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Embattled Illinois child welfare chief now consulting for Nebraska

By   /   March 8, 2013  /   News  /   10 Comments

By Deena Winter | Nebraska Watchdog

LINCOLN – A former head of the Illinois child welfare agency — who resigned after an audit found his friend was awarded millions in taxpayer dollars with little to show for it — is now helping Nebraska negotiate how much it will pay a private company to provide child welfare services.


LARGE-SCALE FRAUD: A former head of Illinois’ child welfare system, who resigned amid scandal, is now consulting for the state of Nebraska on child welfare.

Erwin McEwen left his job as director of the Illinois Department of Children and Family Services in September 2011 after that state’s executive inspector general found that a man McEwen described as his “personal friend and mentor” – Dr. George Smith — perpetrated a “large scale fraud” upon the state. The inspector general’s report says both McEwen and Smith failed to cooperate during the investigation, which found millions in grants awarded to Smith’s companies for services that could not be substantiated.

The investigation found more than 100 instances of forged signatures, excessive administrative expenses, ghost employees and suspicious expense reimbursements.

Smith’s companies won $18 million worth of contracts between 2008 and 2011, including about $3 million annually from McEwen’s department. The report said Smith’s fraud went on so long in part due to inadequate oversight by McEwen’s department – for example, one $450,000 grant was “completely unmonitored” by the department for years while other grants had “little to any fiscal or programmatic oversight.”

The investigation found Smith’s companies spent thousands of dollars on tickets to Chicago Cubs, White Sox, Bulls and Bears games.

State employees told investigators they were intimidated by Smith, who told them he only answered to “Mac,” his nickname for McEwen. The report says McEwen repeatedly ignored red flags his employees raised about Smith.

Now McEwen is consulting for Nebraska in its case rate negotiations with Nebraska Families Collaborative – a nonprofit that handles child welfare for the state in Douglas and Sarpy counties.

A spokeswoman for the Nebraska Department of Health and Human Services, Kathie Osterman, said McEwen doesn’t work for the state of Nebraska, but for Casey Family Programs, which provides free assistance with child welfare reform to Nebraska.

Osterman said the department was aware of McEwen’s past in Illinois when he was “offered by Casey as a resource.”

“We reviewed the allegations at that time and determined they were not related to the limited kind of technical assistance he would be providing us,” Osterman said in an email.

Last year he came to Nebraska for some meetings on case rate negotiations, and this year he is available by phone as needed, Osterman said.

A spokeswoman for Casey Family Programs, Sara Fridovich, said the organization has a policy of not commenting on “questions related to staff members, particularly when it is unrelated to the duties they perform for the organization.”

Casey is the nation’s largest operating foundation focused on foster care and improving child welfare systems and helps states implement child welfare practices. The Seattle-based foundation was established by UPS founder Jim Casey.

McEwen did not return a call seeking comment.

David Newell, president of Nebraska Families Collaborative, or NFC, said the state used McEwen for case rate negotiations last year, and the resulting case rate resulted in NFC being shorted about $2 million of its actual costs this year. He contends a third-party study commissioned by the Legislature buttresses his point. The report by Hornby Zeller Associates said NFC “must be compensated based on rates sufficient to cover its allowable and required costs.”

“It doesn’t allow us to cover our true costs,” Newell said of the rate McEwen helped develop. “To me the case rate that the department developed with Mr. McEwen was critically flawed, and the Hornby Zeller report supports that.”

Newell hopes negotiations this year – which are in the early stage and were to include McEwen, according to an HHS document – will resolve that. Up until mid-2012, NFC received a lump sum for handling child welfare for the state in the Omaha area, but now is paid a set rate per case.

“We can’t just continue to invest millions of dollars,” Newell said. “I don’t think that we got a good product last year. The case rate that was constructed last year with the department clearly didn’t cover NFC’s costs.”

Contact Deena Winter at [email protected].

Editor’s note: to subscribe to News Updates from Nebraska Watchdog at no cost, click here.


Deena formerly served as staff reporter for Watchdog.org.

  • Biff Pocoroba


  • slycad

    I can personally attest to financial irregularities within the Dept of Health & Human Services, however my complaints were refused to be investigated by Auditor Foley, presumably because it was one case of thousands. Auditor Foley suggested I hire an attorney. Who can afford that, when they are fighting the State? Methinks where there is smoke, there is fire.

  • Got a crooked asshat you want to get rid of, send em to the Good Life State. He’ll fit right in with heie man and crew.

  • Joan

    I find it unbelievable that our Gov Heiniman has managed to dismantle the mental health care system, wants to decline Obama Care, has started action to shift the way we handle trouble juveniles by shuting down their facilities and now we are going to PRIVITIZE child welfare? I almost fell off my chair when I saw that Erwin McEwen works for Casey Family Programs who provides FREE assistance to the state. If it is free folks it means they can’t charge cuz the man is worthless and they have to give his services away. He is what company he keeps, a crook. Purhaps we should not wait until Heini distroys every thing we have, maybe we should impeach him.

  • This doesn’t bode well for the needy children of Nebraska.
    The governor will not be happy until he completely destroys every program that helps the children of Nebraska.
    When Omaha decided to privitize the management of the civic auditorium, rosenblatt stadium, and quest center, they ended up doing everything possible to kill the civic, and rosenblatt. Rental of the Quest is three times the cost of the civic, and we have to pay for parking!
    I just love how privitization saves money!

  • tri pacer

    You are so right on! I have had firsthand experience with the states new “system” and they do not care about the children of this state at all, it is an embarrassment to every Nebraskan!

  • tri pacer

    Our governor has chased almost all the good, long term people from the DHHS and now he wants to farm it out to anyone who is the cheapest. I think it is unconscionable for him to throw the poor children of this state to the wolves! SHAME ON YOU DAVE!

  • Joan

    I cannot wait until we get this wave of Republicans out of office to include Heiniman. They are a group of people who cry smaller government as they destroy the systems that provide for those who are the most vulnerable in our society. Then they ware house them and treat them like prostitutes to make money off of them. What ever happened to the Christian attitude this country once had? The honor we had for the elderly and our children? A starving teenager will steal to help his mom feed his sibblings, what is so hard to figure that out? A family living out of their car will steal clothing off of a cloths line rather than send a child to school in rags. Lets get real here folks, we cannot keep expecting the poor to live in poverty while the rich get richer.

  • Joe Jordan, Nebraska Watchdog

    Editor’s note: Casey Family Programs and the Annie E. Casey Foundation are separate entities. According to the Annie E. Casey Foundation they had nothing to do with the hiring of the Nebraska consultant.

  • Follow the money and the organization supporters. I would bet that many of these “pro-child” organizations are actually funded by those whose only goal is to cut the social safety net that is supposed to protect our children.
    It takes alot of time and staff to find the truth, something broadcast and paper news organizations are in short supply of these days. (Being corporate, fear of biting the hand that feeds you, too)