Blago-Quinn Era Defrauder of DCFS & St. Bd. of Education Pleads Guilty

A press release from the U.S. Attorney’s Office in Springfield about a crookster who operated while Rod Blagojevich and Pat Quinn served as Governor:


Springfield, Ill. – A Chicago businessman today pled guilty to fraudulently inducing two separate state agencies to issue separate, but nearly identical, grants to his not-for-profit entity.

George E. Smith, 66, owned and operated Diversified Behavioral Comprehensive Care, a not-for-profit entity described as offering comprehensive and holistic social services and mental health care to youth and their families.

In addition, Smith owned and operated three for-profit entities:

  • Diversified Behavioral Services, Inc.
  • Management Planning Institute, Inc.
  • the Institute for Positive Child and Family Development

From 2005 through 2011, Smith, through both his for-profit and not-for profit entities, received millions of dollars in funding from agencies of the state of Illinois, including

  • the Illinois Department of Human Services
  • the Illinois Department of Children and Family Services
  • the Illinois State Board of Education

At today’s hearing, Smith admitted that he induced DCFS and ISBE to issue two separate, but nearly identical grants to Diversified Behavior Comprehensive Care:

  • a $450,000 grant awarded by DCFS on Sept. 2, 2008, under the Students at Risk Program
  • a $342,000 grant awarded by the State Board of Education on Sept. 8, 2008.

According to the terms of the grants, awarded within 10 days of each other, both provided for services to be provided to the same at-risk population in the Chicago area during fiscal year 2009.

The populations served, sources of referral, services to be provided, and the goals for each grant were essentially identical.

Neither DCFS nor ISBE were aware of the issuance of an identical grant by the other state agency.

Smith then converted the duplicate funding to his personal and business use.

In addition, Smith admitted that as part of the scheme, in February 2009, he caused the Department of Human Services to award a third grant of $200,000 to DBCC to provide community services relating to the prevention, intervention, treatment and rehabilitation of alcohol and other drug abuse and dependency.

Smith admitted that he submitted and caused to be submitted false and fraudulent documentation to DHS falsely representing the amount of community services DBCC actually provided under the DHS grant and fraudulently caused DHS to pay DBCC a total of $138,901.

Smith appeared today before U.S. Magistrate Judge Tom Schanzle-Haskins to enter his guilty pleas to two counts of mail fraud and one count of money laundering. Sentencing has been scheduled for July 25, 2016.

According to terms of the plea agreement, the government has agreed to recommend a sentence at the low end of the advisory sentencing guidelines range. The government and the defendant agree that the amount of restitution owed to the State of Illinois as a result of the mail fraud offense is between $400,000 and $550,000. Smith was allowed to remain on bond pending sentencing.

Assistant U.S. Attorney Timothy A. Bass is prosecuting the case on behalf of the U.S. Attorney’s Office for the Central District of Illinois. The investigation was conducted by the Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG) and the Internal Revenue Service, Criminal Investigations Division.

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