Tally in Welfare Fraud Case Still Unknown : Government: Eight-month probe could extend into next year. Four ex-county welfare workers have been implicated; as many as a dozen employees may have been involved, one official said.

Eight months after the district attorney and the County Department of Social Services began investigating allegations that four county welfare eligibility workers stole funds by creating phony families, authorities said they still do not know how much money was stolen.

Richard Jacobsen, county director of Social Services, put the loss at “several hundred thousand dollars.” He said the scheme could have been ongoing for as many as two years before it was discovered in February.

District attorney spokeswoman Linda Miller said the investigation is continuing and no charges have been filed. Because of the vast amount of paperwork that needs to be reviewed, Miller said the investigation will not be completed until “some time early next year.” She refused further comment.

Department of Social Services sources said investigators are reviewing thousands of cases to learn the magnitude of the alleged fraud and checking thousands of Social Security numbers to see if people claiming them really exist.

Barbara Penn, Social Services Department spokeswoman, said one of the employees suspected of participating in the scheme was fired after the investigation began. The other three resigned before they could be fired, Penn said.

The employees--called benefit analysts--worked out of three of the department’s nine field offices, but Penn declined to identify the offices.

Officials also declined to say whether the four were part of a ring, but a Department of Social Services official familiar with the case said that as many as a dozen other employees are also thought to be involved.

As analysts, the four ex-employees determined an individual’s eligibility for various aid programs. Jacobsen said the department currently employs about 950 benefit analysts.

Benefit analysts yearly direct about $350 million in Aid to Families with Dependent Children and $67 million in food stamps to households in the county. A Social Services Department official, who requested anonymity, said the stolen money was taken from AFDC funds.

Jacobsen said the scheme began to unravel following a routine audit.

A source within the department said auditors from the department’s quality control unit apparently could not find a family receiving AFDC funds. “They went to talk to the family, and found no such people existed. This led to a further review of the analyst’s caseload,” the official said.

The review revealed additional bogus families receiving AFDC funds in the analyst’s caseload. A broader probe revealed discrepancies in the caseloads of at least three other analysts, and a criminal investigation was launched. The investigation is being conducted by an investigator from the district attorney’s office and another one from the department.

Typically, the scheme worked like this, said the Social Services official: Analysts suspected of stealing money would open a phony case and collect the funds for a few months, before closing it. Then, they would reopen the case a few months later and close it again.

Jacobsen said welfare recipients have to meet certain eligibility guidelines, which are supposed to be monitored by benefit analysts.

“Depending on the program, they (recipients) have to submit information to the analyst on a regular basis, like income reports. We make adjustments on their benefit level based on this information,” Jacobsen said.

Individual analysts do not have a caseload quota or a specific level of funds to disperse, he added.

In the past, the department relied almost solely on spot checks to verify claims and welfare payments. Reviews were routinely conducted on 10% of the cases, picked at random by the department to assess the analyst’s work and to look for fraud.

According to published reports, which the department did not dispute, 12 employees have been fired or disciplined since 1985 for what department officials call “misspent funds.” The misspent funds totaled more than $205,000.

Since the current investigation began in February, the department has instituted safeguards designed to stop employee fraud, Jacobsen said.

“We have numerous internal safeguards that . . . make it easier to detect fraud. We have an internal security manager who has been appointed and who evaluates security issues for us and makes recommendations for continued improvement,” Jacobsen said.