RIVERSIDE (AP) — Stephanie Vega’s soon-to-be ex-husband was gathering his belongings to move out of the house when he found a bag that contained $3,000 and bogus documents bearing alterations of his name.

The Riverside County district attorney’s office says that was the evidence that unraveled a nine-year-long, $500,000 swindle of a state program that pays for child care so welfare recipients can go back to work.

Vega, a county child-care liaison, was arrested last month.

The bust is not the first time fraud has been alleged in the CalWorks child care program administered by the state Department of Education. But despite discoveries of scams that have cost millions in taxpayer dollars over the years, glaring holes in the program’s oversight continue.

A report by the state Senate Office of Oversight and Outcomes released in October highlighted the fact that although authorities acknowledge that stricter accountability measures are needed, little has been done. Official efforts to root out and prosecute
fraud remain sporadic. Meanwhile, 194,000 children across the state wait an average of three years for the subsidies.

“The current system amounts to a merry-go-round of disincentives in which those who oversee the program would rather not know about fraud or feel powerless to address it,” wrote Senate staffer John Hill in the report.

The 38-year-old Vega, who was in charge of approving client eligibility and payments for a decade, will plead not guilty to three counts of embezzlement by a public official, said her lawyer Daniel Greenberg.

While the Riverside case involves public employees accused of stealing taxpayer funds, fraud by parents who receive CalWorks money is likely more common, according to the Senate report.

The crux of the problem rests in the complicated way the $1.4 billion program, which serves 185,000 children, even with its long waiting list, is set up. The Education Department oversees most of the program because the concept was to include an educational component in the day care to boost disadvantaged children.

Part of the program is also administered by the Department of Social Services because recipients start on welfare and are given child care for six months while they seek a job. They are then required to have a job that doesn’t exceed a certain income to continue receiving aid.

While welfare laws require the Social Services Department to fund investigators to go after cheats, the Education Department has no funding or authorization to establish similar enforcement and no money to give its partner agency.

“We’ve sort of been round and round about this,” said Greg Hudson, Education Department administrator.

The potential for fraud may also be exacerbated by the fact that CalWorks allows parents to choose unlicensed child-care operators, who can be friends, relatives or neighbors.

The types of swindles are numerous and often complex, involving rings of relatives and friends covering for each other, according to the Senate report.

A Los Angeles County case involved four people claiming they were providing child care when they were not. One was acting as an employer to qualify 11 parents for child care, defrauding $1.3

Another Los Angeles case involved 55 defendants in a $2 millionscam. A man falsely claimed to employ parents in a day-care center, writing kickback checks to show as proof of employment to collect
the child care money.

In Sacramento, two parents swindled $100,000 by creating a bogus identity for the father who claimed to be a child-care provider. In Santa Clara, a father listed himself as a provider and reaped
almost $65,000.

In Fresno County, a parent and a provider were paid $50,000 after failing to disclose they were married. Another case involved two parents who were being paid to look after each other’s children
when in fact they cared for their own.

Child-care providers are left in a bind when they suspect cheating because agencies have nowhere to take the case, said Denyne Kowalewski, executive director of the California Alternative Payment Program Association, which represents the 86 agencies that funnel the money from the Education Department to child-care providers.

“We have the indicators. We have the paperwork. Who do we hand it off to?” she said. “No one wants to take responsibility for it. It’s crazy.”

If the dollar amount is high enough, local law enforcement will sometimes accept the case, but usually the money involved is not worth their time, she said. If a prosecutor receives evidence of a child-care fraud, “We’ll do the case because it’s a crime,” said Tulare County District Attorney Phil Cline, who heads the public assistance fraud unit of the state district attorney’s association.

But the key is the investigation. Without hard evidence from investigations and their own limited resources, prosecutors cannot do much.

The DA’s association has recommended the state directly fund prosecutors’ offices for welfare and child-care fraud investigations, Cline said.

As is, suspected scammers are usually merely terminated from the program, but even then they can appeal, Kowalewski said.

There have been attempts to fix the system. In 2004, the state budget was revised to include $3.1 million to fund fraud investigators for the Education Department, but that was later diluted to reviews to detect administrative errors. In 2006, a Senate bill would have funded a pilot-program for Education Department child-care investigations, but it died in committee.

In the meantime, the department encourages agencies to ferret out scams, press for prosecution and terminate dodgy clients, as well as develop and share ways to corroborate information and close loopholes.

“Neither federal or state law gives us much in the way of alternatives,” Hudson said. “You can never totally outsmart everybody.”

(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

Comments (7)
  1. karen topol says:

    Gee, what a surprise. Several years ago I worked in concert with both the Education and Social Services arms of the State government. They were inept, petty and self serving. I can’t believe it’s taken so many years for their incompetence to come to light. I find it reprehensible that there are so many agencies willing to put their hearts and souls into these programs, only to be defeated by the very entity “handling” funding and regulations.

  2. phil nguyen says:

    send these people to prison for along time. So it will prevent something like this happen in the future.

  3. joe says:

    so what is new ex wife did for years

  4. mary says:

    Cancel the program and save taxpayers’ money. It’s not worth all the headaches and it’s not benefiting those intended, No wonder the California state budget is in such a mess. People are stealing and getting away with it! Enough!

  5. headjazz says:

    If you have children you care for them. Cancel this program now, governor Brown! Enough, is enough! Yes we can!

  6. Fed Up says:

    The California Bureaucracy is broken. And politicians acting like pimps use these programs to get re-elected. They tend to use our tax dollars for their own desires. I used to work in a program called Med-Ocho. We worked along with DPSS. And O Boy, the fraud there. Now Cal-Works! Another program where we the hard working populace suffers at the hands of people who know how to work the system. And the system allows them to get away with fraud. The only way to stop it is to shut down this program. At least temporarily to see how these leeches function. I understand there are those who need help, but unless we best go after fraud and prosecute them under the law it will never stop. We need men and women, in authority, with some guts to make the hard decisions, even if it means they are not re-elected. The bleeding hearts have got to stand back and allow the program to be cleansed for those who truly need it.

  7. Yes Maria ! says:

    And yet….Ms Vega is due to walk in a few months…and gets to rest comfotrtably at her residence with all the things money can buy….YOUR MONEY< AND MY MONEY, AND THE STATES MONEY !!!

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