Thread: Fewer prosecuted in benefits program fraud

Fewer prosecuted in benefits program fraud

By Brad Heath, USA TODAY
Updated 34m ago |

WASHINGTON — The Obama administration is prosecuting fewer cases in which people are accused of defrauding government benefits programs, even as the number of Americans seeking federal aid has ballooned to record levels, a USA TODAY analysis found.

The drop in criminal prosecutions indicates a shift for federal law enforcement agencies, which have increasingly targeted schemes aimed at mortgage lending, financial institutions and Medicare, the government insurance plan for the elderly. It suggests that people who defraud food stamps, Social Security or other benefits programs are less likely to face federal criminal charges.

In the two years since President Obama took office, data released by the Justice Department show the number of criminal prosecutions for defrauding those programs has dropped by about 20% to its lowest point in a decade. Figures from the department's annual reports and from TRAC, a research organization at Syracuse University, also show a declining number of prosecutions.

Last year, records show, the Justice Department brought 678 such cases.

Criminal prosecution is typically the most significant step the government can take when it suspects fraud. Although officials can try to recover lost money and ban swindlers from receiving aid without bringing a criminal case, "as with anything else in law enforcement, if there's a law on the books and you don't enforce it, it becomes meaningless," says University of Maryland law professor Jane Barrett, a former federal prosecutor.


During the past two years, the agencies responsible for investigating fraud have referred about 8% fewer cases to federal prosecutors, Justice Department records show. At the same time, records compiled by TRAC show that prosecutors have been turning down a higher percentage of the referrals they received.

Former Los Angeles U.S. attorney Thomas P. O'Brien says focusing the government's limited resources on Medicare and other high-cost frauds makes sense because those schemes tend to involve far more taxpayer money. "You have to decide what will have the biggest impact for taxpayers," he says. "But you also can't turn a blind eye to a certain area and say the government's not going to take a very aggressive stance," he says.

The drop in prosecutions comes as a lackluster economy has swelled the size of government benefits programs. By last year, almost 49% of American households collected Social Security, food stamps, housing assistance or one of dozens of other forms of federal benefits, Bureau of Labor Statistics surveys show. Food stamps alone help feed a record one in eight Americans.

Auditors say the risk of fraud has grown along with the size of those programs. "When we have more people on assistance, there's more susceptibility to people defrauding it," says Alan Kimichik, the inspector general of Michigan's Department of Human Services, which operates that state's food stamps program.

Officials have no way of knowing how much fraud costs its benefits programs each year, but the sum is certainly substantial. Auditors estimated that $330 million worth of food stamps were "trafficked" in 2008, a figure that was rising as the number of people seeking aid increased. The Labor Department estimated that $17.5 billion of unemployment insurance was lost to "improper payments" last year, though it could not say how much was because of fraud.

"Some of these cases, we assume that they can deal with them administratively," says former Housing Department inspector general Kenneth Donohue, a principal with the Reznick Group. "Typically, with the little cases, the U.S. attorney's offices would not want to pursue them."

Jessica Smith, a spokeswoman for the Justice Department, says criminal prosecutions can fluctuate over time, and officials have other tools — including settlements and civil lawsuits — to go after fraud.

Iowa Sen. Chuck Grassley, the top Republican on the Senate Judiciary Committee, says prioritizing the costliest schemes is important, but "no type of fraud, regardless of size or scope, should get a free pass from those sworn to uphold the laws and Constitution of the United States."

The Justice Department's last major push to prosecute fraud cases came in the aftermath of Hurricane Katrina in 2005, when prosecutors were instructed to take a zero-tolerance approach to people trying to cheat the aid programs intended to help rebuild the Gulf Coast. They responded by bringing federal charges in thousands of cases, even when the schemes involved only a few thousand dollars, court records show.

That approach was an important tool for deterring swindlers, and it helped uncover problems in aid programs that made the abuses possible, says David Dugas, the former U.S. attorney in Baton Rouge, who oversaw the effort.

http://www.usatoday.com/news/washington ... raud_n.htm

This is the latest benefit fraud that we had in our city.


$500K food stamp fraud alleged at Waukegan mom-and-pop store

NEWS-SUN STAFF REPORT June 23, 2011 8:48PM

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Updated: June 24, 2011 2:29AM


A Waukegan couple is accused of defrauding federal food stamp and nutrition programs of more than $500,000 over the past two years.

Federal prosecutors also said that after a search of Sunset Food Market, 1501 Sunset Ave., co-owner Fatima Saleh, 35, was caught trying to flee with more than $350,000 in a suitcase.

She and husband Khaled Saleh, 46, are charged with one count each of conspiracy to defraud government programs and one count of Agriculture Department program fraud in a two-count indictment returned Wednesday by a federal grand jury in Chicago.

According to the indictment, between August 2009 and April 2011, the Salehs redeemed more than $1.175 million in Link food stamp and WIC coupons, with more than $500,000 allegedly obtained through fraud,

The complaint alleges they exchanged cash with customers who made falsely inflated purchases using food stamp cards and nutrition coupons. They also allegedly purchased items, typically infant formula, that customers bought at other stores using program benefits, paying half of the value and then re-selling the items in their store at higher prices.

The charges followed an investigation in which an undercover agent from the U.S. Department of Agriculture Inspector General’s Office used program benefits to buy formula at a discount store, then sold it for half the price in cash to the Salehs on several occasions, according to the U.S. Attorney’s Office.

After federal agents executed a search warrant at the store on April 26, Fatima allegedly went to her nearby residence, and agents saw her leave a short time later with a suitcase and her mother in tow.

Agents found more than $350,000 in cash and more than 800 coupon vouchers for the WIC supplemental food program in the suitcase, authorities said. They later found another $25,000 in cash in the apartment.

The indictment seeks forfeiture of about $377,000 seized on April 26, as well as more than $14,500 seized from Sunset Market’s bank account.

Court documents also allege that Fatima Saleh applied for and received Link benefits and WIC coupons for herself, the complaint alleges. In 2010, she received WIC vouchers and as much as $952 a month in Link benefits. As late as May, she was receiving $738 a month in food stamp benefits, authorities said.

The Salehs remain free on bond pending arraignment on June 28 in federal court.

Sunset Food Market’s participation in the federal food programs has been suspended.

Each count of the indictment carries a maximum penalty of five years in prison and a $250,000 fine.

Bart Beals, Khaled Saleh’s Chicago attorney, said Thursday the couple has been “cooperative with the legal process since day one.â€