[StBernard] Fewer prosecuted in benefits program fraud

[Westley Annis]

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 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.