ACS insiders' $1M 'phantom-tot bilk' fake adoption busts
Cornell, Kati, Jennifer Fermino and Stephanie Cohen. New York Post, July 17, 2008.
Two top ACS officials were among four people charged yesterday in a million-dollar scheme to rip off the city's child- protection agency by funneling cash through fake adoptions of kids who didn't exist.
The Administration for Children's Services duo allegedly spent the last three years setting up the phantom adoptions and cutting checks for nonexistent computer services.
Calling the case a "weighty and tragic situation," Department of Investigation Commissioner Rose Gill Hearn called for a major overhaul of a system that allowed the scam.
She accused Nigel Osarenkhoe, supervisor of adoptions at the ACS payment services unit, and a second agency official, Lethem Duncan, of using the "great river of public money that flows through ACS" as a personal piggy bank.
In a disturbing twist, Hearn said investigators learned of the embezzlement scam during a year-long probe of the agency launched in response to the case of Judith Leekin, a Florida foster mother who allegedly abused 11 New York City kids in her care. Osarenkhoe was the ACS point person in that investigation.
The stolen cash was earmarked for orphaned, abandoned, and often abused kids, Hearn said.
A criminal complaint shows Osarenkhoe hatched the phony adoption plot at least as early as 2005, and recruited Duncan's help in finding people willing to pose as parents.
Osarenkhoe boasted to Duncan that "all he needs is a name, any name" to put in the ACS system in order to cut a check, US Attorney Michael Garcia said in announcing the charges of embezzlement, mail fraud and money laundering.
Stay Thompson, a foster-care worker with Concord Family Services in Brooklyn, snapped up the chance to become "foster mother" to a phantom child in exchange for a share of nearly $80,000 in checks, court papers charge.
At the same time, Duncan allegedly wrote a $375,000 check for computer equipment and services under a fabricated contract with Philbert Gorrick, owner of Contemporary Technologies Inc., which provided services to Concord.
Gorrick used his share to pay for a 2006 BMW, a 2006 Range Rover and $30,000 in rental payments at a doorman building, according to court papers.
The major break in the case came in March when a cooperating Duncan set up an additional, jaw-dropping $711,000 bogus transaction. The charges came one day after Leekin, 63, was sentenced to 11 years in prison for stealing more than $1.6 million from ACS, even as she tortured 11 disabled kids.
Stay Thompson (left) posed as a foster mom and ACS official Nigel Osarenkhoe, at court yesterday, made crooked payments in a scheme (flow chart) that netted another man this BMW, feds say.
Showing posts with label embezzlement. Show all posts
Showing posts with label embezzlement. Show all posts
Monday, October 13, 2008
Employee steals from adoption subsidy program
Ex-Official Pleads Guilty In Fraud at Welfare Agency
Weiser, Benjamin New York Times, Aug 1, 2008.
A former official of New York City's child welfare agency pleaded guilty on Thursday to charges including embezzlement, fraud and money laundering. Prosecutors have said he took part in schemes to steal hundreds of thousands of dollars intended for the care of children with disabilities or special needs.
The official, Lethem Duncan, 62, participated in one scheme in which prosecutors have said that another Administration for Children's Services employee manipulated the agency's computers to create phantom adoptions and issue checks as if they were subsidies being paid for real adoptions.
In another scheme, Mr. Duncan, who officials have said was the deputy director of the payments-services department, arranged to have the agency issue checks to a private contractor for fictitious services, and received kickbacks in return.
"I agreed with other persons to embezzle money from A.C.S.," Mr. Duncan said in United States District Court in Manhattan as he addressed the first of six counts to which he pleaded guilty.
The judge, John G. Koeltl, asked Mr. Duncan, "Did you know that what you were doing was wrong and illegal?"
"Yes, Your Honor," Mr. Duncan replied.
The fraud charges involving Mr. Duncan and others were first made public about two weeks ago by the United States attorney's office in Manhattan and the city's Department of Investigation.
That announcement came a day after the sentencing of Judith Leekin, who was convicted of fraud after she adopted 11 children under four aliases and collected $1.68 million in payments meant for their care, which she used to support a lavish lifestyle. She received a prison term of nearly 11 years.
The two fraud cases have focused a harsh spotlight on the lack of internal financial controls at Children's Services. When the scheme involving Mr. Duncan was disclosed last month, Rose Gill Hearn, the Department of Investigation commissioner, said that Mr. Duncan "had the power to authorize A.C.S. payments and checks -- so he did, for himself and his co-conspirators, and it was easy, too easy."
John B. Mattingly, the Children's Services commissioner, said at the time that his agency would investigate to "discover how our internal controls and fiscal accountability systems were violated," and what could be done "to prevent this malfeasance from reoccurring."
An agency spokeswoman referred a reporter for comment to the Investigation Department on Thursday night. There, Ms. Gill Hearn said: "This guilty plea was a substantial step forward in this case. We're glad that this investigation has ended this individual's corruption in his former city position."
In the phony-adoption scheme, Mr. Duncan also worked with an employee of a Brooklyn foster care agency, Concord Family Services, the authorities have said. They said that the employee, Stay Thompson, Concord's fiscal director, received about $79,000 in illegal payments and agreed to share the proceeds with Mr. Duncan and the other A.C.S. employee, Nigel Osarenkhoe.
Mr. Mattingly, the commissioner, has said that the city has halted the placement of children with Concord.
In the other scheme, the authorities said, Mr. Duncan had his agency issue a check for $375,000 to a computer-services firm run by an acquaintance of Ms. Thompson's, which they said had done no work to earn the money.
The head of that firm, which had offices at Concord, then split the money with Mr. Duncan and Ms. Thompson, prosecutors said. Mr. Duncan, they said, received more than $100,000 that way.
Court records unsealed last month indicated that Mr. Duncan has been cooperating with the authorities in hopes of receiving a lighter sentence.
In court on Thursday, Daniel L. Stein, a prosecutor, said that the evidence included recordings of conversations between Mr. Duncan and his conspirators in the case.
The judge told Mr. Duncan that he could face up to 75 years in prison on the charges. Mr. Duncan, who is free on bond pending his sentencing, had no comment as he left the courtroom.
His lawyer, Steven K. Frankel, said Mr. Duncan had retired from the Children's Services agency.
Mr. Frankel added, "A.C.S. should look closely at their internal safeguards, which are literally nonexistent, particularly within the adoption subsidy program." He said that the activities the investigation uncovered "could never have happened if there were any kind of reasonable safeguards in place."
Weiser, Benjamin New York Times, Aug 1, 2008.
A former official of New York City's child welfare agency pleaded guilty on Thursday to charges including embezzlement, fraud and money laundering. Prosecutors have said he took part in schemes to steal hundreds of thousands of dollars intended for the care of children with disabilities or special needs.
The official, Lethem Duncan, 62, participated in one scheme in which prosecutors have said that another Administration for Children's Services employee manipulated the agency's computers to create phantom adoptions and issue checks as if they were subsidies being paid for real adoptions.
In another scheme, Mr. Duncan, who officials have said was the deputy director of the payments-services department, arranged to have the agency issue checks to a private contractor for fictitious services, and received kickbacks in return.
"I agreed with other persons to embezzle money from A.C.S.," Mr. Duncan said in United States District Court in Manhattan as he addressed the first of six counts to which he pleaded guilty.
The judge, John G. Koeltl, asked Mr. Duncan, "Did you know that what you were doing was wrong and illegal?"
"Yes, Your Honor," Mr. Duncan replied.
The fraud charges involving Mr. Duncan and others were first made public about two weeks ago by the United States attorney's office in Manhattan and the city's Department of Investigation.
That announcement came a day after the sentencing of Judith Leekin, who was convicted of fraud after she adopted 11 children under four aliases and collected $1.68 million in payments meant for their care, which she used to support a lavish lifestyle. She received a prison term of nearly 11 years.
The two fraud cases have focused a harsh spotlight on the lack of internal financial controls at Children's Services. When the scheme involving Mr. Duncan was disclosed last month, Rose Gill Hearn, the Department of Investigation commissioner, said that Mr. Duncan "had the power to authorize A.C.S. payments and checks -- so he did, for himself and his co-conspirators, and it was easy, too easy."
John B. Mattingly, the Children's Services commissioner, said at the time that his agency would investigate to "discover how our internal controls and fiscal accountability systems were violated," and what could be done "to prevent this malfeasance from reoccurring."
An agency spokeswoman referred a reporter for comment to the Investigation Department on Thursday night. There, Ms. Gill Hearn said: "This guilty plea was a substantial step forward in this case. We're glad that this investigation has ended this individual's corruption in his former city position."
In the phony-adoption scheme, Mr. Duncan also worked with an employee of a Brooklyn foster care agency, Concord Family Services, the authorities have said. They said that the employee, Stay Thompson, Concord's fiscal director, received about $79,000 in illegal payments and agreed to share the proceeds with Mr. Duncan and the other A.C.S. employee, Nigel Osarenkhoe.
Mr. Mattingly, the commissioner, has said that the city has halted the placement of children with Concord.
In the other scheme, the authorities said, Mr. Duncan had his agency issue a check for $375,000 to a computer-services firm run by an acquaintance of Ms. Thompson's, which they said had done no work to earn the money.
The head of that firm, which had offices at Concord, then split the money with Mr. Duncan and Ms. Thompson, prosecutors said. Mr. Duncan, they said, received more than $100,000 that way.
Court records unsealed last month indicated that Mr. Duncan has been cooperating with the authorities in hopes of receiving a lighter sentence.
In court on Thursday, Daniel L. Stein, a prosecutor, said that the evidence included recordings of conversations between Mr. Duncan and his conspirators in the case.
The judge told Mr. Duncan that he could face up to 75 years in prison on the charges. Mr. Duncan, who is free on bond pending his sentencing, had no comment as he left the courtroom.
His lawyer, Steven K. Frankel, said Mr. Duncan had retired from the Children's Services agency.
Mr. Frankel added, "A.C.S. should look closely at their internal safeguards, which are literally nonexistent, particularly within the adoption subsidy program." He said that the activities the investigation uncovered "could never have happened if there were any kind of reasonable safeguards in place."
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