San Jose: Former group home operator pleads guilty to pocketing foster care funds

SAN JOSE — A former South Bay group home owner pleaded guilty to federal fraud charges Tuesday, admitting in court that she misappropriated more than $1.2 million by pocketing her workers’ tax withholdings.

Annie Corbett, 55, also admitted to spending public and grant funds meant for foster care support on personal expenses including her timeshare. The longtime Redwood City resident who records show also has a residence in Nebraska entered the plea in the U.S. Northern District Court in San Jose, according to the U.S. Attorney’s Office.

The charges to which she pleaded, one count each of wire fraud and willful failure to pay over employment taxes, carry maximum sentences of 20 years and five years in prison, respectively, and up to a $250,000 fine for each count. Since the case resolution was reached through a plea agreement, it is unlikely Corbett’s sentence will approach those upper sentencing boundaries.

Her attorney declined to comment on the plea, which court filings show had been in the works since at least April.

The U.S. Attorney’s Office initially charged Corbett in October 2020 after an investigation found evidence of fraud while she ran Corbett Group Homes, Inc., which operated three homes in the San Jose area between 2011 and 2018 before the company shut down.

Corbett told this news organization in a 2019 interview that she closed the homes after her company was denied a state license to manage what are known as Short-Term Residential Therapeutic Programs. She said that she and her employees, which numbered about 60 a year, had worked for two years ramping up to meet the programs’ higher care and service standards, and thereby keep the homes running.

In that same interview, Corbett blamed a disgruntled former bookkeeper for problems she was having with the state, saying the ex-employee tried to blackmail her after being fired, then made phony claims that derailed her licensing bid.

The bookkeeper conflict coincides with the time period during which Corbett now says she committed fraud. The U.S. Attorney’s Office news release about Corbett’s guilty plea states that she “admitted that she deceived her bookkeeper and CPA” while she pocketed payroll taxes that were supposed to go to the IRS.

According to the federal investigation — conducted by the FBI, IRS Criminal Investigation, and the U.S. Department of Health and Human Services — Corbett accepted funds from federal and local governments and charities that were aimed at supporting foster children, and spent hundreds of thousands of dollars of that money on herself.

The U.S. Attorney’s Office said Corbett illegally diverted a total more than $550,000 that was spent “for her personal enrichment, including making her own credit card payments, her person retail business payments, and her payments on a vacation timeshare.”