NDIS for prisoners a suspected rort, says head of probe into Cocoon SDA Care
Federal authorities formed a preliminary view that a troubled disability firm at the centre of a probe needed to pay back money for claims that it had provided NDIS services to prisoners.
Federal authorities formed a preliminary view a troubled disability firm at the centre of a major investigation needed to pay back money for claims that it provided NDIS services to prisoners.
The National Disability Insurance Agency fraud unit’s serious and complex non-compliance team discovered during initial inquiries into Cocoon SDA Care that its parent company, Horizon Solsolutions Australia, made claims for services to the incarcerated, court documents state.
“We obtained records for these (NDIS) participants from Melbourne Assessment Prison and Barwon Prison,” team leader Karen McDonald states in an affidavit obtained by The Australian.
“These confirmed they were incarcerated at the relevant time and that Horizon had claimed they had provided services to them. Based on this, SCNC formed a preliminary view that a debt was owed to the agency by Horizon.”
Horizon was told of the finding on March 6 this year and was “provided with an opportunity to comment or provide additional information before a debt invoice was raised”, she added.
Horizon’s response was due to the NDIA on Friday.
The documents were filed in the Federal Court as part of Horizon’s attempts to force the NDIA to stop holding up its NDIS payments.
A major NDIA investigation was launched into the company following whistleblower complaints and tip-offs about its operations, leading to all of the company’s claims for payments since early March being manually reviewed.
Watchdog the NDIS Quality and Safeguards Commission is conducting its own investigations into Cocoon and has suspended the business’s operations for 30 days following targeted site visits that identified safety concerns.
Cocoon’s lawyers have told the Federal Court that services could be provided to prisoners remotely, including by phone and video through an iPad, and that there may have been a misunderstanding in the NDIA over what could be claimed for.
Ms McDonald in her affidavit stated that with more participants joining the NDIS, “there has been an increase in fraud and criminal activity”.
The agency was cracking down, doing more work to review claims before they were paid. “Thousands of tip-offs have been received this financial year to date. Loss of money to non-compliance or fraud reduces the amount of funding available to protect participant safety and prevent financial loss to the scheme,” she stated.
Tip-offs about Cocoon included that it “was managed by someone other than the company director, who had previously declared bankruptcy”, she stated.
The company had also been accused of trading while insolvent and enticing specialist disability accommodation investors “with promises of unrealistic investment returns”.
Money from investors for SDA investment was also allegedly used by the company for its own operations and private use, and the company “continued to charge a support service fee” after the death of participants, according to the tip-offs.
The NDIA’s intelligence and analytics branch referred Horizon to Ms McDonald’s team for assessment on January 3, 2024, the affidavit states. It was another nine months before a case officer was allocated, on October 8, 2024.
The agency had reviewed financial reports submitted to ASIC. These included an independent auditor’s report from Trigons Business Advisory that raised many concerns about the state of the company’s record keeping and the unavailability of key supporting documentation.
The agency became aware on December 3, 2024, that the NDIS Commission had issued three infringement notices to Horizon more than a year earlier, on November 9, 2023.
“It was alleged Horizon failed to pay rent to owners of SDA and SIL (supported independent living) resulting in participants being locked out of their residences requiring alternative emergency accommodation,” the affidavit states.
It confirms prior reporting in The Australian about three women with complex disability care needs returning to their home in South Australia to discover padlocks on the gate.
Cocoon’s co-founder and “corporate strategist”, a former bankrupt and taxi driver, Zaffar Khan was controlling the company, whistleblowers say.
Mr Khan and the sole director of Cocoon and Horizon, Muhammad Latif, have denied any wrongdoing.
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