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Former Head of Foster Agency Sentenced for Theft, Money Laundering, Tax Evasion

The DOJ issued a press release in June highlighting the sentencing, after conviction at jury trial, of an Oregon woman found guilty of stealing over $1 million from a foster care agency. Portland’s Mary Ayala had served as President, Executive Director, and primary agent of “Give Us This Day,” a foster care agency and youth residential program from 2008 to 2015.

The FBI agent seemed particularly incensed, as many likely would be, about the idea that the woman had effectively stolen from children who already faced challenges. Per the press release, which can be found here:

“Foster children have already lost almost everything—their parents, their homes, their sense of security. Mary Holden Ayala took from them the last thing they had—faith in a foster care system that is supposed to give them a chance at a better life. To steal from society’s most vulnerable children to enrich yourself is simply unconscionable,” said Renn Cannon, Special Agent in Charge of the FBI in Oregon.

“Stealing money meant to pay for foster care expenses is reprehensible,” said Special Agent in Charge Steven Ryan of the HHS Office of Inspector General. “Such greed-fueled fraud can impact those in need and cheats taxpayers; however, today’s sentence shows that our hardworking investigators and law enforcement partners are committed to making sure criminals are held accountable for their actions.”

According to court documents, since its inception in 1979, GUTD was primarily funded by the Oregon state and federal government for foster care services including hiring and screening foster parents for community placements, compensating foster parents for services and placing foster children in residential or group homes. GUTD federal funding originated from the Administration for Children and Families, a division of the U.S. Department of Health and Human Services, and was administrated by ODHS.

From 2009 through 2015, Ayala exercised sole and complete control over GUTD finances. No other GUTD employee or board member had access to the organization’s bank accounts or statements during this time. With no internal controls in place, Ayala wrote checks, used the GUTD debit card and withdrew cash at will, using the organization’s bank accounts as her own.

Ayala used the money stolen from GUTD to pay her mortgage, remodel her home and fund other retail, travel and transportation expenses. Additionally, she used the money to fund other, non-GUTD business ventures including a media company, Big Mary’s fish and ribs restaurant in Portland, and to purchase and flip a commercial property.

In total, Ayala stole over $1 million from GUTD. As a result, her employees, foster parents and foster children in GUTD’s care suffered. GUTD residential house managers complained about a lack of basic necessities, including but not limited to food, toiletries and cleaning supplies.

In 2015, the day after Ayala resigned her position at GUTD, she filed five false federal income tax returns for tax years 2009 through 2013. Shortly thereafter, she filed a sixth false return for tax year 2014. Ayala failed to file a tax return in 2015.

Surprisingly, Ayala was sentenced to 33 months, which by my calculation is the minimum under the sentencing guidelines (Offense Level 20, see the table here) for theft or embezzlement only (see the United States Sentencing Commission’s Guidelines at Section 2B1.1, a 6 base level plus 14 for the amount), without taking into account the additional tax crime. But, there is also an additional 6-level increase under that section where the theft “resulted in substantial financial hardship to 25 or more victims.” In this case, while the DOJ could have argued for this increase, it may have chosen not to make the argument because the children and families were not the direct victims. It is unclear what mitigating factors were presented to the judge from the press release.

The author of this post is Daniel Layton, a former Federal Prosecutor in the Los Angeles U.S. Attorney’s Office Tax Division and former IRS trial attorney. He has offices in Newport Beach and Fullerton, California.

Posted on 7/25/2019 by Daniel W. Layton.

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