A state fraud investigator is alleging that the state of Oregon may have violated federal law by paying 79 "undocumented individuals" to provide day care for low-income families.

Ryan Cram, who has worked as a criminal fraud investigator for five years, sent an email to every Oregon lawmaker last week saying he came forward as a whistleblower after the Department of Human Services swept his concerns under the rug. He called for a full investigation.

In response, the Department of Human Services said it had carefully examined the issue and did not find problems, according to an email sent to lawmakers and obtained by The Oregonian/OregonLive.

Leah Horner, the agency's legislative director, wrote that the agency's policy team conducted "a full review of the 79 providers" and their identification information. Of those, three required re-evaluation but were cleared. Horner said attorneys with the Department of Justice "had no concerns that fraud was committed and would not be pursuing the issue."

Cram's allegations come amid growing tensions over immigration in the era of President Donald J. Trump, whose administration has increased prosecution of immigration violations. A measure on the Oregon ballot this year would repeal the state's sanctuary law that bars state and local law enforcement from being used to enforce federal immigration standards.

"I tried going through the right steps and got blown off," Cram said in an interview Monday. "I wanted to put it all out there, and now they can answer these questions to elected officials."

At issue is the state's payments to a small fraction of childcare providers who participate in the Employment Related Day Care program. The state taps federal funds to subsidize day care for about 8,300 low-income families each month. The Department of Human Services directly pays approved providers to cover a portion of childcare costs, offering a monthly maximum of $1,255 per child.

Six months ago, while investigating a childcare-subsidy fraud case, Cram discovered an approved day care provider had supplied the Department of Human Services with a taxpayer identification number instead of a Social Security number. Cram also found the same day care provider was a recipient of food stamps.

Cram wrote that the woman was listed in internal state records as an "illegal alien" who "came over to the United States in 2007 undocumented," according to an April email he wrote to the Department of Human Services' policy office. Cram later shared the contents with lawmakers.

Cram kept digging. He found 79 daycare providers in all who, according Department of Human Services records, acknowledged being "undocumented and unauthorized to work in the United States," he said in his letter to lawmakers.

Under federal law, it is unlawful "to hire, or to recruit or refer for a fee, for employment" anyone known to have not been lawfully admitted into the United States. It's also unlawful to use "a contract, subcontract, or exchange" to "obtain the labor" of someone known to be illegally in the United States.

A Department of Human Services employee initially dismissed Cram's concern, according to an email Cram provided lawmakers. The state labeled any payment to a day care as a "client benefit" for the low-income family, not the worker. The state also said it "is not an employer of providers," according to an email Cram provided lawmakers.

Cram challenged that interpretation. He wrote that the state's relationship with the day care provider appeared to be a "form of employment/contract employment."

A child care policy analyst later told Cram by email that the department had reversed course and "would no longer pay a provider once we learned they were undocumented."

But on Sept. 24, Cram was called into a meeting and told no changes would be made, according to a memo Cram wrote and shared with lawmakers.

Sen. Sara Gelser, D-Corvallis, who chairs the Interim Committee on Human Services, said she read all of the dozens of documents Cram provided. But Gelser said she had not yet had time to compare his allegations to the response offered by the Department of Human Services.

Kate Kondayen, a spokeswoman for Gov. Kate Brown, said in an email Monday that the Department of Human Services "has conducted an extensive internal review, and apprised the Governor's office of their findings."

Kondayen declined to say if Brown would ask for any further investigation.

-- Brad Schmidt

503-294-7628

@_brad_schmidt