Fraud by County Quake Aid Workers Probed : Food stamps: At least 19 are under investigation by task force on charges that they filed false applications.

Federal authorities are investigating allegations of food stamp fraud among Los Angeles County welfare workers who process applications for earthquake-related benefits, with at least 19 employees already under scrutiny for possible criminal prosecution or administrative discipline by the county, The Times has learned.

Several anonymous tips to a federal abuse hot line have alleged that a substantial number of county Department of Public Social Services employees--including case workers--have filed fraudulent food stamp applications in their names or those of relatives, or have helped others obtain food stamps illegally, federal authorities said Friday.

Although authorities said it was too early to know exactly how many employees may have been involved, they said the allegations deal with four welfare offices, including a large processing center set up at Dodger Stadium. A large number of employees allegedly participated, and some individuals are named.

If all the allegations are substantiated, federal officials said, the number of implicated employees could reach into the hundreds, but they cautioned that they were only beginning the investigation and had no evidence of such widespread abuse. More than 1,600 county employees have been assigned to the emergency food stamp program.

“We are talking about a very serious crime,” said David F. Dickson, regional inspector general for the U.S. Department of Agriculture, who leads investigations of food stamp fraud. “You cannot allow your own employees to steal from the program or it undermines public confidence. If there are allegations that people in the program are ripping off the system, it sends the message to the street: Why shouldn’t we rip it off too?”

County officials declined to comment on the possible scope of the investigation. But they said they had cleared 22 of the 41 employees referred to them by federal authorities, who said they were tipped off by the hot-line calls and a county employee. Tony Vargas, chief of the fraud division of the county Department of Public Social Services, said the 22 cleared employees had applied for emergency food vouchers but simply did not meet income eligibility requirements, and had not filed fraudulent information on their applications.

“The others we are looking at and opening an investigation,” Vargas said. “It is a very sensitive situation. . . . At this point we know very little.”

A special team of federal auditors arrived in Los Angeles on Friday to help the county department review applications that may have been filed fraudulently by the employees, Dickson said. The auditors will help make computer cross-checks of addresses, Social Security numbers and other information that might point to multiple or fictitious filings.

“Internal fraud is a No. 1 priority any time you are dealing with it,” said Dickson, who expects to receive more tips on the (800) 424-9121 hot line.

“For some reason, people got the idea that the government was going to allow people to come in and scam this program.”

The allegations against county workers are the latest blow to the emergency food stamp program. The program was overwhelmed with applications--many believed to be fraudulent--after officials lifted standard screening procedures to help accelerate the distribution of benefits shortly after the earthquake.

Some of the procedures have since been reimposed, but the flow of applications continues: As of Thursday, 173,165 applications had been received for emergency food stamps, with $42.1 million in food vouchers distributed. In the last week, authorities have arrested at least 15 people on charges of buying and reselling food stamps on the street. Three of those arrested were sentenced Friday to 90-day jail terms after pleading no contest to illegally dealing in food stamps.

Federal statistics released Friday show the enormity of temptation for fraud in the multimillion-dollar quake relief effort. Nearly $818.5 million in assistance has been allocated since the Jan. 17 temblor, or an average of $51.2 million a day. By comparison, the average daily allocation for previous national disasters was $2 million over the same period.

In an effort to clamp down on fraud and corruption in the relief effort, federal authorities said Friday that they have formed a task force that will monitor all agencies providing assistance to quake victims and aggressively pursue cheaters.

In all, eight federal agencies have joined the task force, and they will combine criminal investigators and other resources. A special team of federal prosecutors will decide if the U.S. attorney’s office or state or county prosecutors should handle specific cases, said Assistant U.S. Atty. George B. Newhouse Jr.

Newhouse said the task force is made up of officials from the Federal Emergency Management Agency, the FBI, the Postal Service, the Department of Housing and Urban Development, the Department of Agriculture, the Small Business Administration, the Army’s Criminal Investigation Division and the U.S. attorney’s office.

“With any government program designed to assist the needy, there are those individuals, driven by greed, who rush in to take advantage of benefits intended for the truly needy,” U.S. Atty. Nora Manella said in a statement. “We intend, by forming this task force, to aggressively prosecute those who seek to profit from relief efforts, and thus stem the flow of fraud.”

In the case of the county welfare caseworkers, Newhouse said some workers have been accused of filing false claims in their names as well as those of relatives. He would not comment on the cases because of the ongoing investigation, but said he expected criminal prosecutions, either by his office or the Los Angeles County district attorney.

“We are most interested in people who are doing this on a repeated basis,” Newhouse said.

Under state law, fraudulent claims of more than $400 are a felony and could bring a maximum penalty of three years in prison and a $5,000 fine. Fraud less than $400 carries a penalty of up to six months in jail and a $500 fine. If cases are prosecuted under federal law, the penalties are as great as five years in prison and a $250,000 fine.

Times staff writer Josh Meyer contributed to this story.

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