May 23: Minneapolis child care center accused of illegally billing state program

A Minneapolis day care center that was raided last week by federal and state investigators had billed the state for hundreds of hours of care that were never provided — even billing for days when it was closed, according to an FBI search warrant request.

Federal authorities determined that the Salama Child Care Center billed Minnesota's state-funded child care assistance program for more children than were actually observed entering the building.

State regulators revoked the center's license last week for numerous safety violations.

The findings result from a 16-month physical surveillance of the center, located at 1411 Nicollet Av. S. Local law enforcement officers and civilian investigators monitored Salama's entrances and found wide discrepancies between the number of children entering the building and the number billed to the state.

On a single day last January, for instance, Salama billed the state for 132 children, even though investigators observed a total of only 24 children entering the building. On at least two occasions, Salama billed the child-care assistance program for services even though the facility was actually closed, according to the FBI search warrant filed with the U.S. District Court in Minneapolis.

Though Salama was licensed to provide care for just 60 children at any time, the facility had nearly four times that many — 229 children — enrolled in the state-funded Child Care Assistance Program (CCAP), which provides monthly financial assistance to more than 30,000 children of low-income families. Last year, state and federal payments to Minnesota providers under the CCAP program totaled $216 million.

"The investigation has revealed that a large discrepancy exists between the number of children actually attending and receiving care at Salama and the number of children for which Salama seeks and receives reimbursement …" wrote FBI special agent Kathryn Morrissey in an affidavit included with the search warrant application.

No formal charges have been filed against Salama, its owners or any of its employees. Ardo Y. Diriye is identified as the chief executive and license holder of Salama; Fozia Sheik Ali is listed as director in state licensing documents.

Telephone calls to the center were not returned Friday and it appeared closed, with black tarp covering most of the windows.

Nationwide, federal and local prosecutors have been cracking down on fraud in taxpayer-supported child care programs. In some states, lax regulation has led to pervasive billing abuse by child care providers and parents, who often collude in billing state programs for services never rendered.

In December, a husband and wife from Fridley and two accomplices allegedly bilked the state of $4 million by falsifying work records at their child and home care businesses. The owners of Deqo Family Centers allegedly recruited mothers eligible for state-funded child care to enroll their children, and then disguised payments to the mothers by asking them to work as employees. They then allegedly filed false time records of the mothers' employment. It was the largest case of alleged fraud in the history of the CCAP program, state officials said.

Investigators from the FBI and the Minnesota Department of Human Services (DHS) searched the Salama facility near downtown Minneapolis last week. Some families were turned away as investigators carried away computers and boxes full of documents. The Internal Revenue Service and the Hennepin County fraud investigation unit also have participated in the investigation.

The Salama Child Care Center, which was licensed in 2009, has a long history of child safety violations. In its license revocation order, the DHS cited more than 20 violations of state rules, including inadequate staff-to-child ratios; exposing children to hazards, such as unshielded electrical outlets, and operating without basic classroom materials, such as small blocks and crafts supplies.

The Salama Child Care Center in St. Cloud, an affiliate of the Minneapolis facility, had its license revoked in 2013 after a 4-year-old wandered away from the facility to a nearby parking lot, where a customer almost hit the child with a car.

Federal and state authorities declined to comment on the Salama case, citing the ongoing investigation.

Chris Serres • 612-673-4308

Twitter: @chrisserres