Owners of Sponsor Organization and Catering Company Charged in Connection with Multi-Million Dollar Scheme to Defraud Food Program for Underprivileged South Florida Children
Sandra Ruballo, 46, of Davie, and Carlos Andres Montoya, 47, of Miramar, have been charged by criminal complaint with participating in a conspiracy to defraud the federally funded Child Care Food Program (CCFP), which provides free and reduced meals to underprivileged children at hundreds of South Florida daycare centers. As part of the scheme, the conspirators falsified paperwork, entered into various kickback arrangements, manipulated the catering bid process, and inflated annual budgets, all in order to receive millions of dollars of falsely and fraudulently obtained federal funds for their own personal use and benefit.
Benjamin G. Greenberg, United States Attorney for the Southern District of Florida; Michael J. DePalma, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI); Brian Swain, Special Agent in Charge, U.S. Secret Service (USSS); and Karen Citizen-Wilcox, Special Agent in Charge, U.S. Department of Agriculture, Office of Inspector General (USDA-OIG), made the announcement.
Ruballo and Montoya were charged with one count of conspiracy to commit wire fraud, in violation of Title 18, United States Code, Section 1349, in Case No. 18-MJ-02629 (Ruballo) and Case No. 18-MJ-2592 (Montoya). Each defendant faces a maximum statutory sentence of 20 years in prison.
According to court documents, the purpose of the CCFP is to provide nutritious meals and snacks to underprivileged children in daycare centers located in the Southern District of Florida, and elsewhere. As such, the CCFP provides children classified at or below a certain family income level with daily meals and snacks, at a free or a reduced rate. Daycare centers often contract with a sponsoring organization to process and submit their program paperwork. In those situations, the sponsoring organization enters into an agreement to operate the CCFP, and assumes administrative and financial responsibility on behalf of the center.
The criminal complaint alleges that Ruballo was the owner and operator of Highland Food Resources, Inc. (HFR), a sponsoring organization of more than 200 daycare centers that participated in the CCFP. In this role, HFR processed paperwork and electronically submitted monthly reimbursement claims on behalf of such centers. Reimbursement was calculated on a sliding scale, with the largest reimbursement being for children at the daycare centers classified as free, then reduced, then non-needy. Once HFR was reimbursed with federal funds, they paid the daycare centers, less HFR’s fee, which is a percentage of the total monthly meal reimbursements. Thus, the size of HFR’s payment was driven, in part, by the number of meals claimed by daycare centers that are multiplied by a higher reimbursement rate for the free and reduced meals/snacks.
Ruballo and others allegedly falsified paperwork for children enrolled at daycare centers in order to qualify more kids for free and reduced meals under the CCFP. They also inflated the number of meals claimed to have been served at centers. This fraudulent paperwork was used as the basis for inflated monthly reimbursement claims that Ruballo submitted to the program.
On behalf of HFR, Ruballo also allegedly solicited caterers through a bidding process to deliver meals to children at participating daycare centers. The caterers were reimbursed by HFR under the terms of their agreement for the meals provided. Montoya was the owner and operator of Montoya Holdings, Inc., a catering service that Ruballo selected through the bidding process to provide CCFP meals to eligible students at participating daycare centers located in the Southern District of Florida. In return for providing such meals, Montoya Holdings was paid more than $8 million in federal funds, via HFR.
According to court documents, Ruballo, Montoya and others conspired to rig the catering bid process through materially false and fraudulent representations to the CCFP. For example, Ruballo agreed to accept kickbacks from Montoya in exchange for using false and fraudulent misrepresentations and pretenses regarding meal pricing, bid details, and inflated monthly reimbursement claims to repeatedly secure catering contracts for Montoya Holdings at participating CCFP centers that used HFR as a sponsoring organization. The difference between the represented inflated costs submitted by Ruballo, and the actual costs, were used, in part, to fund monthly cash kickbacks.
Additionally, according to court documents, Ruballo inflated the budget that she submitted to the USDA as part of the CCFP. For example, certain HFR employees agreed to receive inflated salaries from Ruballo in exchange for cashing part of their paychecks and providing the cash to Ruballo. Furthermore, while employed at HFR and in violation of the CCFP rules and regulations, conspirators received monthly side payments from daycare centers in exchange for helping with their paperwork and administrative items. They retained a portion of these payments for her own personal use and benefit, and provided the remainder of them to Ruballo, who knowingly accepted the cash payments and retained them for her own personal use and benefit. During this same period, Ruballo falsely represented to the USDA that no such side payment arrangements existed.
Another defendant, Yudy Miranda, pleaded guilty in connection with the scheme to defraud, in Case No. 18-CR-20040. Miranda is scheduled to be sentenced on June 18, 2018 at 1:30 p.m. by United States District Judge Jose E. Martinez, in Miami.
Mr. Greenberg commended the investigative efforts of IRS-CI, USSS and USDA-OIG. This case is being prosecuted by Assistant U.S. Attorney Anne P. McNamara.
A criminal complaint is a charging instrument containing allegations. Every defendant is presumed innocent unless or until found guilty in a court of law.