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The operators of a Minneapolis day care center with a history of regulatory violations have been charged with overbilling the state and then using kickbacks to keep parents from reporting the fraud.

Abdirizak Gayre, 51, of Minneapolis and Ibrahim A. Osman, 53, of New Hope, were charged with defrauding the state child care assistance program of $103,500 over a six-month period, according to indictments announced Friday by the Hennepin County attorney’s office. The two men are owner and assistant director of Minnesota Child Care Services, a day care center at 2500 Minnehaha Av. S. in Minneapolis.

Using a secret camera installed outside the main entrance, state investigators counted the number of children who entered the center and then compared the footage with attendance records. They said they found 1,673 incidents, between December 2014 and May 2015, in which the center claimed children were in attendance when records showed the children were actually absent or on holiday, according to the criminal complaint.

Prosecutors also allege that Minneapolis Child Care Services billed the state for days when it wasn’t even open. For instance, the center claimed that 34 children attended on the day after Christmas in 2014, when the center was closed; and that 44 children attended May 25, 2015, another day the center was closed. Overall, video evidence showed that about 30 percent of the center’s billings were false, prosecutors allege.

“The video shows a consistent pattern of [the center] billing for far more children than are seen entering the center through the main entrance,” the complaint said.

In addition, prosecutors allege that Gayre and Osman diverted some of the money they received through the false billing to parents of children at the center. These cash payments were meant to ensure that parents did not inform the state about the fraud, and as kickbacks to parents for sending their children to the center, the complaint said. Making the payments in cash also prevented the parents from having to report the income, which is important because a family’s eligibility for child care assistance depends on income, prosecutors allege.

In February 2015, the Minnesota Department of Human Services (DHS) cited the center for more than two dozen licensing violations. Investigators found the center failed to properly document background studies of employees; did not adequately supervise aides; lacked adequate learning materials and toys; and had areas of disrepair, exposing children to hazards.

Osman declined to comment Friday, saying he did not want to discuss the allegations until he hired an attorney. Messages left with Gayre were not returned.

The investigation of the center stems from a broader crackdown of fraudulent billing practices in the state’s Child Care Assistance Program, or CCAP, which last year received $247 million in federal and state funds to help poor families pay for child care. Nearly 31,000 children statewide benefit from the program’s monthly subsidies, while another 7,200 families are on a waiting list for the program.

In 2015, the Legislature gave the Department of Human Services broad new powers to investigate and prosecute child care fraud, after investigators uncovered multiple schemes in which centers were exploiting poor parents to obtain cash assistance from the state. Since early 2015, the agency has completed criminal investigations into six child care centers, and three of these centers have been criminally charged.

“This case is important because it shows that we are continuing our collaborative effort to detect fraudulent activity and hold the individuals accountable,” said Jerry Kerber, DHS inspector general.

Chris Serres • 612-673-4308

Twitter: @chrisserres