State worker accused of creating fake disability clients, stealing more than $1M from taxpayers

ATLANTA — A former state worker whose job was to help the disabled is expected to plead guilty to federal charges that she defrauded taxpayers out of well over a million dollars.

Channel 2 Investigative Reporter Richard Belcher says so-called criminal information released by prosecutors states that Karen Lyke created fake disability clients to steal state tuition benefits, and it went on for four years.

Georgia’s Office of Inspector General (OIG) uncovered the fake client’s scheme after the Georgia Vocational Rehabilitation Agency asked the OIG to investigate some stolen laptops. GVRA helps Georgians with disabilities get tuition benefits and job training. Lyke is expected to admit that she created the fake rehab clients to steal tuition money.

“This is a very satisfying day for OIG. This is the largest dollar-amount criminal case we’ve ever investigated. And it was absolutely brazen,” Inspector General Scott McAfee told Channel 2.

The charges against Lyke (whom some of her former state colleagues may remember as Karen Gregory) were unveiled before a magistrate judge at the Russell Federal Building. Remarks by both the prosecution and defense confirm that Lyke will plead guilty at some unspecified date. McAfee says was a GVRA counselor when she manipulated the agency’s system, creating fake disability clients and arranging for tuition checks to go straight to those fake clients rather than to the educational institutions the clients were supposedly attending.

“She was able to route these payments to herself for about four years. It’s absolutely staggering the amount she was able to pocket. And the fact is we don’t see something on this scale -- thankfully -- that often,” McAfee says.

The  OIG and GVRA released an audit analyzing the system for handling these tuition grants for disabled Georgians. McAfee told Channel 2′s Richard Belcher the rehab agency has already made critical corrections.

“This is a program that’s supposed to protect our most vulnerable citizens in Georgia. It’s a great program that actually helps people get into a college that might not be able to,” McAfee said after the brief court hearing for Lyke.

The so-called criminal information (submitted in place of an indictment when a defendant has signaled a willingness to plead guilty) includes an example of a college grade sheet on which authorities say Lyke had an unnamed family member falsify the college’s name, the student’s name and more critical information to pursue her fraud. That criminal information repeatedly references a “Family Member” authorities say was working with Lyke.


Will others -- perhaps that unnamed family member -- be charged?

“I think it’s clear from that charging document that she didn’t do this alone,” McAfee says.

The magistrate judge allowed Lyke to be released on a $10,000 signature bond.  She is no longer a state employee here. The judge is allowing her to return to her home in northern Ohio until she comes back to Georgia to enter her guilty plea.

Her attorney did not provide a statement for our story.


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