Wilmington Daycare Owner Indicted On Federal Wire Fraud, Theft And Tax Evasion Charges

A federal grand jury returned an indictment on January 26, 2021, charging the owner and operator of a Wilmington daycare center with one count of wire fraud, one count of theft of government money, and three counts of tax evasion, officials said Monday.

According to the indictment, Brenda Mathis, 56, inflated attendance records for her daycare center, L.J.’s Playpen Academy, Inc., to increase subsidies and payments she received from two federally-funded programs: Purchase of Care and Delaware Stars for Early Success.  The Purchase of Care Program helps eligible, low-income families pay for childcare by providing subsidies to a daycare provider of the families’ choice.  The Delaware Stars for Early Success Program disperses payments to daycare providers based on the quality of service.

According to the indictment, Ms. Mathis also under-reported the income from the daycare center, including the income received from these programs, on corporate tax returns for tax years 2015 through 2017.

Ms. Mathis is charged with one count of Wire Fraud, one count of Theft of Government Money, and three Counts of Tax Evasion.  If convicted on the Wire Fraud count, Ms. Mathis faces a maximum penalty of 20 years in prison and a $250,000 fine.  If convicted on the Theft of Government Money count, Ms. Mathis faces a maximum penalty of 10 years in prison and a $250,000 fine.  The Tax Evasion counts each carry a maximum penalty of 5 years in prison and a $250,000 fine.  A federal district court judge will determine any sentence after taking into account the U.S. sentencing guidelines and other statutory factors.

David C. Weiss, U.S. Attorney for the District of Delaware, made the announcement and gave the following comment, “The defendant is charged with defrauding and stealing from federally-funded programs designed to ensure that families in Delaware receive affordable and high-quality care for their children.  She further increased her ill-gotten gains by failing to pay taxes on the stolen money.  My office is committed to prosecuting those who illegally collect government funds for their own benefit, especially when those funds are stolen from programs meant to help Delaware’s children.”

“Tax violations have been erroneously referred to as victimless crimes, but it’s the honest law-abiding citizen who is harmed when people try to shirk their tax liability,” said IRS Criminal Investigation Special Agent in Charge Thomas Fattorusso. “Today, Brenda Mathis stands accused of doing just that; attempting to evade her tax liabilities. Those Americans who file accurate tax returns and pay their fair share can be assured that the government will hold accountable those who don’t.”

“The Department of Health and Human Services provides federal funding for daycare services to help children and their families,” said HHS-OIG Special Agent in Charge Maureen Dixon. “HHS-OIG will continue to work with our law enforcement partners to ensure the integrity of these important federal grant programs.”

USDA Office of Inspector General, Special Agent-in-Charge Bethanne M. Dinkins stated, “Those who are involved in fraud and abuse of USDA feeding programs will be investigated by our office to the fullest extent.  Our joint investigation with the U.S. Department of Health and Human Services, OIG, IRS Criminal Investigation, and FBI identified those who sought to profit through illegal schemes.  The USDA Office of Inspector General will continue to dedicate investigative resources, working with our law enforcement and prosecutorial partners, to protect the integrity of these programs and bring to justice those who commit fraud.”

“When people steal from programs like these, social service programs suffer across the state of Delaware and tax payers’ funds are illegally diverted to those seeking to enrich themselves personally,” said Jennifer C. Boone, Special Agent in Charge of the FBI Baltimore Field Office. “The FBI is grateful for the cooperation and hard work of the many agencies in this case and we will continue to work together to aggressively target fraud in public programs.”

This case was investigated by IRS Criminal Investigation, U.S. Health and Human Services Office of the Inspector General, U.S. Department of Agriculture Office of the Inspector General and the FBI.  This case is being prosecuted by Assistant U.S. Attorneys Lesley F. Wolf and Ruth E. Mandelbaum.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.