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

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

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

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

Johnson-Rushing admitted to fraudulently receiving $83,394 in public funding for her daycare, Granny's Pray & Play, located at 3714 E. 27^th Street in Kansas City, Missouri, and that she illegally received food stamps. Johnson-Rushing also admitted that she participated in a conspiracy to obstruct the collection of federal employment taxes by failing to remit to the government $154,186 in federal income tax and FICA contributions collected on the checks payroll for 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 was $772,861.

Theft of public money

Johnson-Rushing admitted to submitting false statements to the Missouri Department of Human Services that intentionally reported false information about children attending Granny's Pray & Play from January 1, 2016 to November 28, 2019. The purpose of the program was to receive payments from the Program federal block grant for child care and development. This program aims to help low-income families access high-quality child care and after-school programs. Parents of adopted children can benefit from childcare allowance for their children under 13 if both parents work. However, the provider's contract explicitly states that the daycare owner cannot be paid for services provided to their own children.

Six children adopted by Johnson-Rushing and her husband were approved to receive the child care subsidy for full-time care. To qualify for child care assistance, Johnson-Rushing submitted false documents to misrepresent her ownership of the center and to falsely claim employment elsewhere. According to the plea agreement, the total amount of 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 grants from the state of Missouri. She falsely claimed to have no job or bank account on these applications. In reality, she frequently withdrew funds from Granny's Pray & Play bank account to purchase cashier's checks for herself. Personal expenses were also paid on his behalf from Granny's Pray & Play bank account, including $15,000 for the purchase of a Cadillac Escalade in October 2016.

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

Conspiracy to defraud the United States

Granny's Pray & Play had approximately 15 employees and withheld funds from federal income taxes and FICA contributions from their paychecks. Johnson-Rushing failed to pay these taxes on its employee trust funds to the Internal Revenue Service in the amount of $154,186.58 from the first quarter of 2015 to the fourth quarter of 2018.

The total tax loss related to the subject conduct (which includes Johnson-Rushing's share of federal and state payroll taxes as employer) is $499,142, which combined with $154,186 total tax loss for not -payment of employee taxes, gives 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 in bankruptcy court. Johnson-Rushing did not disclose this criminal matter in its bankruptcy filing. Johnson-Rushing also filed three bankruptcy cases in 2022, which were later dismissed for failing to follow bankruptcy court rules. Prosecutors noted that these four bankruptcy cases once again demonstrate how she is abusing the system.

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

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