The Incident at a Glance
According to the U.S. Attorney’s Office for the Southern District of Indiana, Sharon Jackson, a 60-year-old former daycare operator, was charged with one count of wire fraud and one count of failure to file an individual income tax return. Between 2017 and 2024, she operated three Indianapolis childcare facilities: Precious Hearts of Solid Rock, Greater St. Mark Five Star Ministry, and Little Angels of Precious Hearts.
Prosecutors allege that Jackson submitted false attendance records to the Child Care and Development Fund (CCDF), claiming children were present at Little Angels when they were not. She allegedly used Hoosier Works Child Care cards assigned to parents and worked with some parents to submit those false claims. Jackson then paid the parents a portion of the funds through Cash App or by leaving cash in the gutters at the facility. She also allegedly created fraudulent invoices from food vendors to claim reimbursements for meals that were never served through the Child and Adult Care Food Program (CACFP). The total amount fraudulently obtained was approximately $359,083.60. She also reportedly failed to file federal income tax returns for 2018 and 2020 through 2023, owing around $287,381.79. Jackson has agreed to plead guilty to both charges, though her formal plea has not yet been entered. Read the original article here.
Legal Issues Beyond Licensing
This case is a reminder that daycare fraud can quickly move from a licensing issue to a federal criminal matter. Wire fraud under 18 U.S.C. § 1343 requires a scheme to defraud and the use of interstate wire communications. Submitting false attendance records and fraudulent invoices electronically satisfies that requirement. Failure to file a federal tax return is a separate criminal charge under 26 U.S.C. § 7203.
In addition to criminal exposure, providers who submit false claims to federally funded programs like CCDF and CACFP can face civil liability under the False Claims Act, including treble damages. For daycare owners, the consequences can include license revocation, exclusion from government subsidy programs, restitution, fines, and even prison time.
OCFS Part 416: Family Day Care Homes
Although this incident happened in Indiana, New York providers should pay close attention. OCFS Part 416 applies to family day care homes in New York. If a provider engaged in similar conduct, the following sections would likely be implicated:
- 416.4 – Records: Providers must maintain accurate records, including attendance and enrollment information. Falsifying attendance is a direct violation.
- 416.7 – Nutrition and Food Service: Meals and snacks must actually be served and documented. Claiming reimbursement for meals never provided violates this section.
- 416.3 – Program: The provider must actually deliver care and supervision. Billing for children who are not present means the program was not provided.
- 416.16 – Enforcement: OCFS may suspend, revoke, or deny a registration for violations of Part 416.
OCFS Part 418-1: Group Family Day Care
Part 418-1 applies to group family day care homes, which serve larger groups of children. The same type of fraudulent conduct would likely violate:
- 418-1.4 – Records: Accurate attendance and meal records are required.
- 418-1.7 – Nutrition and Food Service: Reimbursement can only be claimed for meals actually served.
- 418-1.3 – Program: Children must be present and receiving care for the provider to claim payment.
- 418-1.16 – Enforcement: OCFS can take disciplinary action, including suspension or revocation.
Group family day care providers often participate in subsidy and food programs, so accurate recordkeeping is even more critical.
DOHMH Article 47: New York City Day Care Centers
In New York City, the Department of Health and Mental Hygiene (DOHMH), also known as DOH, regulates day care centers under Article 47 of the NYC Health Code. A center that falsifies attendance or meal claims could face violations including:
- Section 47.15 – Records: Day care centers must keep true and accurate records, including attendance and meal counts.
- Section 47.21 – Nutrition: Food service must meet program requirements, and providers cannot claim reimbursement for meals not served.
- Section 47.19 – Program: The center must provide the care, activities, and supervision for which it is registered.
- Section 47.11 – Revocation and Suspension: DOHMH may suspend or revoke a center’s registration for violations.
- Section 47.23 – Health and Safety: Maintaining false records undermines the health and safety oversight that Article 47 is designed to protect.
Practical Takeaways for Daycare Owners
- Keep attendance records accurate and contemporaneous.
- Never submit claims for children who are not in your care.
- Document meals and snacks at the time they are served.
- Report all income on your tax returns.
- If you receive an inquiry from OCFS, DOHMH, or a funding agency, contact an experienced daycare defense attorney before responding.
Conclusion
Fraud allegations can upend a daycare business and lead to serious criminal, civil, and licensing consequences. If you are facing license suspension or revocation, an OCFS investigation, a DOHMH enforcement action, or questions about government subsidy compliance, the Law Office of Gregory P. Mouton, Jr., LLC can help. As a daycare defense lawyer for providers across New York, we understand the regulations and the stakes. Contact our office today to schedule a consultation.
