF.
The state said between 2009 and 2011, the company and a related nonprofit that ceased operations in 2010 got $18.1 million in contract revenues. The Department of Children and Families is seeking reimbursement of $6.1 million of that.
The largest single questionable expense is $3.1 million charged from the for-profit to the nonprofit for “administrative expenses.” The state alleges that Simon failed to produce any documentation justifying those charges.
In a letter revoking Community Care Resources’ license to place children with foster care families, DCF listed nearly $5 million in excess and unallowable costs or charges for which the company had no paperwork.
However, the letter did not mention an additional $1.3 million in “excess profits” that CCR allegedly earned over the three-year period that was listed in the more extensive fiscal review released Monday.
Simon declined to comment in an email Monday. His attorneys did not immediately return email messages seeking comment.
Buschman said Community Care Resources will continue operating while the revocation is appealed. No hearing date has been set. However, she said counties are now directly paying foster parents, rather than through CCR, while the appeal is pending.
Sen. Rob Cowles, co-chairman of the Joint Legislative Audit Committee, on Monday repeated his call for an audit of the foster care program and a criminal investigation by the state Department of Justice into the allegations.
“The use of any taxpayer money for personal gain is unacceptable,” said Cowles, R-Green Bay. “The fraud, theft and abuse of Wisconsin’s programs will not be tolerated.”
Buschman and DOJ spokeswoman Dana Brueck both declined comment on whether a criminal probe was under way. Buschman said the Department of Children and Families is continuing to review other child-placement agencies “and final reports will be forthcoming.”
Source: Wisconsin State Journal
Addendum: Only a day later, the same story, this time from New Jersey.
Audit: N.J. child welfare nonprofits misspent as much as $12.2M
TRENTON — They were hired to recruit people willing to open their homes to abused children and prepare them for the demands of foster parenting.
But an audit released today found that among 20 community agencies hired by the state, several had misspent or failed to refund a total of $12.2 million from January 2010 to June 2011 —some by awarding themselves bonuses, throwing themselves a party at a country club, or hiring others to do the work and pocketing the proceeds.
The audit by the nonpartisan Office of Legislative Services found the department spends $39.9 million in contracts a year to hire 20 community agencies to manage the foster care needs of 522 children, while the other 5,229 foster children in New Jersey's child welfare system are supervised directly by state workers. Given how much the state is spending on such a small pool of kids, the Department of Children and Families should end those contracts and handle all foster care services in-house to "better monitor and control their delivery," according to the audit.
State auditors uncovered $4.2 million in “unallowable” and “unreasonable spending” by several unidentified foster care agencies. They include:
- A CEO who awarded herself and 13 employees $121,500 in bonuses ranging from $2,500 to $22,000 each.
- One agency threw itself a $2,000 country club holiday party for 50 adults and 10 children and bought $5,900 in “designer merchandise” and gift cards;
- One agency used $126,000 in contract money to pay the mortgage in violation of the state contract.
- One company charged $1,800 in gym memberships for its employees.
The audit report did not disclose names of the individuals or companies it cited.
Department of Children and Families Commissioner Allison Blake said that her staff was already taking a hard look at ending the foster home contracts.
“Fortunately, we are currently at a point within our child welfare reform where we ... (are) now licensing more than two times the number of beds than the number of children currently in foster care,” Blake wrote in an email to employees and other child welfare professionals late today. “While contracted foster care agencies and the support provided by them and the parents was critical to DCF many years ago at a time when the state had a significant deficit… today we must re-evaluate the program,” according to her email.
Assembly Human Services Committee Valerie Vanieri Huttle, (D-Bergen) called the findings “incredible. . . .Where are the internal controls?”
Huttle said she’s contacted the auditors and will draft legislation “to make sure there is no future abuse.”
The audit also found contractors should have returned $3.9 million in unspent cash, and while human error and technology glitches allowed the department to overpay agencies $630,000 from 2008 to 2012.
Source: Newark Star-Ledger