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EYE on OIG - September 8, 2008

Contents: Eye on OIG


Investigative HighlightsSpecial Agent Badge

Woman Hides True Identity to Collect Benefits

Our Office of Investigations received an allegation from the Housing and Urban Development (HUD) Office of the Inspector General (OIG) in Chicago that a woman was receiving Social Security benefits under two identities. Our investigation revealed that the woman was a Title II retirement beneficiary, but had used a second name and Social Security number (SSN) to collect Supplemental Security Income (SSI) and additional HUD benefits. As a result of concealing her dual identities, she was overpaid $69,337 in retirement benefits, $12,451 in SSI benefits, and $10,122 in HUD benefits.

In July 2008, the woman pled guilty to theft of Government funds. She was sentenced to 3 years' probation and ordered to pay restitution of $81,788 to SSA and $10,122 to HUD.

Man Sentenced to 56 Months in Prison for Identity Theft Scheme

"Operation Guarantee Fraud" was an 18-month investigation conducted by the OIG's Seattle Field Division, together with the FBI, United States Probation, and several State and local law enforcement agencies. This joint investigation determined that a man had used fraudulent driver's licenses, obtained birth dates and SSNs of victims, and taken over victims' bank accounts. He used this information to run up thousands of dollars in purchases and then defaulted on the debt.

The man pled guilty to conspiracy to commit identity theft and aggravated identity theft, and was sentenced in July 2008 to 56 months in prison and 5 years of supervised release. He was also ordered to pay $153,633 in restitution to local merchants and banks.

Convicted Sex Offender Steals Identity

An investigation by our Charleston, West Virginia office revealed that a convicted sex offender, who had previously been arrested and placed on probation for failing to register as a sex offender, had stolen another person's identity. In a joint investigation with the U.S. Marshals Service in Huntington, West Virginia, we discovered that the man had moved from Ohio to West Virginia after his arrest in 2007 for failing to register as a sex offender. In West Virginia, he began using another person's name and SSN for identity and employment purposes, in part to avoid having to register as a sex offender under his true identity.

Based on our investigation, the man was charged with misuse of a Social Security number and failing to register as a sex offender, pled guilty to the latter charge in July 2008, and was sentenced to 18 months' incarceration and 3 years of supervised release.

Woman Conceals Marriage to Receive SSA Widows Benefits

This investigation was based on a referral from the Port St. Lucie SSA office. We determined that a woman had concealed her marriage to her second husband in order to collect Title II survivors benefits based on her first husband's Social Security record. The woman's first husband had passed away in 1988, and she remarried in 1991. Our investigation further revealed that in 2002, the woman had made several false statements in her application for benefits on the record of her first husband.

The woman pled guilty to making false statements to SSA, and was sentenced in July 2008 to 6 months' home confinement and 1 year of probation. She was also ordered to pay restitution of $35,834 to SSA.

Civil Monetary Penalty HighlightsAmerican flag with gavel

SSA is authorized under Section 1129 of the Social Security Act to impose civil monetary penalties (CMP) for each false statement made in applying for or continuing to receive SSA benefits, or for neglecting to report to SSA changes that affect benefit eligibility. SSA has delegated this CMP authority to OIG, which can impose up to $5,000 for each false statement or omission, as well as assessments in lieu of damages of up to twice the benefit overpayment. For Fiscal Year 2008 (through July 31), Office of Counsel (OCIG) attorneys have imposed $5.8 million in penalties and assessments under the OIG's CMP program.
Man Acting as Representative Payee for Daughters Defrauds SSA

OCIG initiated a CMP against a man acting as the representative payee for his two daughters, based on an investigation by agents in our Dallas office showing that the man had made six false statements regarding his daughters' living arrangements. While he claimed his daughters were living with him and he was spending their benefits on their care and support, we determined that they had not lived with him since 1998, and that he had used their benefits to cover his personal expenses. The man's false statements resulted in a fraud loss of $43,170.

OCIG ultimately imposed a total penalty of $63,170, which included a $20,000 CMP and an assessment in lieu of damages of $43,170.

Man Uses Son's SSN to Work While Also Collecting Disability Benefits

OCIG initiated a CMP against a man who had been receiving SSI since 1995. An OIG investigation had revealed that in 1998, the man fraudulently took a drug test for his son, who had applied for employment with Pepsi-Cola Bottling Company. The father not only passed the drug test, but accepted the job in place of his son, working under his son's SSN while also collecting disability benefits under his own SSN.

From 1998 through 2006, the man received approximately $48,000 for which he was not eligible. OCIG attorneys negotiated a settlement in which the man agreed to pay a penalty of $20,000 plus an assessment of $45,000 for a total of $65,000.

Woman Receives a Penalty of $7,500 for Cashing Multiple Benefit Checks

In July 2008, OCIG imposed a CMP on a woman with a lengthy history of double-check negotiations (DCN). A DCN occurs when a beneficiary claims non-receipt of a benefit check, receives a replacement check from a local SSA office, and then cashes both the original and the replacement checks for what amounts to a double monthly payment. The woman had committed DCNs on six different occasions, which resulted in a fraud loss of $2,943.

In the most recent instance, the woman came into an SSA office in March 2008 and alleged that she did not receive her March check, requesting an immediate payment. The U.S. Treasury Department checked its records to ensure that the original check had not already been cashed, and then SSA issued a replacement check. However, our investigation revealed that the woman had knowingly withheld her original check because she knew the replacement check would not have been issued had she first cashed the original.

OCIG ultimately imposed a $7,500 penalty, and SSA will withhold part of the woman's monthly benefit check until the outstanding penalty is paid in full.

Audit Report Highlights OIG staff members

Supplemental Security Income Recipients with Excess Income and/or Resources (View Report A-01-08-18022)

Supplemental Security Income (SSI) provides cash assistance to low-income elderly, blind, or disabled individuals. In this audit, we assessed whether bank data can be used to identify SSI recipients who may not be eligible for payments because they have income and/or resources that exceed allowable limits.

We selected a random sample of 250 foreign-born SSI recipients. For those individuals with large deposit amounts or bank balances, we requested that SSA's Office of Operations contact the recipients to determine whether they were ineligible for SSI. Based on our sample results, we estimated that overpayments totaling approximately $408.9 million went undetected because about 68,966 recipients did not inform SSA of their changes in income and/or resources. Additionally, we estimate that SSA will not detect approximately $169.2 million each year to recipients who have income and/or resources above the maximum allowable amounts, if the Agency does not take action.

Our recommendation, which SSA partially agreed with, is that SSA should obtain detailed electronic bank statement information, in the most cost-effective manner, to enable SSA to identify additional income and resources which could indicate ineligibility for SSI.

Title II Benefits to Fugitive Felons and Probation or Parole Violators (View Report A-01-07-17039)

In this audit, we quantified the savings achieved as a result of the suspension of monthly benefits to fugitive felons and probation or parole violators. The Social Security Act prohibits the payment of Title II benefits or SSI to beneficiaries who are fleeing to avoid prosecution or confinement for a felony, as well as to beneficiaries violating probation or parole. SSA interprets the law to mean that a person is "fleeing" when he or she has an outstanding warrant for his or her arrest, even if that person is unaware of the warrant. However, the United States Second Circuit Court of Appeals, ruling in the case of Fowlkes v. Adamec, held that SSA could not conclude from the mere fact that an outstanding felony arrest warrant exists that an individual is "fleeing." As a result, SSA no longer suspends benefits to fugitive felons in the Second Circuit (New York, Connecticut, and Vermont)-though it still suspends benefits to parole or probation violators.

Based on our review, we estimated that SSA saved about $404.3 million from January 1, 2005 through March 2008 due to suspending benefits to fugitives. This includes (1) $47.3 million in fugitive felon overpayments that were recovered; (2) $218.6 million in ongoing monthly benefits that were withheld from the fugitive felons while the warrants remained unsatisfied; and (3) $138.4 million in ongoing monthly benefits that were withheld while they were incarcerated following apprehension. We further estimated that SSA did not save approximately $60.3 million. This includes (1) $41.8 million in overpayments that were waived or deemed uncollectible and (2) $18.5 million that was paid to beneficiaries with outstanding felony warrants that will not be recovered because of the Fowlkes ruling.

Our findings demonstrate that SSA is addressing improper payments. They also show SSA's efforts to address its stewardship responsibilities-ensuring that only individuals eligible for benefits receive them.

Financial Institutions Deducting Fees and Garnishments from Social Security Benefits (View Report A-15-08-28031)

In August 2007, Senate Special Committee on Aging Chairman Herb Kohl requested that the SSA OIG conduct a review to determine whether financial institutions (FI) were inappropriately deducting service fees and garnishments from beneficiaries' personal accounts. We selected a sample of the 12 largest sized FIs and 13 randomly selected small, medium and large-sized FIs to determine: (1) how many of these accounts have been garnished at creditors' requests; (2) the number of accounts upon which fees in relation to such garnishment were imposed; (3) the number of times these fees were imposed; and (4) the total dollar amount of fees charged to these accounts as a result of the garnishment.

Based on the information received, we identified several FIs that charged fees as a result of the garnishments; however, not all of the FIs had actually charged such fees. Seven of the 19 FIs we surveyed reported garnishing funds from accounts into which only Social Security funds were deposited. Three FIs received garnishment orders but did not garnish the funds because the funds were exempt as Social Security monies. The most common fees charged as a result of the garnishment orders were for legal processing and non-sufficient funds.

During our review, we identified several potential safeguards to protect Social Security recipients from inappropriate fees and garnishments, and SSA agreed with these potential safeguards.

Around OIG

Personnel Announcements

Inspector General Patrick P. O'Carroll, Jr. recently announced several personnel changes:

  • The Senior Executive appointment of Jonathan L. Lasher as Counsel to the Inspector General. Mr. Lasher served most recently as Assistant Inspector General for External Relations, and has previously served as Deputy Counsel to the Inspector General.
  • George Penn II, formerly a senior attorney in the Office of Counsel, has been asked to serve as Deputy Assistant Inspector General for External Relations.
  • Scott Antolik has been selected as the Special Agent-in-Charge of the Office of Quality Assurance and Professional Responsibility within the Immediate Office.
  • In the Office of Investigations, Guy Fallen has been selected as the Special Agent-in-Charge of the Atlanta Field Division.
  • Gerald Maye has been asked to serve on detail as Acting Deputy Assistant Inspector General for the Office of Technology and Resource Management on an interim basis until October 2008, when OIG Leadership Development Program participants will begin serving rotations in that position.

OIG Prepares as Hurricane Gustav Hits Louisiana

In preparation for Hurricane Gustav, Office of Investigations agents in the Dallas Field Division office, and in Baton Rouge, Louisiana in particular, were in constant contact with Federal, State, and local authorities. Agents were on standby to assist regional and local Social Security officials and employees. Although Gustav proved less damaging than had been feared, the preparations undertaken by OIG, like those undertaken by SSA, represented a well planned and executed approach to ensuring that SSA services would be available to those in need.

2008 OIG Executive Recognition Awards

We are pleased to announce the recipients of the 2008 OIG Executive Recognition Award. This award recognizes exceptional or outstanding team achievements and contributions to OIG's objectives.

Administrative Law Judge (ALJ) Caseload Performance Audit Team - Mark Bailey, Shannon Agee, Tonya Coffelt, Kenneth Bennett , N. Brennan Kraje, Sandi Archibald. The team is recognized for its significant contributions to SSA, Congress, and American taxpayers through their work and recommendations related to the Office of Disability Adjudication and Review's oversight of ALJ performance.

Succession Planning Workgroup/OIG Leadership Development Program Team -
Succession Planning Workgroup/OIG Leadership Development Program Team
Ellen Schwartz, Mary Hipsley, Robert Meekins, Dennis Fabel, Margaret Moore-Jackson, Joscelyn Funnie, Jonathan Lasher, Shirley Todd. The team is recognized for its efforts to design and implement the OIG Leadership Development Program, which will address future OIG staff losses by providing a cadre of well-trained personnel ready to assume leadership positions and move OIG forward to the future.

Left to right: Shirley Todd, Joscelyn Funnié, Jonathan Lasher, Patrick O'Carroll, Jr., Robert Meekins, Margaret Moore-Jackson, Ellen Schwartz, and Mary Hipsley (award recipient not pictured: Dennis Fabel).

Boston Whaler Team - Jason Donnelly, Alforzo Hammonds, Mark Sutton, Micah Spooner-Wyman, John Tedeman, Julie Constant, John Cremonini, Joseph DeSantis, Michael Leonard Sarah Hanson, Kevin Rogers, Jonathan Lasher. The team is recognized for its outstanding efforts in an investigation concerning large-scale Social Security number (SSN) misuse at Michael Bianco, Inc. and Front Line Defense, Inc.

Waxman Request on Unimplemented Recommendations Team - Waxman Request on Unimplemented Recommendations Team

Chasity Crawley, Kimberly Beauchamp, Jerrod Hinton, Ronald Anderson, Victoria Vetter, Sally Zeller. The team is recognized for its response to a request from Congressman Waxman for detailed information on all recommendations issued by OIG to SSA from January 2001 to present that were not implemented. The team identified 497 recommendations and summarized and prioritized the response by audit objectives, findings, and recommendations.

Left to right: Sally Zeller, Jerrod Hinton, Chasity Crawley, Patrick O'Carroll, Jr., Victoria Vetter, Kimberly Beauchamp, Ronald Cooper.

Financial Institutions Audit and Testimony Team - Jason Arrington, Ronald Gunia, Patrick Kennedy, N. Brennan Kraje, Jr., Jonathan Lasher, Kelly Lewis, Mark Meehan, Ashley Moore, George Penn II, Kristen Schnatterly, Clara Soto, Wade Walters, Valerie Wood, Joan Yurecsko, Charles Zaepfel. The team addressed recent newspaper articles that raised public concern over financial institution practices that put the benefits of SSA beneficiaries at risk.

Financial Institutions Audit and Testimony TeamFrom left to right: Joan Yurecsko, Valerie Wood, Jonathan Lasher, George Penn II, Patrick O'Carroll, Jr., Charles Zaepfel, Mark Meehan, Kelly Lewis, N. Brennan Kraje, Jr., Kristen Schnatterly, Jason Arrington, Patrick Kennedy (award recipients not pictured include Ronald Gunia, Ashley Moore, Clara Soto, and Wade Walters).

ALJ Dual Employment Team - Kimberly Byrd, Thomas J. Caul, Shane M. Henley, Mary Hipsley, Phillip Krieger, DeJuan Martin, Frank Nagy, Deborah Shaw. The team collaborated to provide information to the Merit Systems Protection Board (MSPB) concerning an ALJ who inappropriately held full-time positions with both SSA and the U.S. Army. Based on the efforts of this team, the MSPB ruled that SSA can terminate the employment of the ALJ. Additionally, SSA is seeking repayment of over $300,000 from the ALJ.

2008 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. This award recognizes exceptional or outstanding team achievements and contributions to OIG's objectives.

The following are our 2008 PCIE award winners:

Award for Excellence-Audit: SSA OIG Medicare Part D Audit Team - Granted in recognition of the team's outstanding performance in assessing the effectiveness of SSA's Medicare Part D low income subsidy eligibility determination and appeals processes. Team members include: Office of Audit - Lela A. Cartwright, Patrick Kennedy, N. Brennan Kraje Jr., Ronald P. Gunia, Warren D. Wasson.

Award for Excellence in Audit: Foreign Use of ATMs Audit Team - Granted in recognition of the team's outstanding performance in identifying Supplemental Security Income (SSI) recipients who were overpaid due to being outside the United States. Team members include: Office of Audit - Jeffrey T. Brown, Chad M. Burns, Kevin M. Joyce, N. Brennan Kraje Jr., David Mazzola, Judith M. Oliveira; Office of the Counsel to the Inspector General - George E. Penn II.

Award for Excellence in Investigation: Operation "Double Check" Phases 1 and 2 Team - Granted in recognition of the team's exceptional contributions in combating fraud by targeting chronic double check negotiators in Southwestern Michigan. Team members include: Office of Investigations - William C. Brown, John A. Pollock; Office of Technology and Resource Management - Christopher A. Walters; SSA/Chicago Regional Office - John H. Williams.

Award for Excellence in Law and Legislation: Civil Monetary Penalty Double Check Negotiation Project Team - Granted in recognition of the team's efforts to address double check negotiations in Kansas City and St. Louis, Missouri and Omaha, Nebraska, resulting in significant monetary penalties. Team members include: Office of the Counsel to the Inspector General - Sandi C. Archibald, Penny L. Collender, Lewis A. Dardick, Diane L. Dona, Joscelyn N. Funnie, Joseph C. Grow, Michele W. Homsey, Peter W. Johnson, Erin M. Justice, David C. Rodriguez, Deborah Shaw; Office of Investigations - Steven R. Barry, Jon R. Guilford, Anthony A. Harvey.

Award for Excellence in Management: Gerald L. Maye - Recognized for the outstanding effort and leadership he showed as the Criminal Investigations Division Assistant Special Agent-in-Charge and the leader of the Electronic Crimes Team (ECT). SAC Maye's development and supervision of the ECT has resulted in superior forensic accomplishments and successful investigation of numerous individuals for crimes impacting SSA programs and operations.

OIG By the Numbers

Red arrow In Fiscal Year 2008 through July 31, SSA OIG's 19 CDI Units have closed 3,553 cases. CDI findings in these cases have led to projected SSA program savings of over $178 million and non-SSA savings of more than $114 million.

Red arrow During the week of August 18-22, 2008, the SSA OIG Fraud Hotline received 1,223 allegations.

Red arrow During Fiscal Year 2008 through August 22, the SSA OIG Fraud Hotline has received a total of 37,048 allegations. Of those, 30,166 (81 percent) were allegations of Title II or Title XVI disability program fraud.

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 OIG Office of External Relations.

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  Last reviewed or modified Tuesday Sep 09, 2008