Investigators: Alleged day care fraud goes unpunished

A former fraud investigator with the government blows the whistle on a scheme that's raking in millions of your tax dollars. He claims authorities are well aware of the problem, but are doing little to stop it.

Steve Halicki spent 15 years as a welfare fraud investigator for Hennepin County. He came to the Fox 9 Investigators to grind an ax. He was fired in 2013 while in the midst of a big investigation. The county claims he was an insubordinate bully whose tactics were hampering efforts to catch welfare cheats.

Halicki contacted the Fox 9 Investigators after seeing our series of reports on DEQO day care centers. In 2013, we uncovered evidence the company was collecting millions of dollars in public subsidies for providing bogus child care services to low income families. In December, the Ramsey County Attorney charged DEQO's owner with fraud. According to Halicki, before he was fired, he was tracking a similar scheme in Hennepin County involving multiple child care centers.

More: Fraud charges against Deqo Family Centers owners follows Fox 9 investigation

Halicki took the Fox 9 Investigators on a driving tour to show what he'd uncovered. He said the day cares he pointed out all billed over $100,000 a month. Halicki discovered one center was charging the county for kids who were never dropped off.

He took us to center after center that had no sign outside to indicate it was a daycare. When we knocked on the doors during posted business hours no one answered. Yet, each location has a state license to operate and is eligible to collect child care subsidies to serve low income families.

The Fox 9 Investigators asked Halicki why the windows of one particular day care were blacked out. He replied, "So you can't prove when they're working and when they're not. You could be billing until 11 p.m. but they've gone home 6 hours earlier." Each of the centers he took us to had their windows mysteriously covered.

The Fox 9 Investigators checked state inspection records for each of the centers on the tour. They've all been cited for licensing violations.

Hennepin County officials say they take all cases of alleged day care fraud seriously. "Our focus is really primarily on prevention. But certainly we investigate and take action and work with our county attorney's office whenever there is actually fraud that has occurred," said Rex Holzemer Asst. Hennepin Co. Administrator

In the two years since Halicki was fired, not one case has been prosecuted by Hennepin County. The Fox 9 Investigators found most counties in the metro aren't investigating day care center fraud. They're handing those cases off to a special team within the Department of Human Services that ramped up more than a year ago. "Nobody is more frustrated with the amount of time its taking than we are, we really want to get through these and get some of these completed," said DHS Inspector General, Jerry Kerber. We're told the state has nearly a dozen active investigations underway.

Halicki says he's going public with this information because he wants to clear his name. He did appeal his firing from the Hennepin County Fraud Unit. But an arbitrator upheld the county's decision to let him go.

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