CEDAR RAPIDS — A former director of a Toledo day care pleaded guilty Thursday to embezzling at least $5,000 in federal grant money from the business.
Kristine Michelle Daniel, 48, of Grinnell, former executive director of Kids Corner day care, pleaded guilty in U.S. District Court to one count of federal program theft. She is accused of 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.
Her plea agreement wasn’t available in court records.
U.S. Magistrate Judge Mark Roberts released Daniel on a personal recognizance bond pending sentencing, which will be set later.
A state audit of the day care showed she spent over $278,000 of stolen funds on gift cards, lingerie, facial and skin products, cigarettes and alcohol, home furnishings, the "50 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.
The audit, conducted in May 2018, found $278,362 in improper and unsupported disbursements, collections not deposited and lost grant revenue. Included in that amount were $55,523 in purchases made with the day care’s three credit cards, $36,770 in unauthorized payroll payments issued to Daniel; $19,600 in travel reimbursements issued to Daniel; $5,141 in penalties and interest on payroll taxes; and $3,650 in purchases from various vendors.
State court documents and the audit also show that Daniel appeared to have used the day care credit cards to buy $1,591 worth of cellphone accessories that then would be resold online to make a profit.
The day care also lost state and federal funding because of Daniel’s actions, according to the 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.
Daniel faces up to 10 years in federal prison and mandatory restitution.
The state charges will be dismissed once the federal case is resolved.
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