Kansas City daycare owner sentenced for $772,000 fraud scheme

Fraud News Graphic
Share To Your Social Network

A Kansas City, Mo., day care owner was sentenced in federal court today for her role in a conspiracy that resulted in a $653,329 tax loss to the federal government, as well as fraudulently collecting almost $120,000 in government benefits she was not entitled to receive.

Patricia L. Johnson-Rushing, 55, was sentenced by U.S. District Judge Greg Kays to two years and three months in federal prison without parole. The court also ordered Johnson-Rushing to pay $772,861in restitution and to forfeit to the government $95,704.

On Sept. 7, 2023, Johnson-Rushing pleaded guilty to one count of theft of public money, one count of benefits fraud, and one count of conspiracy to defraud the United States.

Johnson-Rushing admitted that she fraudulently received $83,394 in public funding for her childcare center, Granny’s Pray & Play, located at 3714 E. 27th Street in Kansas City, Mo., and that she unlawfully received food stamps. Johnson-Rushing also admitted that she participated in a conspiracy to obstruct the collection of federal employment taxes by failing to pay over to the government $154,186 in federal income tax and FICA contributions collected from the paychecks of Granny’s Pray & Play employees. This was part of a total tax loss to the government, including the employer’s share of payroll taxes, of $653,329.

The total fraud to which Johnson-Rushing pleaded guilty is $772,861.

Theft of Public Money

Johnson-Rushing admitted that she submitted false claims to the Missouri Department of Social Services that intentionally reported false information for children attending Granny’s Pray & Play from Jan. 1, 2016, to Nov. 28, 2019. The purpose of the scheme was to receive payments from the federal Child Care and Development Block Grant Program. This program is intended to help low-income families get access to high-quality early care and after-school programs. Parents of adopted children are eligible to receive the childcare subsidy for their children who are under the age of 13 if both parents are working. However, the provider agreement explicitly states that the owner of the childcare center cannot be paid for services to their own children.

Six children adopted by Johnson-Rushing and her husband were approved to receive the childcare subsidy for full-time care. To qualify for the childcare subsidy, Johnson-Rushing submitted false documentation to misrepresent her ownership of the center and to claim employment elsewhere falsely. According to the plea agreement, the total funds fraudulently paid to Granny’s Pray & Play is $83,394.

Benefits Fraud

From 2016 to 2019, Johnson-Rushing signed food stamp applications to receive subsidy money from the state of Missouri. She falsely claimed to have no job or bank account on those applications. In reality, she frequently withdrew funds from the Granny’s Pray & Play bank account to purchase cashier’s checks for herself. Personal expenses were also paid in her name from the Granny’s Pray & Play bank account, including $15,000 towards the purchase of a Cadillac Escalade in October 2016.

Based on the fraudulent statements and representations in her application, Johnson-Rushing unlawfully acquired $12,310 in food stamps. Her fraudulent applications, which included additional fraud, caused a total loss to the Missouri Family Support Division of $36,138.

Conspiracy to Defraud the United States

Granny’s Pray & Play had about 15 employees and withheld funds in federal income tax and FICA contributions from their paychecks. Johnson-Rushing failed to pay those trust fund taxes from her employees to the Internal Revenue Service in the amount of $154,186.58 from the first quarter of 2015 through the fourth quarter of 2018.

The total tax loss in relevant conduct (which includes Johnson-Rushing’s portion of federal and state payroll taxes as the employer) is $499,142, which combined with $154,186 in total tax loss for failure to pay over employee taxes yields a total tax loss of $653, 329.

Bankruptcy Petitions

According to court documents, Johnson-Rushing filed for bankruptcy on June 29, 2023, which is pending before the bankruptcy court. Johnson-Rushing failed to disclose this criminal case in her bankruptcy filings. Johnson-Rushing also filed three bankruptcy cases in 2022, which were subsequently dismissed for failure to comply with bankruptcy court rules. Prosecutors noted these four bankruptcy cases further demonstrate how she abuses the system.

This case was prosecuted by Assistant U.S. Attorney Rudolph R. Rhodes, IV. It was investigated by the U.S. Department of Health and Human Services, Office of Inspector General, and IRS-Criminal Investigation.


Share To Your Social Network