Florida martial arts school billed taxpayers over $350,000 for ‘ghost’ kids, state says

Funded by public grants, the United Martial Arts Academy in Homestead offered an array of self-defense training, including the “Tiny Tigers” and “Little Dragon” courses for kids.

But investigators say that many of those little dragons and tigers were actually phantoms — with the academy falsely billing over $350,000 for non-existent students and fake employees.

The Miami-Dade Inspector General’s Office and prosecutors on Wednesday announced charges against Kelly Mendoza Regalado, who ran the school’s books. She ran the academy with her husband, martial arts instructor Henry Regalado, who describes himself as holding a “ninth-degree” black belt in Shaolin Kung Fu.

She is being charged with an organized scheme to defraud, grand theft and communications fraud. The school itself was charged as a defendant.

Reached on Wednesday, Henry Regalado hung up the phone on a reporter. “I have no comment sir,” he said.

It was not clear Wednesday if the couple had retained an attorney.

Prosecutors say the academy fraudulently billed over $350,000 from the Miami-Dade’s Children’s Trust, a taxpayer-funded organization that awards grants to programs that serve poor and at-risk children. The school appears to now be closed, and its website has been taken down.

According to archive images of its website, the martial-arts academy began in the mid 2000s, and got its first Children’s Trust grant of $50,000 in 2007. Regalado, on his website, said he quit a job at the University of Miami to run the gym, which featured ample mats, punching bags and a raised boxing ring.

“The kids are watched over here, they’re safe — the streets outside are not so friendly,” Regalado said, according to the website. “What would these parents do without this? Of course, they’re thankful it’s here.”

According to a memo released by Inspector General Felix Jimenez, the academy was enrolled in two programs — one for after-school programs, another for summer camps — that reimbursed for costs associated with students and employees.

Agents reviewed the academy’s bills between 2013 and 2017. They discovered that the Regalados used fake checks, bogus records of money transfers and even sham student attendance data to bill over $350,000. The trust actually paid out just under $300,000, according to the memo.

The school inflated employee costs, agents found. That included paying Kelly Regalado’s mother under two different names, money that was kicked back to her daughter, the memo said. When the Trust questioned Regalado, she provided “forged bank statements,” Jimenez wrote.

“Theft in any form is repugnant, but it is particularly vile to line one’s own pockets with funds designated to help the children of our community,” Jimenez said in a statement to the Miami-Dade County Commission.

This story was originally published September 30, 2020 at 10:23 AM.