Beneficiary With Ties to Organized Crime Convicted of Insurance
Fraud
Our New York City office investigated an allegation from a national
insurance company via a local SSA office in Omaha, Nebraska that
an SSA disability beneficiary was working while collecting benefits
based on a heart condition. The company alleged that the beneficiary
had received $1 million in private disability insurance payments
while he was vice-president of a company, overseeing multi-million
dollar construction projects as well as several well-known New
York restaurants.
Our investigation found that the beneficiary had worked full-time
and concealed this employment to continue receiving benefits from
June 2000 to April 2006. We also determined that the man had previously
served time in prison for income tax evasion, racketeering, and
laundering money for a well-known organized crime family. The
beneficiary pled guilty to insurance fraud and was sentenced in
July 2007 to 1.5 to 4.5 years in prison. He was also ordered to
pay restitution of $927,000 to three insurance companies, as well
as $90,000 in restitution to SSA.
Woman Uses Two SSNs to Conceal Work and Receive Disability
A local SSA office reported to our San Francisco office that a
woman filing for retirement benefits had apparently been working
under one SSN while receiving disability benefits under another
SSN. Our investigation revealed that the woman had a valid SSN
that she used to work and then collect Title II disability benefits
until 1988. However, she had acquired a second SSN in 1971 using
fraudulent information, and worked under that second SSN for 35
years, during the entire time she was receiving disability benefits.
SSA referred the matter to the OIG when the woman filed for retirement
benefits under the fraudulently acquired SSN.
As a result of our investigation, the woman pled guilty to illegally
receiving more than $91,077 in government funds and has agreed
to pay full restitution to SSA. In addition, she faces a maximum
of 5 years in prison and a fine of $250,000 when she is sentenced
in December 2007.
Former Soldier Applies for Disability Benefits while Working
at the VA
The Seattle CDI Unit investigated a 38-year-old man who filed
an initial claim for Title II disability benefits due to pain,
carpal tunnel, foot problems, post traumatic stress disorder (PTSD),
poor memory, and hearing loss. The man reported that his problems
were the result of his combat experiences in Iraq. The Washington
State Disability Determination Services referred this case due
to inconsistencies in the man's behavior and allegations.
CDI investigators determined that the man had served in Kuwait
and had never been stationed in Iraq nor been in a combat situation.
They also learned that the man was working 30 hours per week at
the United States Department of Veterans' Affairs, doing a variety
of jobs. During an interview, the man conversed easily and exhibited
no apparent physical limitations. He later admitted to lying about
serving in Iraq. Based on our investigative findings, the man's
disability claim was denied.
Man Sentenced to Prison for Filing False Unemployment Claims
In cooperation with the Louisiana Department of Labor, U. S.
Postal Inspection Service, and the U. S. Marshals Service, our
Baton Rouge, Louisiana office investigated a 46-year-old Villa
Rica, Georgia resident for filing fraudulent applications for
Disaster Unemployment Assistance (DUA) funds. The investigation
revealed that the man fraudulently received DUA funds by submitting
39 applications containing false identities and SSNs of alleged
Hurricane Katrina victims to the Louisiana Department of Labor.
As a result of his actions, the man defrauded the State of $39,835.
As a result of this investigation, the man pled guilty to wire
fraud and illegal use of an SSN. He was sentenced in July 2007
to 27 months in prison and 5 years' probation, and was ordered
to make full restitution.
Office
of the Chief Counsel Highlights
Woman Assessed $92,597 Penalty for Receiving Benefits While
Working
While investigating an unrelated matter, the Colorado Organized
Crime Task Force uncovered evidence that a Title II disability
beneficiary owned her own business and had worked full-time since
2000. OI's Denver office conducted an investigation which revealed
that the woman, who had received benefits since 1995 for herself
and three children based on a mood disorder, had performed work
under her husband's SSN. She had reported some of her work to
SSA, but concealed substantial work and income that would have
put her over the earnings threshold for benefit eligibility. Based
on the woman's false statements on several SSA forms, OCCIG imposed
a $20,000 civil monetary penalty (CMP), as well as full restitution
of the $72,597 benefit overpayment.
Beneficiary Falsely Claiming Custody of Son Assessed $43,340
Penalty
The SSA office in Warner Robins, Georgia notified the OIG that
a Title II disability beneficiary had falsely claimed custody
of her son so she could receive his dependent auxiliary benefits.
The investigation found that although the child's father had been
awarded full custody in 1997, the beneficiary filed for auxiliary
benefits in 2002 on behalf of the child. The benefit claim was
approved, and SSA appointed the woman as representative payee.
She then converted the child's benefits for her own personal use.
Based on her false statements, the woman received $18,340 to which
she was not entitled.
When prosecutors declined to file criminal or civil charges against
the woman, OI referred the matter for CMP consideration. OCCIG
developed the case and imposed a total CMP of $43,340, including
a $25,000 penalty and $18,340 in restitution to SSA.
OCCIG Levies $30,000 Penalty against Florist Working under
Daughter's SSN
OCCIG imposed two CMPs against individuals in connection with
a Boston CDI Unit investigation of a woman who received Title
II disability benefits while operating a flower shop in Sutton,
Massachusetts. CDI investigators observed the woman working at
the flower shop, and when they interviewed her, she admitted working
approximately 30 hours per week since April 2004. She also acknowledged
using her daughter's SSN to work another job at a friend's flower
shop in North Grafton, Massachusetts. The woman stated that she
concealed all of her earnings to avoid losing her disability benefits.
CDI investigators referred the matter to OCCIG, which imposed
a $30,000 CMP against the woman for making false statements to
SSA while receiving disability benefits and concealing her employment
at the Sutton flower shop. OCCIG also imposed a $5,000 CMP against
the North Grafton flower shop owner in for knowingly concealing
the woman's employment and earnings.
Some individuals are entitled to both Social Security disability
benefits based on their own earnings history and widow's (or widower's)
benefits based on their deceased spouse's earnings. Widow's benefits
are reduced when beneficiaries elect to receive them prior to
full retirement age (FRA); however, this reduction is eliminated
when beneficiaries attain FRA and transition from disability to
retirement benefits. We conducted this review to determine whether
SSA properly adjusts widow's benefits when beneficiaries attain
FRA.
Based on our review of a random sample of cases, we estimate
that about 9,751 beneficiaries were underpaid approximately $113.7
million through November 2006. If SSA does not take action to
correct the benefits paid to these individuals, we estimate that
they will continue to be underpaid about $137.8 million over the
rest of their lives. On average, for our sample cases, 121 months
(or 10 years) had elapsed since the beneficiaries attained FRA.
SSA agreed to our recommendations that the Agency (1) review
these cases and take any appropriate action; (2) remind staff
of proper procedures for adjusting widows' benefits; and (3) review
automated programs used to ensure that these cases are identified.
SSI Recipients Eligible as Disabled Adult Children Under the
Old-Age, Survivors and Disability Insurance (OASDI) Program (View
Report A-13-07-17073)
We performed this audit to determine whether SSI recipients who
previously received OASDI benefits were eligible for additional
benefits. Individuals receiving SSI payments may also be eligible
for disabled adult child benefits under the OASDI program if they
(1) were disabled before reaching age 22; (2) are not entitled
to a higher OASDI benefit payment based on their own work history;
and (3) have a parent who is receiving benefits or who was insured
for benefits at the time of death.
Based on an analysis of SSA records, we identified 5,908 SSI
recipients who appeared to be eligible for additional OASDI benefits.
Of these, we randomly selected 200 for further review, and found
that 137 appeared to be eligible for additional benefits. Based
of this review, we estimate that about 4,047 SSI recipients may
be eligible for additional OASDI benefits. Of the 137 cases, we
selected 10 SSI recipients to assess their respective OASDI and
SSI payments. We determined these 10 recipients were owed OASDI
underpayments of approximately $114,000.
SSA agreed with our recommendation to determine whether the SSI
recipients we identified are eligible for OASDI benefits and calculate
any underpayments. Also, SSA should evaluate ongoing efforts to
identify individuals who may be eligible as disabled adult children
to determine whether these efforts should be expedited or expanded.
Through the Exchange Visitor Program, foreign nationals may visit
the United States under a J 1 visa to work and travel. In this
review, we assessed SSA's process for assigning SSNs to J-1 exchange
visitors. We focused our review on visitors in the camp counselor
and summer work/travel categories. In Calendar Year 2005, SSA
assigned about 100,000 SSNs to individuals in these two categories.
Based on our interviews with employers, international cultural
exchange organizations, and SSA personnel, we question whether
individuals who can work in the United States for a maximum of
4 months should be assigned SSNs that are valid for life. While
we recognize that current law allows exchange visitors to obtain
SSNs, we are concerned that this practice creates opportunities
for potential SSN misuse. For example, an SSN makes it easier
for exchange visitors to remain in the country and continue working
after their immigration status expires. One employer told us that
28 of 143 (about 20 percent) exchange visitors hired last summer
left shortly after receiving their Social Security cards.
In addition, some exchange visitors leave their employer or return
to their home country before receiving their Social Security card,
thus increasing the potential for other individuals to obtain
and misuse these cards. Further, some of the employers and SSA
field office personnel with whom we spoke stated that exchange
visitors who receive their SSN cards do not always recognize their
value and therefore do not adequately safeguard them.
SSA agreed with our recommendation to instruct employers and
organizations to return Social Security cards to local field offices
when cards arrive after visitors' departures. However, SSA disagreed
with our recommendation to work with the IRS to develop alternatives
to assigning SSNs to summer work/travel visitors, because we did
not find evidence of fraud related to this program.
Around OIG
Inspector General Announces Organizational Changes
On September 13, the Inspector General announced a restructuring
of the OIG's Office of Investigations which will allow OI to better
respond to trends in Social Security fraud and take greater advantage
of emerging investigative techniques, including data mining and
analysis.
The Strategic Enforcement Division will become the Strategic
Research and Analysis Division, which will be composed of the
Employee Integrity Team; the Computer Research and Inquiries Team;
and the Program Integrity and Policy Review Team. The Enforcement
Operations Division will become the Criminal Investigations Division,
which will be composed of the Disability Investigations Team (formerly
the Cooperative Disability Investigations Program), the Electronic
Crimes Team, and the Field Operations Team.
The IG also made several personnel announcements to facilitate
this restructuring and redefine management roles, as well as to
enhance career development and assist in succession planning.
We congratulate all employees on their new roles and look forward
to positive changes made possible by fresh perspectives and ideas.
OIG Officials in the Spotlight at National Conferences
OIG officials recently addressed three national audiences on
issues related to our mission of preventing fraud in Social Security
programs and operations. The OIG values these important opportunities
to forge and further partnerships that can help us accomplish
this mission as well as inspire public confidence in Federal programs.
On September 17, Inspector General O'Carroll addressed the Kansas
City chapter of the Association of Government Accountants, which
counts among its members OIG auditors in that region. In that
presentation, IG O'Carroll gave an overview of the OIG's role
in maintaining Social Security number integrity despite its widespread
use in American society.
IG O'Carroll was also a featured speaker at the National Association
of Disability Examiners' annual conference, held September 17
- 20 in Sioux Falls, South Dakota. In this forum, IG O'Carroll
shared current OIG projects and initiatives related to disability
program integrity as well as Social Security number protection
and misuse.
Also in September, two senior OIG officials were featured on
speaker panels at the Association of Government Accountants’ 2007
Internal Control and Fraud Conference in Atlanta. Deputy Chief
Counsel for External Relations Jonathan Lasher covered topics
including identity theft and the Federal Government’s efforts
to protect Americans’ personally identifiable information. In
addition, Acting Allegation Management Division Director Robert
Meekins provided information about the SSA OIG Fraud Hotline’s
operations.
SSA and OIG Host 2007 Six Nations Benefit Fraud Conference
During the week of September 10, SSA and the OIG hosted officials
from five countries at the 11th Annual Six Nations Benefit Fraud
Conference in Williamsburg, Virginia. The Six Nations Benefit
Integrity Group is a workgroup of the Six Nations Benefit Forum,
which focuses on sharing ideas to improve program integrity. Participating
countries include Australia, Canada, Ireland, New Zealand, the
United Kingdom, and the United States.
This year's conference covered topics including
the integration of program integrity with customer service;
various methods used to recover benefit overpayments;
guarding against criminals who work to exploit program controls;
and
safeguarding personally identifiable information.
In addition, workgroup members shared the status of ongoing cooperative
projects, including a joint initiative by our Office of Audit
and the Canada Department of Human Resources and Social Development
to ascertain the current status of beneficiaries living abroad.
2007 President's Council on Integrity and Efficiency Awards
We are pleased to announce that several OIG employees and teams
have been recognized by the President's Council on Integrity and
Efficiency (PCIE) as part of its annual awards program. The PCIE
presented the awards on October 23, 2007, at a ceremony in Washington,
D.C. These awards celebrate outstanding achievement within the
Federal inspector general community. We congratulate all of our
winners on this notable accomplishment.
Following are our 2007 PCIE award winners:
Special Agent Matthew T. Lavelle, Seattle Field Division(Award for Excellence in Investigation) - For outstanding
investigative efforts which led to the apprehension of an SSA
beneficiary who kidnapped a seriously ill child. In addition,
Special Agent Lavelle was responsible for achieving $1,476,098
in recoveries, savings, and restitution of SSA funds as well as
52 convictions during Fiscal Year 2006.
Federal Audit Executive Council Information Technology Committee(The Barry R. Snyder PCIE/ECIE Joint Award) - In recognition
of the Team's exceptional performance in evaluating and reporting
on the protection of sensitive information government-wide. Team
members include: from SSA OIG, Gale S. Stone (Deputy AIG for Audit),
Kitt Winter, Philip S. Rogofsky, and Grace C. Chi (Data Analysis
and Technology Audit Division); from the General Services Administration,
Andrew Patchan (AIG for Audit), Gwen McGowen (Deputy AIG for Audit),
Jennifer Klimes, and Khalid Hasan; and from the Department of
Interior, Roger Mahach.
Government Pension Offset Exemption for Texas School Districts'
Employees Team(Award for Excellence in Audit) - In
recognition of the Team's outstanding performance reporting a
major abuse by Texas school districts that will result in improper
exemptions from the Government Pension Offset provisions of the
Social Security Act. Team members include: James J. Klein, Joseph
I. Robleto, and Timothy E. Meinholz (San Francisco Audit Division).
Widows Audit Team (Award for Excellence in Audit)
- In recognition of the Team's outstanding performance in recommending
improvements to SSA's processes for identifying widows whose benefits
should be increased when they attain retirement age. Team members
include: Judith M. Oliveira, Jeffrey T. Brown, Frank J. Salamone,
Melinda Tabicas, Chad Burns, David M. York, and Kevin M. Joyce
(Boston Audit Division).
Numident Accuracy Audit Team(Award for Excellence
in Law and Legislation) - In recognition of the Team's exemplary
service to Congress in reviewing the accuracy of SSA data that
may be relied on in a proposed mandatory employee verification
system. Team members include: Kimberly A. Byrd and Theresa A.
Roberts (Birmingham Audit Division); Shane M. Henley (Atlanta
Audit Division); N. Brennan Kraje, Jr. (Policy Planning and Technical
Services Division); and Lauren A. Butts (former OIG employee).
Quick Disability Determination Team (Award for Excellence-Special
Act) - For developing and providing SSA with critical information
on its new disability process so improvements could be made. The
Team provided immediate insight which was used by the Commissioner
to make decisions affecting a vulnerable population. Team members
include: Judith M. Oliveira, David Mazzola, and Phillip W. Hanvy
(Boston Audit Division).
SSA
OIG by the Numbers
During Fiscal Year 2007, OIG's Office of Communications responded
in writing to 73 inquiries from members of Congress and 661 inquiries
from the public.
During Fiscal Year 2007, the SSA OIG Fraud Hotline received a
total of 43,651 allegations.
Our website provides guidelines for reporting fraud and a way
to submit an allegation to our Fraud Hotline. For more information
click here.
Eye on OIG is published by the Office
of the Chief Counsel to the Inspector General.
www.socialsecurity.gov
