A welfare fraud ring that included five former County Department of Social Services employees embezzled as much as $1 million in a scheme of phony payments that operated from 1986 to 1990, district attorney officials said Wednesday.
Prosecutors Wednesday charged 20 people with 67 counts of welfare fraud in the case, which was discovered by happenstance on March 1, 1990, during a routine state audit of San Diego County welfare cases.
The defendants will be arraigned Nov. 14.
Investigators said it was the largest welfare fraud case ever prosecuted in San Diego County. The investigation, which generated more than 15,000 pages of reports, 40 search warrants for bank records and reviews of six years of welfare records, took a year and a half.
The extent of the case and the Department of Social Services’ shoddy oversight of welfare cases have made it all but impossible to determine the exact losses, officials said. Investigators have been able to track down $553,000 of the stolen funds but estimate the actual loss to be as much as $1 million.
A statement released by Dist. Atty. Edwin Miller noted that “there is significant additional loss which has insufficient documentation to support filing criminal charges.”
A welfare department official who was a source for a Times story that was written last year about the investigation was much more critical of the department.
“This is just the tip of the iceberg. There is no quality control here. Benefits analysts have free reign to open cases. When a case is closed, the records get buried, and there is no tracking system,” said the official, who requested anonymity.
Deputy Dist. Atty. Robert L. Boles, who supervised the investigation, credited state Department of Social Services analyst John Hernandez for uncovering the scheme. Hernandez looked at a computerized list of cases and picked some at random for inspection. When files for some of the cases could not be found, Hernandez began asking questions, Boles said.
According to Boles, the group’s ringleaders were Victoria Clarissa Aguirre and Angela M. Nieto. Aguirre, 39, of Chula Vista, was a supervisor in an office that approved welfare payments, and Nieto, 47, of El Cajon, was a benefits analyst.
Investigators said Aguirre and Nieto were close friends. Boles said the women received kickbacks that amounted to two-thirds of the money paid out in the phony cases.
Typically, Aguirre, Nieto and the other three ex-welfare department employees would open cases under phony names, but list the payee in the case as a relative or friend. Each case was assigned to Nieto and the other three benefits analysts.
For example, Aguirre’s sister, Susan Louise Hernandez, 40, was listed as the payee in five cases opened under other names. The charges against Hernandez, a Chula Vista resident, allege that she collected almost $88,000 in illegal welfare payments.
The friends and relatives of the five welfare department employees allegedly involved in the embezzlement were allowed to keep one-third of the illegal payments, Boles said.
The illegal payments ranged from $5,080 paid to Jose Martinez, 30, of El Cajon, to a high of $99,699 paid to Sandra Gray, also known as Sandra Alaniz, of Chula Vista. Gray, 39, was also a benefits analyst.
The other former welfare employees charged in the scheme are Beverly Louise Najera, 50, and David P. Tovar, 27, both of San Diego. They were benefits analysts. According to prosecutors, Najera embezzled $30,444, and Tovar stole $18,626 it is charged.
County Department of Social Services spokeswoman Carol Baenziger said each of the former employees resigned.
Aguirre, who worked for the department for 13 years, resigned March 2, 1990, one day after Hernandez uncovered the scheme. Gray, who worked for the department for 17 years, resigned with Aguirre the same day.
Nieto, a 12-year welfare employee, and Najera, an 18-year employee, resigned in April, 1990.
Tovar worked for the department for almost three years, before he stopped coming to work on Feb. 23, 1988, Baenziger said. According to prosecutor Boles, Tovar left the department during the second year of the fraud scheme, which began in 1986.
Earlier this month, Tovar began working for the County Health Department’s child’s health programs, said Ron Yardley, a department spokesman. Tovar, who could not be reached for comment, helps indigent families who need health services, Yardley said.
The stolen funds came from the Aid for Dependent Children (AFDC) program. A frustrated Boles said the embezzlers were able to pull off their scheme in part because the department allows AFDC recipients to name others as payees of the funds they receive.
“We never got a straight answer about this. If somebody has six kids and qualifies for AFDC, why does the check go to somebody else? I was given all kinds of answers. ‘Suppose the kids’ mother is incompetent. Suppose the mother got arrested. The money is for the kids, and grandma is taking care of them,’ ” Boles said.
But, although the AFDC payments may go to someone outside the recipients’ immediate family, the welfare case is opened in the mother’s name, Boles added. He said welfare officials said it is done that way in order to spot different women who try to get assistance for the same children.
However, Boles noted that several of the phony cases allegedly opened by Aguirre and her accomplices were opened in men’s names. Susan Hernandez, for example, was listed as the payee for cases opened in the names of three men.
In fact, Hernandez and Gray were both listed as payees for one of the men. According to the district attorney’s office, Hernandez received almost $25,000 under the man’s name, and Gray collected $17,522.
Gray, who was also known as Alaniz, was also known by a third name, Becerra.
According to Boles, Gray and Oscar Becerra, 44, of Chula Vista, had a child together and then separated. Becerra, who was unemployed, persuaded a judge to order Gray to pay him child support, because he had custody of the child, Boles said.
At the time of the judge’s order, Becerra was married to Lisa Apablasa, 30. But, instead of paying child support, Gray arranged for Becerra and Apablasa to receive AFDC funds, Boles said. Both Becerra and Apablasa were among the 20 people charged in the case.
In what he called “another outrageous rip-off,” Boles said Aguirre’s brother, Michael Hernandez, 37, and his wife, Kathleen Hernandez, 37, were receiving AFDC payments in both Sacramento and San Diego counties at the same time.
According to investigators, the Hernandezes were charged with receiving more than $30,000 in illegal payments.
“Aguirre’s greed had no bounds. . . . She also preyed on people with financial problems,” Boles said.
According to Boles, Hugh F. and Debra Ann McLinden of Chula Vista were friends of Aguirre. He described Hugh McLinden, 37, as “a doper who got in trouble with some people over money and was soaking up the family income.”
When Aguirre learned of the McLindens’ financial problem, she arranged for Debra McLinden, 38, to receive $42,687 in illegal AFDC funds, with the understanding that she would hand over two-thirds of the funds to Aguirre, Boles said.
But the illegal payments were not enough to take care of the couple’s financial problems, Boles added. He said that Hugh McLinden robbed a few banks, was caught, and is now incarcerated at the Terminal Island Federal Prison.
The amount some defendants allegedly received in illegal payments on some months was staggering, officials said.
According to Boles, Ana Guerrero, 48, a Bonita resident, received $25,000 in one particular month. That amount was more than half of the $42,445 that investigators said she received in illegal payments.
County Department of Social Services Director Richard W. Jacobsen Jr., said in a written statement that new measures have been implemented to minimize fraud.
Jacobsen said the measures include background checks of employees and a computerized system that warns officials of “unusual transactions and payments.”
However, the department official who spoke with The Times said extensive background checks are still not being done.
“There’s no background checks being done on analysts,” the official said. “Each one of them has a yearly budget of $210,000 and up that they disburse to clients, and we don’t know anything about these people. . . . We’ve actually had people with prior convictions for armed robbery, welfare fraud and embezzlement hired as benefits analysts. We learned this only after they did something wrong and were caught.”
The other defendants charged in the case are Maria Contreras, 36, Chula Vista; Arnoldo Guerrero, 28, in Folsom Prison on burglary convictions; Christina Lieras, 23, Chula Vista; Patricia Marie Padilla, 48, Bonita; Suzette Rochelle Padilla, 23, Bonita; and Rojean Rittmiller, 35, Chino Hills.
Patricia Padilla is Aguirre’s sister and allegedly received $62,000 in illegal payments. Suzette Padilla is Patricia’s daughter and allegedly received $12,000 in illegal AFDC funds.