CEDAR RAPIDS — A former director of a day care in Toledo will plead guilty to embezzling at least $5,000 in federal grant money from the day care, but a state audit shows she spent over $278,000 on gift cards, lingerie, facial and skin products, home furnishings, alcohol, the "50 Shades of Grey" book and "Call of Duty" video games.
Kristine Michelle Daniel, 48, of Grinnell, former executive director of Kids Corner day care, waived indictment and will plead to one count of federal program theft in U.S. District Court. 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.
A plea hearing hasn’t been set.
Daniel first was 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.
The audit and search warrant affidavit filed in Tama County District Court show Daniel purchased various items that wouldn’t be associated with day care operations, such as video games, skin care products, beef jerky, cigarettes and alcohol, hygiene and haircare products, clothing and accessories, home décor and bedsheets, a television and other electronic items.
Many of the described items were found in Daniel’s home, according to the warrant.
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.
The day care should have received $105,000 for 2015 through 2017, but because the application wasn’t renewed, it received only $11,000 for 2015, the audit shows.
If convicted, Daniel faces up to 10 years in federal prison and mandatory restitution.
The state charges will be dismissed once the federal case is resolved. Comments: (319) 398-8318; email@example.com