Former Executive Director of Zanesville's Center for Child and Family Development Pleads Guilty to Stealing Program Funds
COLUMBUS, Ohio – Melissa Daley, 45, of Nashport, Ohio, pleaded guilty in U.S. District Court to one count each of filing a false income tax return with the Internal Revenue Service (IRS), wire fraud and money laundering.
Carter M. Stewart, United States Attorney for the Southern District of Ohio, Troy N. Stemen, Acting Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), and Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Division, announced the plea entered into today before U.S. District Judge Gregory L. Frost.
According to court documents, since 1992 Daley acted as the Executive Director for the Center for Child and Family Development (CCFD), which was located in Zanesville, Ohio. CCFD, a non-profit organization, provided foster care and residential case services to children as well as adult care services.
In June 2009, on behalf of CCFD, Daley applied to the Ohio Department of Developmental Disabilities (DODD) to allow for CCFD to be a part of the Individual Options Waiver Program (I/O Waiver Program). This program allowed for continued care of adult individuals with mental or developmental disabilities and permitted qualified individuals to remain in their homes and obtain support for their disabilities rather than requiring them to live in an Intermediate Care Facility for the Mentally Retarded. The application was approved by DODD.
Between March 2011 and November 2012 Daley devised a scheme to defraud CCFD. Daley faxed a change of direct deposit form to the agency responsible for processing payments for the I/O Waiver Program, which was Ohio Shared Services (OSS). Included in the fax to the OSS was a request to change the direct deposit of I/O Waiver Program funds from the CCFD operating account into a different account. Daley included in her request a copy of a bank check and a bank letter purportedly signed by a bank representative confirming that the new account was a business account in the name of CCFD. However, the letter Daley submitted was fictitious, the bank representative was an individual who never worked for the bank and the bank account was not a business account in the name of CCFD, but rather, a personal checking account for Daley. In addition, Daley altered the bank check she submitted to OSS to make it appear as though the bank account belonged to CCFD and not to her. As a result of this fraudulent scheme, Daley received $71,977.31 of CCFD’s I/O Waiver funds that were deposited into her personal checking.
In addition, in August 2011, after having resigned from CCFD, Daley opened a new bank account in the name of CCFD and claimed she was the President of the organization. After opening the account, Daley again faxed a change of direct deposit form to OSS to have CCFD I/O Waiver Program funds deposited into her bank account. Once Daley received CCFD’s I/O Waiver funds she would immediately transfer the funds into another bank account in the name of Community Base Services, which was a newly formed entity created by Daley. As a result of this fraudulent scheme, Daley received an additional $296,115.00 of CCFD’s I/O Waiver funds into her personal bank account
Daley did not report any of CCFD’s I/O Waiver funds she fraudulently obtained on her 2011 or 2012 income tax returns. The total unreported income on Daley’s 2011 and 2012 income tax returns was $360,182.37 resulting in additional taxes due and owing to the IRS in the amount of $103,043.07.
“Operating a non-profit program does not give you a license to steal,” said Troy N. Stemen, Acting Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. “The conduct detailed in this case was egregious. This program was designed to help children and adults with their much needed continued care, and this defendant defrauded them for her own personal gain.”
Filing a false income tax return with the IRS is punishable by up to five years in prison and a $250,000 fine. Wire fraud is a crime punishable by up to 20 years in prison and $250,000 fine. Money laundering carries a maximum sentence of 10 years in prison and a $250,000 fine.
U.S. Attorney Stewart commended the cooperative investigation by the FBI and IRS, as well as Assistant United States Attorney Kenneth F. Affeldt, who is representing the United States in this case.