It appears that the fraud here is mostly cases where investigators were trying to enroll fictional kids, even though their stated income was too high. So frankly, I doubt if the fraud is particularly widespread, although I suppose some working parents might be willing to jump through a few dishonest hoops to get free daycare. It appears that a large number of the programs were willing to help the parents lie to get in, but they're probably not presented with too many opportunities to do so in the first place. (The cases of fictional kids being counted are more likely to be widespread, since they don't rely upon the fortuitous circumstance of a high-income parent showing up to enroll a kid.)
But I guess what is more troubling is that there is a program that provides free education to poor kids, but denies that same education to other kids, apparently even if the parents are willing to pay for it. If you don't have a job, you can bring your kids there while you stay at home. If you go to a job and earn a whopping $22,000 per year, then you're apparently not allowed to bring your kids there.
It seems to me that in addition to being poor economic policy to reward people for not working, this kind of segregation is probably counter-productive educationally, and is probably one of the reasons why the program apparently doesn't do much to help the kids do better in school.
But it sounds awfully politically incorrect to be opposed to Head Start, so I doubt if much will come of this.