Fewer prosecuted in benefits program fraud
Tuesday, June 28, 2011
Fewer prosecuted in benefits program fraud
By: Brad Heath, USA TODAY
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
MedicareEnlargeClose
, 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.