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Former Toledo day care director sentenced to 4 months in prison, 4 months of home confinement for embezzlement

She also was ordered to pay over $113,000 in restitution

Kristine Daniel
Kristine Daniel

CEDAR RAPIDS — A former director of a Toledo day care convicted of embezzling thousands from the business was sentenced Monday to eight months — four months in prison and four months on home confinement — and ordered to pay more than $113,000 in restitution.

Kristine Michelle Daniel, 49, of Kellogg, former executive director of Kids Corner day care, pleaded guilty last October in U.S. District Court to one count of federal program theft. She admitted in a plea agreement to embezzling federal grant benefits for the day care of at least $5,000 for a one-year period from Oct. 1, 2013, and another one-year period from Oct. 1, 2014.

A state audit of the day care showed she spent more than $278,000 of stolen funds on gift cards, lingerie, facial and skin products, cigarettes and alcohol, home furnishings, the “Fifty Shades of Grey” book and “Call of Duty” video games.

Daniel was initially charged with theft and money laundering in Tama County District Court after the day care’s board members noticed accounting discrepancies in 2015, according to court documents. Parents also raised issues about their payments not being accurately reflected in billing statements. Once the parents confronted Daniel, their payments would be “found” and applied to their accounts. And the employee who initially brought up the concerns then was fired by Daniel.

Board members then started noticing inaccurate financial statements, but Daniel said those were the result of a change in accounting software. In February 2016, the balance sheet didn’t balance and the income statement was inaccurate, so the board discussed having an audit.

A month later, the board discovered more issues, such as past-due bills to vendors and payroll taxes not being paid, which totaled about $116,000 plus penalties as of April 2016 for the day care, court documents show.

Daniel, who had worked for the day care since December 2009, was fired April 29, 2016, after admitting to board members that she knew the payroll taxes hadn’t been paid and an electric bill was past due.

Board members then found additional irregularities in back statements and accounting records and decided to notify law enforcement and the State Auditor’s Office, according to court documents.

Information at sentencing showed Daniel embezzled or misappropriated $113,830 from the day care during her employment. She stole about $33,000 by using day care credit cards to buy personal items, including video games, clothing, and home furnishings. She also gave herself over $34,000 in gross pay, which wasn’t authorized by the day care. Daniels made about $40,000 a year.

Daniels also stole over $42,000 from cash payments that parents paid for their child care, according to court documents.

The day care also lost state and federal funding because of Daniel’s actions, according to the state audit. She didn’t make timely payments and deposits and didn’t renew applications for the grants through the Adult Care Food Program, which was Daniel’s responsibility, and the basis for the federal charge.

U.S. District Judge C.J. Williams also ordered Daniels to pay $113,830 in restitution to the day care, and serve three years of supervised release following her prison time.

Daniel was released on the bond previously set and will report to designated prison when notified to start her four-month term.

The state charges will be dismissed once the federal case is resolved.

This case was prosecuted by Assistant U.S. Attorney Tony Morfitt and investigated by the Federal Bureau of Investigation, the Tama County Sheriff’s Office and the Iowa State Auditor’s Office.

Comments: (319) 398-8318; trish.mehaffey@thegazette.com

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