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Financial Crimes
08/10/2010

11 charged in day care bribery and fraud scheme

NEW YORK - Eleven New York City residents were charged Tuesday in a massive scheme to defraud the government out of millions in day care subsidies following a joint investigation by the New York City Department of Investigation (DOI) and U.S. Immigration and Customs Enforcement (ICE) Office of Homeland Security Investigations (HSI) in New York.

Preet Bharara, the U. S. Attorney for the Southern District of New York, Rose Gill Hearn, the Commissioner of the New York City Department of Investigation (DOI), and James T. Hayes, Jr., the special agent in charge of ICE's HSI Office in New York, announced today the unsealing of federal charges against 11 defendants for allegedly operating a massive fraud and bribery scheme through which they more than $18 million intended to help needy parents obtain public assistance for day care services. The defendants also were charged with conspiring to pay and receive bribes to facilitate the criminal scheme.

"Individuals in positions of public trust must be held accountable when they abuse their authority for personal gain," said Hayes. "ICE will continue to work with its law enforcement partners to root out public corruption wherever it exists."

Four owners of day care service providers - Liudmila Umarov, Lyudmila Grushko, Yana Krugly, and Rimma Volovnick, all of Brooklyn, N. Y. - and seven New York City officials - Leonid Gutnik and Aleksey Vasilyev, of the New York City Human Resources Administration ("HRA"); Aurora Villareal, Dionne Rivers-Ettu, Emile Nekhala, and Carolyn Eason, of the New York City Department of Health and Mental Hygiene ("DOH"); and Mariya Rapoport, formerly of the New York City Administration for Children's Services (ACS) - are charged with participating in the scheme. All of the defendants were arrested this morning in the culmination of Operation Pay Care, a joint investigation led by the U.S. Attorney's Office for the Southern District of New York, DOI, and ICE.

Manhattan U.S. Attorney Preet Bharara stated: "As alleged in the Complaint, the parents of children enrolled in the Congregation's day care centers trusted Liudmila Umarov and her co-conspirators with the care of their children. But Umarov and her Congregation allegedly betrayed that trust by exposing the children to hazards and siphoning off millions of taxpayer dollars meant to provide safe, quality child care for deserving, hard-working parents. And 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. If proved, today's allegations demonstrate that the defendants cared far more about their wallets than about the welfare and well-being of the children they were obligated to protect. Along with our law enforcement partners at DOI and ICE, we now begin the process of holding each of these allegedly corrupt actors accountable for their conduct."

DOI Commissioner Rose Gill Hearn stated: "These defendants chose payoffs and profit over their promise to serve the best interests of children, according to the complaint. Public funds were stolen to line the defendants' pockets and integrity was thrown out the window. But DOI and our federal partners exposed this criminal scheme and stopped the corruption. We will continue to work together with our federal law enforcement colleagues to protect children and taxpayers from criminals who exploit these social service programs to enrich themselves."