PHOENIX — An ex-boyfriend’s tip led to the indictment of an Arizona woman accused of defrauding the state’s private school voucher program and healthcare system over several years. The tipster told the Arizona Attorney General’s Office while he was dating 44-year-old Michelle Dils of Phoenix, Dils asked him to help her forge timecards and “pretend to provide educational services” for her son in an ongoing ruse.
“He said he did not want to get involved and disagreed with her schemes,” the investigative report states.
According to investigators, there was evidence to support the ex-boyfriend’s claims.
Following an investigation by the Arizona Attorney General’s Office, a grand jury indicted Dils and two other women in July of last year. They are accused of fraud and theft in connection with AHCCCS and ESAs, totaling $129,000.
“The totals are most likely higher,” one investigator wrote, regarding the alleged misappropriation of funds.
Details of the case are contained in investigative records released through a public records request filed by 12News to the office of Attorney General Kris Mayes.
'No known formal diagnosis'
Michelle Dils is a Phoenix registered nurse and mother of two. She gave a brief statement to investigators in 2022 and said she did not defraud the state. 12News reached out to Dills for comment but has not received a response.
Investigators allege Dils and two acquaintances were reimbursed by the state for “bogus services.” Dils is accused of claiming her son’s medical condition (the description was redacted in public records) required 24/7 care and thus he qualified for high-level healthcare and special needs ESA funding. The three were employed as caregivers through entities that bill AHCCCS for services concerning Dils’ son.
Investigators wrote there was “no known formal diagnosis” from a healthcare provider and they accused the women of fabricating educational receipts and caregiving timecards.
'Supposedly homeschooled' for 26K in annual ESA funds
For example, investigators compared caregiving timesheets to dates and times that Dils’ son would have been homeschooled. According to records, the three women claimed the teen was enrolled in “educational services” 4-6 hours a day.
“Numerous overlaps were identified” over three years and investigators found 626 instances where caregiving services overlapped when the teen was “supposedly homeschooled,” the report states.
During the 2022 investigation, the two women provided some information to investigators via email but declined to participate in interviews, investigators wrote.
$106,540 in ESA funds
Dils qualified to get more than $26,000 a year for special needs ESA expenses and was issued a total of $106,540 in ESA funds between 2017-2021, according to records.
Investigators interviewed Jose Simon Cardenas, the father of Dils’ other child. Cardenas told investigators he believed Dils’ son did not receive homeschooling, as Dils claimed to the state.
According to investigative records, Dils uploaded receipts to the state’s ESA portals that falsely suggested she paid for educational services for her son. In reality, investigators allege, Dils obtained the cash through a series of transactions and then spent the ESA funds for “day-to-day living at retail stores and restaurants,” and for purchases from Amazon, Uber and Airbnb.
'Actual level of disability is unknown'
The teen’s actual level of disability is unknown, investigators wrote. They noted the teen is seen on social media as the lead singer in a punk-rock band that played at concerts in Arizona and California in front of large crowds. Dils’ ex-boyfriend told investigators the teen could take care of his hygiene and make himself meals every day, without assistance.
“If someone can function at that level, that’s totally inconsistent with the state criteria for qualifying for 24/7 care. Someone gamed the system to get this, no doubt about it,” said Will Humble, former Director of the Arizona Department of Health Services. Humble is also the father of a special needs adult who is in the AHCCCS system and qualifies for 24/7 care.
It’s not clear, based on available records, how Dils got her son qualified for high-level medical reimbursements from AHCCCS. One record states Dils herself diagnosed her son but it does not explain what that entailed.
“Someone at the state would need to sign off on a diagnosis and say, yes, this person qualifies. DDD has psychologists and other professionals who review those applications,” Humble said.
Horne vows ESA accountability
Public education advocates want to know if the case reflects bigger problems in the ESA program.
“This highlights why so many people are asking questions about ESA vouchers,” said Marisol Garcia, President of the Arizona Educators Association.
Republican lawmakers have resisted calls for more oversight. ESAs were expanded in 2022 to include all children regardless of whether they have special needs. Costs for the program are nearly eight times more than what nonpartisan analysts projected when the expansion was passed in 2022.
Two weeks ago, State Superintendent Tom Horne said his department is cracking down on ESA fraud.
“I will not allow any abuse,” Horne said.
Horne reported the department rejected more than 1,200 reimbursement requests from ESA parents last fall and sent ten cases to the Attorney General’s Office for further investigation. He said the department suspended 2,200 ESA accounts that involved students already in the public school system, a “savings” of $20 million.
“I am determined that every single expenditure will be a valid educational expense,” Horne said.
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