LAWFUEL – MICHAEL J. GARCIA, the United States Attorney for the
Southern District of New York, and ROSE GILL HEARN, the
Commissioner of the New York City Department of Investigation
(“DOI”), announced today the unsealing of charges against LETHEM
DUNCAN, the Deputy Director of the Payment Services Department of
the New York City Administration For Children’s Services (“ACS”),
NIGEL OSARENKHOE, the Supervisor of Adoptions within ACS’s
Payment Services Department, STAY THOMPSON, a/k/a “Stay Daniels,”
the Fiscal Director at Concord Family Services, Inc. (“Concord”),
and PHILBERT GORRICK, an independent contractor with Concord, for
conspiring to steal hundreds of thousands of dollars in ACS funds
destined for needy children. The Government filed a felony
Information against DUNCAN yesterday in Manhattan federal court,
charging him with a variety of federal crimes. OSARENKHOE,
THOMPSON, and GORRICK were arrested on a Complaint unsealed
today, and will appear this afternoon in Manhattan federal court
before United States Magistrate Judge GABRIEL W. GORENSTEIN.
According to the Information and Complaint filed in Manhattan
federal court:
The New York City Administration For Children’s Services
ACS is a New York City agency responsible for, among
other things, providing services to needy children and their
families. Among other duties, ACS administers payments from New
York City to parents who adopt needy children and to not-forprofits
that find and provide child care subsidies to foster
parents. ACS administers approximately $32 million in adoption
subsidy payments each month. ACS also administers approximately
$42 million in monthly payments to not-for-profit foster care
agencies.
Since 1998, DUNCAN has served as the Deputy Director of
the Payment Services Department of ACS. In that capacity, DUNCAN
has had the power to authorize ACS payments for services to,
among others, not-for-profit foster care agencies and their
independent contractors.
During the same time period, OSARENKHOE served as the
Supervisor of Adoptions within ACS’s Payment Services Department.
In that capacity, OSARENKHOE was responsible for financial
reporting of adoption subsidy payments. OSARENKHOE also served
as a member of ACS’s Quality Assurance Unit. As a result of
these positions, OSARENKHOE had access to and knowledge of the
ACS computer systems involved in the processing of adoption
subsidy payments.
Concord Family Services, Inc.
Concord is a not-for-profit foster care agency that has
been paid by ACS since 1990 to provide foster care services to
needy children in New York City. Between 2005 and 2008, Concord
has had three contracts with ACS to provide foster care services,
resulting in more than $28 million in payments from ACS to
Concord. Since 2004, THOMPSON has been the Fiscal Director at
Concord. During the same time period, GORRICK has controlled
Contemporary Technologies Co. (“Contemporary Technologies”), a
company that provides computer services to Concord as an
independent contractor. GORRICK currently maintains office space
for Contemporary Technologies at Concord.
The Embezzlement Schemes
Adoption Subsidy Scheme
Since 2005, OSARENKHOE has used his position at ACS to
authorize adoption subsidy payments to be made to co-conspirators
posing as adoptive parents who in fact did not adopt any children
(the “Adoption Subsidy Scheme”). An adoption subsidy is a
monthly payment mandated by New York State law to be made for the
care, maintenance, and medical needs of a child who fits the
definition of handicapped or hard-to-place. OSARENKHOE told
DUNCAN that all he needed was a name in order to make
unauthorized payments. DUNCAN provided THOMPSON’s name, and from
the fall of 2004 through 2007, OSARENKHOE fraudulently caused
approximately $79,000 in adoption subsidy payments to be mailed
to THOMPSON, who shared them with OSARENKHOE and DUNCAN.
In June 2008, using his position at ACS, OSARENKHOE
sent another unauthorized adoption subsidy payment to THOMPSON.
OSARENKHOE was arrested earlier today after he received a cash
kickback in ACS’s offices in New York, New York, of a portion of
this adoption subsidy payment. The payment was made by DUNCAN,
who was acting at DOI’s direction.
Fictitious Services Scheme
In 2005, GORRICK and THOMPSON agreed that GORRICK would
submit a fictitious request for payment to ACS for $375,000 in
computer services. DUNCAN arranged for ACS to make the payment,
and GORRICK, THOMPSON, and DUNCAN shared the stolen money.
GORRICK used proceeds to pay for, among other things: a 2006 BMW
750 LI sedan; a 2006 Range Rover; and at least $30,000 in rental
payments for a New York City apartment in a doorman building with
a private garage.
In April 2008, GORRICK, again working with THOMPSON,
submitted a fictitious invoice to ACS for $711,420.25 in computer
supplies which were never provided to ACS. GORRICK and THOMPSON
were arrested last night after they received an ACS check for the
$711,420.25 from DUNCAN, who was acting at DOI’s direction.
The Charges
DUNCAN is charged with conspiracy to commit mail fraud,
mail fraud, conspiracy to commit embezzlement, embezzlement,
money laundering, and accepting illegal gratuities. DUNCAN faces
a maximum sentence of 75 years in prison on these charges. He
also faces a maximum fine on each charge of the greater of
$250,000 or twice the gross gain or loss from the offense.
The Complaint charges OSARENKHOE with mail fraud
conspiracy. If convicted, OSARENKHOE faces a maximum sentence of
20 years in prison, as well as a maximum fine of the greater of
$250,000 or twice the gross gain or loss from the offense.
The Complaint charges THOMPSON with mail fraud
conspiracy, embezzlement conspiracy and money laundering. If
convicted, she faces a maximum sentence of 20 years in prison on
the mail fraud conspiracy charge, 5 years in prison on the
embezzlement conspiracy charge, and 10 years in prison on the
money laundering charge. She also faces a maximum fine on each
charge of the greater of $250,000 or twice the gross gain or loss
from the offense.
The Complaint charges GORRICK with embezzlement
conspiracy. If convicted, GORRICK faces a maximum sentence of 5
years in prison and a maximum fine of the greater of $250,000 or
twice the gross gain or loss from the offense.
Mr. GARCIA praised the outstanding investigative work
of the New York City Department of Investigation.
The prosecution is being handled by the Office’s Public
Corruption Unit. Assistant United States Attorneys DANIEL STEIN
and WILLIAM HARRINGTON are in charge of the prosecution.
The charges contained in the Information and Complaint
are merely accusations, and the defendants are presumed innocent
unless and until proven guilty.
08-178 ###
