Random Survey Finds Evidence of Welfare Fraud in 45% of Cases Studied

Her husband had left her with three children, she was unemployed and had no income, the woman said when applying for welfare.

Four years later, while conducting a random study of 450 welfare recipients in Orange County, investigators discovered that her husband had always been in the home, caring for the children, and that the woman had a paying job.

Together, the couple had bilked the welfare system of more than $50,000.

The fraud case against the couple was discussed Tuesday at a news conference with state and local officials, who detailed the results of a newly released study of welfare fraud in Orange County.

The study--a joint effort of the California Department of Social Services, the Orange County Social Services Agency and the Orange County district attorney’s office--found evidence of fraud in 45% of 450 welfare cases that were randomly selected for investigation.

Thirty percent of the families, who were drawing Aid to Families with Dependent Children (AFDC) and food stamps, were found to be getting more assistance than they should have, primarily because they had concealed income that would have reduced their benefits or had not reported the presence of someone else bringing in money.

“Spending [money] on people who are not eligible is just a terrible waste,” said Sandra Smoley, secretary of the state Department of Health and Welfare. “We cannot afford, nor will we tolerate, this outrageous abuse of the system.”

One way to further crack down on welfare fraud, Smoley said, would be to implement Gov. Pete Wilson’s proposal to institute a lifetime ban on welfare for anyone who intentionally defrauds the system.

Also, Smoley said, the state hopes to expand statewide a pilot program that has been successful in Los Angeles County, where welfare recipients are fingerprinted to make sure they cannot draw welfare benefits at two or more places at the same time.

Of the 450 people investigated in Orange County, 201 had given false eligibility information to welfare officials. In 67 cases, they did so unnecessarily, since they were eligible for the money anyway.

Of 46 cases that were eligible for criminal prosecution, 21 pleaded guilty, 20 await court dates, and five defendants had their cases dismissed. All those convicted of fraud received three years’ probation, during which time they are supposed to earn money to repay the county, said Dist. Atty. Michael R. Capizzi.

Several defendants were also sentenced to jail or required to perform community service. The longest jail sentence meted out to someone caught during the study investigations was 300 days, said Capizzi.

From the beginning, the study was marked by controversy. Civil libertarians charged that the intrusive nature of the investigations were unjustified and possibly unconstitutional. Also, many advocates for the poor argued that others who receive state and federal monies could just as easily have been singled out for investigation, instead of the needy.

The fraud study was launched after an earlier Orange County study of welfare to children of illegal immigrants revealed a 63% fraud rate. That study, however, was decried by advocates for the poor as biased.

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Money at the Root

The most common type of welfare fraud in Orange County is failure to report income. How the 201 cases divide:

Unreported income: 52%

Household composition: 31%

Other: 7%

Unreported property: 10%

Source: County of Orange