Thread: city paid $11.8 million in housing subsidies to dead people

Audit reveals city paid $11.8 million in housing subsidies to dead people
BY Erin Einhorn
DAILY NEWS CITY HALL BUREAU CHIEF

Monday, September 26th 2011, 4:00 AM


Julia Xanthos/NewsNew York City Controller John Liu discovered the city was paying millions in rent benefits to approximately 4,000 dead people. Even the dead are scamming the city.

A shocking new audit from city Controller John Liu discovered that city bureaucrats paid out $11.8 million in rent subsidies in recent years to nearly 4,000 people too dead to enjoy them.

Instead, their landlords or relatives cashed in.

"There's no excuse for losing this much money - management lapse, willful fraud or otherwise," Liu said in a statement.

His office turned its findings over to Manhattan District Attorney Cy Vance Jr. to determine if any crimes were committed.

City officials say they've already recouped $3.3 million of the posthumous profit - and vowed to collect the rest as soon as possible.

They say they had spotted some of the errors even before Liu flagged the screwups - and began implementing safeguards to make sure the dead are never again on the city dole.

"For more than a year and a half, Finance has been engaged in a comprehensive effort to overhaul the entire ... process," said Owen Stone, a spokesman for the city Finance Department.

The problem emerged from a popular program called the Senior Citizen Rent Increase Exemption Program, which helps low-income elderly tenants pay their rents.

Tenants 62 or older who live in rent-stabilized or rent-controlled apartments and make less than $29,000 a year can sign up for the benefit.

It essentially freezes their rents and gives their landlords a tax break to cover the lost income.

Those landlords or the family members of the deceased are supposed to notify the city within 30 days if participants move or die.

Instead, the landlords of 3,801 tenants who were in the grave - some for as long as a decade - continued to cash in on the tax credits.

Liu's auditors discovered that from July 2009 to November 2010, those landlords pocketed $11.8 million in bogus tax breaks.

In some cases, it may have been greedy landlords at fault. In others, it may have been friends or family members of the deceased who wanted to enjoy low rents - and never reported the death.

"We acknowledge that we could do more than rely on landlords and family members to inform us of a tenant's passing," Stone said.

The Finance Department, which took over control of the program from the Department for the Aging in September 2009, insists it's now on top of the problem.

The department plans to run monthly verifications of participants, checking their names against the master death list issued by the Social Security Administration.

The city is also tightening internal controls to make sure it has accurate Social Security numbers for all participants.

But Liu says the program could have been expanded to help more needy seniors if the bogus benefits had been identified sooner.

"The Department of Finance and landlords may try to pass the buck, but it is the senior citizens who could otherwise benefit from [the program] who are losing out," he said.

eeinhorn@nydailynews.com
http://www.nydailynews.com/ny_local/201 ... waste.html

But Liu says the program could have been expanded to help more needy seniors if the bogus benefits had been identified sooner

.

Why can't they follow the paper trail and claw back that money?

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