Dialing Against Fraud--Public Calls ‘Tattler’ Lines : Tips: Advocates say their popularity taps into human desire to right a wrong--or to anonymously seek revenge.

A Northridge bank employee was turned in for approving a loan for a relative. A California Department of Forestry employee was discovered spending afternoons at a bar. A Los Angeles County social services worker was investigated after bringing a gun to the office.

The offenders were not detected by police, but by peers and members of the public who simply picked up a phone, dialed a toll-free 800 number and anonymously reported the alleged misdeeds to a hot line designed to combat fraud and other misconduct.

One of the longest-running programs of its kind, Los Angeles County’s 7-year-old employee fraud line has gotten more than 4,500 calls, leading to 148 firings and 457 suspensions, reprimands or other punishments, according to a recently released report.

Although several hot lines have been operating across the country for more than a decade to root out welfare fraud, the so-called tattler lines are increasingly viewed by public agencies and private corporations as an effective way to regulate behavior.

From petty misdeeds to potential prosecution, the reports go to either an answering machine or a live operator backed by an investigative fraud team. Advocates say the popularity proves that hot lines have tapped into a human desire to right a wrong--or sometimes, to clandestinely seek revenge.

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“It used to be a standing joke that government and corporate-ethics lines were an oxymoron, or people would refer to them as 1-800-RATFINK,” said Michael Hoffman, executive director of the Center for Business Ethics at Bentley College in Waltham, Mass. “But now, there is much more acceptance on the part of employees who see that fraud can be harmful to everyone.”

The lines are popping up from New York City, where retired police officers have set up a corruption hot line, to the Antelope Valley, where school administrators pay students for tips on graffiti, drugs and guns. A similar plan is being discussed in the Los Angeles Unified School District.

In Los Angeles, corporations ranging from Anheuser-Busch to the aerospace giant Lockheed have installed the lines. Others are operated by the Pentagon, other major defense contractors, including Northrop-Grumman, Hughes Aircraft and Texas Instruments, Dunn & Bradstreet and the California State Bar.

In some cases, simply having a hot line is as useful as following up on the tips they collect.

“Deterrence is a big part of the success of these lines,” said Steve Nylander, who oversees a hot line at the Calabasas-based Lockheed Corp.

Not everyone is impressed.

“It has a chilling effect on the workplace,” said Dan Savage, special assistant to the general manager of Service Employees International Union’s Local 660, which represents more than half of Los Angeles County’s 80,000 employees. “The problem with these hot lines is the credibility of the people calling. If you’re mad at somebody, you can just call in and make something up. It’s a way to mess with people.”

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Public officials say many callers to government hot lines are actually complaining about government in general, venting personal anger or asking questions on everything from how to file tax returns to how to get to the Lincoln Memorial.

Many businesses set up hot lines in response to 1992 federal legislation that increased the fines that government contractors could face if found guilty of fraud. A business can reduce its fine if it can prove that it took steps to fight fraud--for instance, by hiring ethics advisers or setting up tip lines.

Northrop-Grumman Vice President Shirley Peterson said the Los Angeles-based aerospace company receives an average of 1,200 mostly anonymous calls each year from its employees. Only about a quarter of the calls are allegations of wrongdoing, she said, while the rest are questions about company rules.

Recently issued reports by the state and county offer a glimpse into the variety of offenses that surface.

According to the Los Angeles County report, most of the violations from October to December, 1994, involved employees who came in late, left early or stretched 15-minute breaks into leisurely siestas. One employee, for example, received a reprimand for calling in sick when he actually was moonlighting.

But the calls also led to one conviction, two arrests, three resignations and six suspensions. In all, employees in 14 different county departments were found to have violated one rule or another.

In one of the most serious offenses, a county employee was caught trying to cash counterfeit checks from the Community Development Commission. County officials refused to disclose more information about this incident and others mentioned in the report, citing the need to protect tipsters from public exposure.

The line received more than 100 mostly anonymous tips during that three-month period, 83 of which resulted in new investigations by county auditors, said Ian Clark, who runs the hot line from a basement office.

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Meanwhile, the state auditor’s hot line received 2,061 calls from August to December, 1994, although about 64% of those were requests for information or other matters outside the auditor’s jurisdiction.

The state opened 71 investigations as a result. In a typical year, the line gets 3,500 to 5,000 calls, prompting about 200 investigations, said State Auditor Kurt Sjoberg.

Although the same tip line once enabled the state to recover $3.9 million in a Medi-Cal billing error, most recent reports of misconduct amassed by the state and county have been modest:

* In Los Angeles County, a health department worker was fired for soliciting cash payments from patients, and a welfare worker resigned after borrowing money from a client.

* A county librarian, caught with 42 overdue books and other materials, was suspended for 30 days.

* A county Planning Department employee slipped a proposal from his own consulting firm into a bid package for a government project he was handling. His punishment is pending.

* A Caltrans highway engineer drove a state vehicle to a card room and gambled on state time. He has not yet been punished.

* A second Caltrans employee who moonlights as a contractor remodeled a ski lodge on state time, although he billed the ski lodge $45 per hour for his services. He has not yet been punished.

Anonymity is widely acknowledged as the reason hot lines work. If informers are exposed, the results can be devastating, as one Los Angeles city worker discovered in the mid-1980s.

Robert J. O’Neill won $800,000 from the city for emotional distress, defamation of character and invasion of privacy after a memo detailing his juvenile crime record was circulated at City Hall. The memo surfaced after O’Neill had complained of mismanagement by his boss, Sylvia Cunliffe, to a city fraud line. Both employees ultimately resigned.

While some rank-and-file employees cringe at the thought of Big Brother, they have been able to use hot lines to their advantage.

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One state worker hung a poster for the hot line near her desk “to let the boss know she was not going to stand for anything wrong,” auditor Sjoberg said.

And one county health worker turned in the boss “for verbally abusing her subordinates,” according to the county report.

Others grudgingly give the fraud line its due for more serious reasons. “If they had had one of these down in Orange County, maybe they wouldn’t be in the mess they’re in today,” said one employee, who, not surprisingly, wished to remain anonymous.