More than 30 day care centers were reportedly defrauded, with the arrests dubbed "Operation Paycare."
The ringleader, identified in court papers as Liudmila Umarov, allegedly controlled the ring of more than 30 day care centers in Brooklyn and Staten Island.
Umarov lives in an apartment on Banner Avenue in Brooklyn above Paragon II Day Care and Learning Center Paragon. Her daughter co-owns two other day cares on the same block, Amazing World Day Care and Banner Learning Center, as well as others in Brooklyn.
Umarov is also close with predominantly Russian speaking men and women who operate day care centers in Brooklyn and Staten Island.
From 2007 through this month, prosecutors say Umarov and others participated in a scheme to defraud the city through their day care centers.
Court papers say city workers took payoffs in exchange for failing to report overbilling by the child care center.
Investigators estimate members of the day care received more than $18 million from the day care subsidy program.
Seven city workers were arrested, all accused of receiving payments. Leonid Gutnik and Aleksy Vasilyev are city Human Resources Administration employees. Mariya Rapoport previously worked as a supervisor in the Administration for Children's Services transitional child care unit. Aurora Villareal, Dionne Rivers-Ettu, Emile Nekhala and Carolyn Eason are Department of Health and Mental Hygiene employees. Villareal is borough manager for Brooklyn and Staten Island, Rivers-Ettu is associate public health sanitarian, Nekhala is public health sanitarian and Eason is an early childhood educational consultant.