Welfare fraud adds up to jail time for cheaters

Nine Kaua’i people were convicted of welfare fraud last fiscal year for lying and cheating to get benefits. All were sentenced to pay back what they took.

From July 1, 2001 to June 30, 2002, the state Department of Human Services Investigations office received 170 complaints and allegations of welfare cheaters on Kaua’i via their fraud hotline. Barry Miyasato, head of the investigations division, said he looks into cases that mainly involve financial assistance, food stamps, medical assistance and child care.

Of the 16 Kaua’i people referred for prosecution last fiscal year, nine were convicted, and the total wrongfully taken was $91,307:

– $32,036 in financial assistance;

– $42,801 in food stamps; and

– $16,470 in medical assistance.

Statewide from July 1, 2001 to June 30, 2002, the DHS counted $2.2 million in 112 fraud cases, and the dollar amounts were high:

– $1,064,042 for financial assistance;

– $631,796 for food stamps;

– $384,320 for medical assistance; and

– $117,541 for child care.

Welfare fraud is “the intentional misstatement or failure to reveal information affecting eligibility, resulting in an overpayment,” according to the DHS.

The DHS calls welfare fraud a “white-collar crime” of deception, concealment and false statements.

Despite the label, “there is no denying the fact that these same perpetrators of welfare fraud are oftentimes involved with convictions of violent crimes, such as family abuse, sexual abuse, assault, terroristic threatening and drug-related offenses,” Miyasato said in a written report about welfare fraud.

“You trust that a client is reporting factual information on their application form,” Miyasato said.

Clients of DHS are required to list income and assets on a Monthly Eligibility Referral Form, which sometimes becomes the instrument used to gain funds fraudulently.

The most common types of welfare fraud are according to DHS:

– Unreported employment or other unearned income (Social Security, Veterans Assistance, unemployment insurance, child support);

– Unreported self-employment income;

– Unreported assets, like vehicles, real estate, savings/checking accounts;

– Misrepresentation of family size, by stating that more children live in the home, or not stating that both parents live in the home;

– Unreported marriage;

– Duplicate assistance under multiple names or creating a false identity, stealing social security numbers or creating fictitious names;

– Unreported absence from the state;

– Wrongful usage of food stamps/Electronic Benefit Transfer card.

Miyasato said he suspects that people in the “welfare community” become well-versed in the tactics to trick investigators. Such actions include placing the clothing of an “overnight guest” in a separate bedroom, using neighbors and friends to “cover” for them, or working “under the table” for cash.

“It’s hard to prove fraud unless you catch them in the act,” Miyasato said.

Welfare fraud is a crime of theft, the degree of seriousness depending upon the amount fraudulently received. Miyasato said that interviews with neighbors, friends, family and employers are often crucial to his investigations. Also, cross-referencing paperwork with other agencies may reveal untruths.

Miyasato said he works with the Kaua’i County Prosecutor’s Office but also conducts Administrative Disqualification Hearings within the department.

Through administrative hearings, 87 people were kicked off benefits, totaling $53,870 in financial, food stamps and medical assistance.

Whether a case is referred to the prosecutors’ office depends upon the dollar amount and “repeat offender” status, Miyasato said. Also, a client may challenge the administrative hearing and request the case be heard in court.

The prosecutor’s office can only charge people for what they believe can be proven beyond a reasonable doubt. Prosecutors will likely negotiate with a person charged with a felony offense to plead guilty; many will likely receive a plea offer unless prosecutors don’t think the crime may be proven beyond a reasonable doubt.

The prosecutor’s office is sometimes willing to make agreements as to sentencing, because most offenders have no significant prior criminal history and are not likely to receive the maximum sentence, said Deputy County Prosecutor Craig De Costa.

“In those cases we also seek to get as much restitution as possible paid before sentencing so that the State does not have to wait years to be reimbursed while the offender makes installment payments,” De Costa added.

Most cases result in conviction, or a deferment after a client pleads guilty. A deferment carries terms and conditions, which commonly include restitution and probation.

People found to be receiving “overpayments” are required to pay back the funds, albeit in a fair manner. If a client is still eligible for benefits after coming clean, the DHS can reduce benefits by up to 10-20 percent and use that toward repayment, Miyasato explained.

A first violation for welfare fraud results in disqualification from benefits for one year; two years for a second violation; and permanent disqualification for a third violation.

A case involving more than $20,000 is a Class B felony, punishable by a maximum fine of $25,000, 10 years imprisonment and five years probation. Getting more than $300 is a Class C felony, and carries a maximum fine of $10,000, five years imprisonment and five years probation.

Since 1999 on Kaua’i there have been convictions in 10 cases for amounts over $20,000; 13 for at least $10,000; 11 for at least $5,000; and 16 cases involving more than $2,000.

Financial assistance can be received for a maximum of five years, but food stamps and medical assistance have no time limit.

Those who know of people fraudulently obtaining welfare benefits are asked to call authorities by phoning the Kaua’i fraud hotline at 241-7107.

Miyasato said that complaints may also be made by calling, or in person at his office, 4370 Kukui Grove St., Lihu’e, Hi 96766. He said most calls are made anonymously. Identities of informants aren’t released by the DHS.

Staff Writer Kendyce Manguchei can be reached at kmanguchei@pulitzer.net or 245-3681 (ext. 252).