Latest / The 47 Morning Update with Ben Ferguson / DOJ Busts $10 Million California Daycare Fraud Scheme

Transcript

DOJ Busts $10 Million California Daycare Fraud Scheme · The 47 Morning Update with Ben Ferguson

• 0:00
  Speaker 1: It's going to end soon, but because they can't go on,
• 0:03
  Speaker 1: they can't go on. Their nation's destroyed. But I have
• 0:08
  Speaker 1: to say, you have a little higher, you have a
• 0:10
  Speaker 1: higher gain. It's a very inexpensive price to pay for
• 0:14
  Speaker 1: what we've done. Remember that it's a little more.
• 0:17
  Speaker 2: It's even if it was, frankly, even if it was
• 0:19
  Speaker 2: a lot more.
• 0:20
  Speaker 1: But that's going to come tumbling down.
• 0:22
  Speaker 2: That's going to be like a rocket ship.
• 0:24
  Speaker 1: In reverse.
• 0:24
  Speaker 3: And don't forget that you're listening to the 47 Morning
• 0:28
  Speaker 3: Update with Ben Ferguson.
• 0:30
  Speaker 4: Good Thursday morning. Nice to have you with us on
• 0:32
  Speaker 4: the 47 Morning Update. And we've got several big stories
• 0:35
  Speaker 4: for you. The Trump administration's fraud crackdown is now uncovering
• 0:39
  Speaker 4: another massive scheme. Twelve people are now charged an alleged
• 0:43
  Speaker 4: $ 10 million California daycare fraud operation. And the DOJ says
• 0:48
  Speaker 4: this is just the tip of the iceberg. They also
• 0:52
  Speaker 4: have much bigger nationwide indictments that I'm going to break
• 0:55
  Speaker 4: down for you as well. And those are costing you
• 0:58
  Speaker 4: not millions, but billions of dollars of your tax dollars
• 1:02
  Speaker 4: going to foreign countries. Now, I have all those details
• 1:06
  Speaker 4: for you, and I'm going to get to that in
• 1:07
  Speaker 4: just a moment. The midterm elections, they're heating up. Congress
• 1:11
  Speaker 4: and control and the president's agenda, they hang in the balance.
• 1:15
  Speaker 4: And every headline has the potential to shift those odds. Well,
• 1:19
  Speaker 4: in Cal State, you can trade major primaries. You can
• 1:22
  Speaker 4: trade election outcomes and the biggest political storylines as they happen.
• 1:27
  Speaker 4: I am taking a look at a lot of the
• 1:28
  Speaker 4: different races, including who controls the House or the Senate.
• 1:32
  Speaker 2: Yeah, that's up there right now.
• 1:34
  Speaker 4: You can also look at races where you are or
• 1:36
  Speaker 4: the big races that everyone's talking about. For example, will
• 1:40
  Speaker 4: Kim Paxson defeat James Tallarico in Texas? Right now, Paxson
• 1:45
  Speaker 4: is currently trading at 50%. meaning a $ 100 trade would
• 1:49
  Speaker 4: pay out $ 93 if he beats Tallarico. Now, one of
• 1:53
  Speaker 4: the things you've got to check out is Calshi's new
• 1:56
  Speaker 4: midterms hub. It's where all the races are. Whether it's
• 2:00
  Speaker 4: the House, the Senate, or the Tallarico and Paxson, they're
• 2:03
  Speaker 4: all there for you. On Calshi, you're trading against peers
• 2:06
  Speaker 4: in a live market, meaning there's no house. And as
• 2:10
  Speaker 4: the probability changes... You can buy in and out of
• 2:14
  Speaker 4: your position. So download the Kalshi app. And if you
• 2:18
  Speaker 4: use the code Ben, you get $ 20 when you trade $ 20.
• 2:22
  Speaker 4: So use that promo code Ben. Kalshi, K-A-L-S-H-I. Kalshi, trade
• 2:28
  Speaker 4: on anything.
• 2:29
  Speaker 5: 18 plus only. Restrictions and eligibility requirements apply. Event contract
• 2:33
  Speaker 5: trading involves risk and may not be suitable for all investors.
• 2:35
  Speaker 5: Cauchy products are not available in all jurisdictions. Prices, values,
• 2:39
  Speaker 5: and available markets may differ from those mentioned. For more information,
• 2:42
  Speaker 5: see cauchy.com slash regulatory.
• 2:45
  Speaker 2: It's the 47 Morning Update, and it starts right now.
• 2:48
  Speaker 3: Story number one.
• 2:49
  Speaker 4: Fraud is something we focus on often on this show,
• 2:52
  Speaker 4: and it seems that we keep finding a lot more
• 2:54
  Speaker 4: of it. This time, even more shocking, and yet again,
• 2:57
  Speaker 4: coming out of, yeah, California. The Justice Department has announced
• 3:02
  Speaker 4: that 12 individuals have now been charged in Southern California.
• 3:06
  Speaker 4: And what they're describing is an alleged home daycare massive
• 3:10
  Speaker 4: fraud scheme involving more than $ 10 million in taxpayer-funded child
• 3:16
  Speaker 4: care money. And wait until you hear how prosecutors say
• 3:19
  Speaker 4: this actually worked. The money was supposed to help, quote,
• 3:22
  Speaker 4: low-income families pay for child care. Instead, the federal prosecutors
• 3:28
  Speaker 4: now allege that millions of dollars were funneled to bogus
• 3:32
  Speaker 4: or fraudulent daycare operations that were claiming taxpayer money for
• 3:37
  Speaker 4: child care they allegedly were not actually providing.
• 3:41
  Speaker 2: Sound familiar?
• 3:42
  Speaker 4: It's awful close to what we found in Minnesota. Now,
• 3:46
  Speaker 4: this wasn't a tiny investigation either.
• 3:49
  Speaker 2: According to the U.S.
• 3:50
  Speaker 4: Attorney's Office for the Southern District of California, more than
• 3:54
  Speaker 4: 250 federal, state, and local law enforcement personnel participated in
• 4:00
  Speaker 4: the coordinated takedown. They said that all 12 defendants were arrested,
• 4:05
  Speaker 4: and authorities executed search warrants at 12 different San Diego
• 4:09
  Speaker 4: area homes that claimed to be operating as child daycare facilities.
• 4:14
  Speaker 2: They were not. They were homes.
• 4:16
  Speaker 4: Now, the details in the federal complaint are extraordinary as well.
• 4:20
  Speaker 4: Prosecutors say the system, well, this is how it worked.
• 4:23
  Speaker 4: The defendants obtained California licenses to operate home child care facilities.
• 4:28
  Speaker 4: They then registered with organizations administering subsidized child care for
• 4:34
  Speaker 4: eligible families. In essence, this is another form of welfare. Now,
• 4:39
  Speaker 4: to get paid, daycare providers were required to submit attendance
• 4:43
  Speaker 4: records documenting which children were actually being cared for, along
• 4:47
  Speaker 4: with the dates and times that they were there.
• 4:50
  Speaker 2: It's pretty straightforward.
• 4:52
  Speaker 4: You take care of a child, you document it, the
• 4:54
  Speaker 4: government reimburses you, and that's how the system works. But
• 4:59
  Speaker 4: prosecutors allege these defendants submitted false attendance records claiming children
• 5:05
  Speaker 4: were receiving daycare when they weren't. And investigators apparently decided
• 5:09
  Speaker 4: to test those claims against reality. They conducted surveillance. One
• 5:15
  Speaker 4: defendant allegedly claimed he cared for 23 children. in March
• 5:19
  Speaker 4: of 2026 and 25 children in April, and that he
• 5:23
  Speaker 4: provided child care every single day during those two months.
• 5:28
  Speaker 4: Federal investigators say surveillance covered 57 days during that period.
• 5:33
  Speaker 4: And guess how many days they allegedly saw children entering
• 5:37
  Speaker 4: or leaving the facility? One time, one day out of 57.
• 5:44
  Speaker 2: And here's the remarkable part.
• 5:46
  Speaker 4: According to the federal complaint, that one day happened to
• 5:49
  Speaker 4: be a day a state inspector arrived for an unannounced inspection.
• 5:55
  Speaker 4: Prosecutors say the children and even the daycare operator himself
• 5:59
  Speaker 4: showed up after the inspector arrived.
• 6:02
  Speaker 2: That's what federal prosecutors are alleging.
• 6:05
  Speaker 4: Now, what's crazy is the story gets even, well, more
• 6:08
  Speaker 4: insane from here because investigators compared some daycare attendance claims
• 6:13
  Speaker 4: against border crossing records. One defendant allegedly left the United
• 6:18
  Speaker 4: States around January the 1st of 2024. and didn't return
• 6:23
  Speaker 4: until around January the 30th. So that would be 30
• 6:26
  Speaker 4: days they're out of the country. Yet according to the prosecutors,
• 6:29
  Speaker 4: attendance records were still submitted claiming child care was being
• 6:34
  Speaker 4: provided at the home during January when the person who
• 6:37
  Speaker 4: was supposed to be watching the children was literally out
• 6:40
  Speaker 4: of the country. Now, the government also says eight subsequent
• 6:45
  Speaker 4: direct deposits totaled nearly $ 15, 000. Federal investigators say each of
• 6:52
  Speaker 4: the 12 defendants received somewhere between approximately.
• 6:54
  Speaker 2: $ 538, 000 and $ 1. 2 million over varying periods.
• 7:02
  Speaker 4: Several allegedly collected more than $ 1 million each. Altogether, prosecutors
• 7:07
  Speaker 4: say more than $ 10 million intended to help low-income families
• 7:11
  Speaker 4: was diverted through these alleged schemes. The defendants are facing
• 7:15
  Speaker 4: wire fraud charges, with some also charged with money laundering. These, again,
• 7:21
  Speaker 4: are all the allegations. And, of course, the defendants are
• 7:24
  Speaker 4: going to say, oh, no, no, no, we're all innocent. Now,
• 7:28
  Speaker 4: this wasn't the only thing that the Trump administration announced
• 7:31
  Speaker 4: this past week. The Justice Department and Small Business Administration
• 7:35
  Speaker 4: also announced the results of a nationwide enforcement surge that
• 7:39
  Speaker 4: was targeting fraud involving pandemic-era government loans. Remember, there was
• 7:45
  Speaker 4: a lot of people taking a lot of cash during
• 7:46
  Speaker 4: the pandemic, and it was a free-for-all to get money. Well,
• 7:49
  Speaker 4: now we know that between June 12th and September 1,
• 7:53
  Speaker 4: prosecutors say enforcement actions... involved more than 160 criminal defendants
• 8:00
  Speaker 4: and more than $ 245 million in intended taxpayer losses. Roughly
• 8:07
  Speaker 4: 80 defendants were newly charged. Others are already pleading guilty.
• 8:12
  Speaker 4: And there is even some that have already been sentenced. Now,
• 8:15
  Speaker 4: these schemes sound exactly like what we also saw recently
• 8:19
  Speaker 4: in Minnesota. They're familiar, fake businesses, bogus payroll numbers, false
• 8:25
  Speaker 4: revenue information, and then, of course, identity theft used to
• 8:29
  Speaker 4: obtain taxpayer-backed loans. Now, the Small Business Association says approximately
• 8:35
  Speaker 4: 870,000 borrowers suspected of fraud involving pandemic-era programs are being
• 8:41
  Speaker 4: suspended from eligibility for future federal SBA loans. Officials say
• 8:47
  Speaker 4: that these pandemic-level loan fraud was massive. And they say
• 8:53
  Speaker 4: that the suspensions now are associated with an estimated $ 3.
• 8:57
  Speaker 4: Thirty nine billion in suspected fraud. Yeah, that would be
• 9:02
  Speaker 4: your tax dollars that disappeared. Now, the SBA says that
• 9:05
  Speaker 4: when combined with previous actions, borrowers connected to approximately forty
• 9:11
  Speaker 4: nine billion in fraud and have now been suspended across
• 9:15
  Speaker 4: all 50 states. And you just got to think about
• 9:18
  Speaker 4: those numbers I just gave you. We're no longer talking
• 9:20
  Speaker 4: about somebody lying on a form to steal a few
• 9:22
  Speaker 4: thousand dollars. We're now talking about fraud investigations reaching into
• 9:26
  Speaker 4: the tens of billions of dollars. And the DOJ, by
• 9:30
  Speaker 4: the way, isn't limiting this to the pandemic programs. They're
• 9:34
  Speaker 4: also saying that health care is another enormous target. Now,
• 9:38
  Speaker 4: the Justice Department also has announced a health care fraud
• 9:41
  Speaker 4: crackdown involving 450 defendants, and they stole allegedly more than
• 9:47
  Speaker 4: $ 6. 5 billion. And just this last month, prosecutors in Massachusetts
• 9:54
  Speaker 4: announced another charge connected to what the DOJ called Operation
• 9:59
  Speaker 4: Gold Rush. that was an enormous health care fraud prosecution
• 10:03
  Speaker 4: that the doj says targeted medicare and other insurers now
• 10:08
  Speaker 4: a foreign national this is just one guy by the
• 10:10
  Speaker 4: way was indicted on a money laundering conspiracy charge connected
• 10:16
  Speaker 4: to a 1.3 billion health care fraud scheme. Prosecutors described
• 10:21
  Speaker 4: the broader organization behind Operation Gold Rush as a foreign based.
• 10:25
  Speaker 2: Let me say that again.
• 10:26
  Speaker 4: A foreign based operation from Russia and elsewhere. So 1.3
• 10:33
  Speaker 4: billion of your dollars disappeared to Russia and other countries. Now, again,
• 10:38
  Speaker 4: this is another example of what Donald Trump said he
• 10:41
  Speaker 4: was going to do. And the government's made it clear
• 10:44
  Speaker 4: that fraud is not victimless. And a great example of
• 10:47
  Speaker 4: this goes back to our first story. When somebody allegedly
• 10:50
  Speaker 4: invents daycare attendance and then takes child care subsidies, this
• 10:54
  Speaker 4: isn't just government money, it's your money. And it's taken
• 10:56
  Speaker 4: away from children that actually need it. And when somebody
• 10:59
  Speaker 4: is creating a fake company and they take a fraudulent
• 11:02
  Speaker 4: pandemic loan in the billions and billions of.
• 11:05
  Speaker 2: Dollars, again, that's your money.
• 11:07
  Speaker 4: And when somebody bills Medicare, as the government just exposed again,
• 11:11
  Speaker 4: for services that were never provided. Well, that money is
• 11:14
  Speaker 4: coming out of the program funded by American taxpayers. And
• 11:18
  Speaker 4: by the way, there's a lot of American seniors that
• 11:20
  Speaker 4: rely on those programs. And that is why Donald Trump
• 11:24
  Speaker 4: has said every dollar stolen makes legitimate programs more expensive
• 11:29
  Speaker 4: and harder for the taxpayers to sustain them. And that
• 11:33
  Speaker 4: is exactly why they highlight the San Diego daycare case
• 11:36
  Speaker 4: and why it's so revealing. Because the federal investigators say
• 11:40
  Speaker 4: they didn't simply look at paperwork and shrugged. They compared
• 11:43
  Speaker 4: the paperwork with surveillance. They checked travel and border records.
• 11:47
  Speaker 4: They followed bank deposits. They compared what providers told the
• 11:50
  Speaker 4: government with the investigators and what they actually saw happening
• 11:53
  Speaker 4: at those addresses. And those alleged discrepancies, they led to
• 11:58
  Speaker 4: those 12 arrests. And the big takeaway is that the
• 12:01
  Speaker 4: Trump administration has made this a formal government-wide priority. The
• 12:07
  Speaker 4: Justice Department established its National Fraud Enforcement Division in April.
• 12:11
  Speaker 4: The DOJ says it works and it supports President Trump's
• 12:14
  Speaker 4: task force to eliminate fraud. And that's chaired by the
• 12:17
  Speaker 4: vice president, J.D.
• 12:18
  Speaker 2: Vance.
• 12:19
  Speaker 4: Now, the message that the Trump administration officials are trying
• 12:22
  Speaker 4: to send is that programs that may previously have been
• 12:25
  Speaker 4: easy targets for fraud are now going to face much,
• 12:29
  Speaker 4: much more, as they described it, aggressive scrutiny. And there's
• 12:33
  Speaker 4: also a second part of this story and why it
• 12:35
  Speaker 4: matters is, well, this reason. Finding fraud is one thing.
• 12:39
  Speaker 4: Getting the money back is another. The SBA says it
• 12:42
  Speaker 4: has referred more than $ 22 billion associated with suspected fraudulent
• 12:47
  Speaker 4: or delinquent pandemic loans to the Treasury Department for collection.
• 12:52
  Speaker 4: And that is an important moment for all of us
• 12:55
  Speaker 4: because this is exactly what we should be demanding, that
• 12:58
  Speaker 4: every tax tower that was stolen be recovered. Now, the
• 13:01
  Speaker 4: real test that's cracked down will be prosecutions and then convictions.
• 13:06
  Speaker 2: And where the evidence proves guilt.
• 13:08
  Speaker 4: Well, the taxpayers, we should be made whole. We probably
• 13:11
  Speaker 4: will never be made whole for what they stole, but
• 13:14
  Speaker 4: at least it's sending a staggering message that this government's
• 13:18
  Speaker 4: actually looking for daycare schemes, looking for Medicare schemes, looking
• 13:23
  Speaker 4: for all of the different schemes. When you've got more
• 13:26
  Speaker 4: than 160 defendants caught up in this recent pandemic loan
• 13:31
  Speaker 4: enforcement surge, well, that's $ 245 million in intended losses. You've
• 13:37
  Speaker 4: got hundreds of corrupt individuals that have now been charged
• 13:40
  Speaker 4: worth billions in just the home health care fraud schemes
• 13:44
  Speaker 4: and tens of billions of dollars associated with suspected pandemic lending.
• 13:48
  Speaker 4: All that together. Now you understand why our deficit is
• 13:52
  Speaker 4: such a problem. And that $ 10 million in Southern California
• 13:55
  Speaker 4: in the daycare case, well, it may be small compared
• 13:59
  Speaker 4: to some of the other cases. But when you can
• 14:01
  Speaker 4: look at taxpayers and say, we stopped $ 10 million in fraud,
• 14:04
  Speaker 4: that's a good day for everyone. So yet again, the
• 14:08
  Speaker 4: Trump administration throwing down on fraud on multiple levels at
• 14:12
  Speaker 4: multiple states and multiple categories. And it's pretty clear they're
• 14:17
  Speaker 4: just getting started.
• 14:18
  Speaker 3: Thank you for listening to the 47 Morning Update with
• 14:21
  Speaker 3: Ben Ferguson. please make sure you hit subscribe wherever you're
• 14:25
  Speaker 3: listening to this podcast right now. And for more in-depth news,
• 14:29
  Speaker 3: also subscribe to the Ben Ferguson Podcast, and we will
• 14:32
  Speaker 3: see you back here tomorrow.