Former Hollywood Entertainer Defrauds SSA of $244,903
Our Los Angeles office opened an investigation after an SSA office
in Los Angeles reported that an SSI recipient had continued to
receive his father's Title II retirement benefits after his death.
Our investigation revealed that Bill Williams, a well-known Hollywood
entertainer during the 1970s, had endorsed and cashed his father's
benefit checks since 1984. Williams had been receiving SSI based
on mood disorders since 2006.
Because Williams was found retroactively ineligible for SSI based
on the income from his deceased father's benefits, SSA assessed
an overpayment of $10,152. The fraud loss from the theft of his
father's benefits totaled $234,751. When interviewed, Williams
admitted receiving his father's benefits fraudulently and concealing
the income from SSA. Williams pled guilty to grand theft and was
sentenced in January 2008 to 2 years' incarceration and full restitution
Our St. Louis office opened a joint investigation with the United
States Postal Inspection Service, based on a referral from an
SSA office in Clayton, Missouri. SSA reported that earnings records
showed more than $100,000 annual income for a woman who had been
receiving Title II disability benefits for mental retardation
and schizophrenia since 1985.
Our investigation revealed that the woman had owned and operated
a mortgage brokerage firm since 1999. We further determined that
the woman had forged a judge's signature on a bankruptcy document,
then purchased an $800,000 home using fraudulent loan application
documents. She subsequently defaulted on the loan and the home
is in foreclosure.
The woman pled guilty to Social Security fraud and wire fraud,
and was sentenced in January 2008 to 33 months in prison and restitution
of $153,857 to SSA and $70,718 to a mortgage company.
Woman Sentenced to 43 Years in Prison for Hurricane-Related
Our Birmingham office investigated an SSI recipient based on
a request for assistance from a U.S. Attorney's Office (USAO)
in Alabama. The USAO reported that the woman was the subject of
a Federal Emergency Management Agency (FEMA) investigation for
filing false disaster-relief claims following Hurricane Katrina.
Our investigation revealed that the woman had been receiving
SSI since 1999 based on mental retardation and mood disorders.
Moreover, she had concealed from SSA all income received from
filing the false FEMA claims. SSA subsequently terminated the
woman's SSI payments. The investigation also revealed that the
woman, working with several co-conspirators, had filed 15 false
FEMA claims using false Social Security numbers.
After a jury trial, the woman was found guilty of 22 counts,
including theft, conspiracy, drug distribution, threatening a
witness, and possession of a firearm. Based on the minimum sentencing
guidelines, she was sentenced in January 2008 to 43 years in Federal
prison and restitution to FEMA of $79,607.
Woman Receives SSI for 10 Years While Working Full-Time
The St. Louis CDI Unit investigated a 42-year-old woman who had
been receiving SSI since 1997 for varicose veins and obesity.
The Missouri Fraud and Noncompliance Unit reported to CDI investigators
that the woman, also under investigation for workers' compensation
fraud, was working full-time.
Our investigation revealed that the woman received $14,827.64
in wages from April 2006 through November 2006. The woman never
reported her earnings to the SSA. When interviewed, the woman
admitted that she had worked as a receptionist for her ex-husband's
company since 1995. The woman advised that she did not inform
SSA of her employment because she was afraid of losing her Medicaid
benefits. She further stated that she stopped working after the
State workers' compensation investigation began.
Based on our investigation, SSA assessed an overpayment of $47,113
due to the woman's unreported work activity from October 1997
through February 2007. In November 2007, the woman entered a Federal
pre-trial diversion program, and was placed on probation for 18
months. She was also ordered to make full restitution to SSA.
In this audit, we evaluated the effect of varying levels of administrative
law judges' (ALJ) caseload performance on the Office of Disability
Adjudication and Review's (ODAR) ability to process projected
hearing requests and address SSA's growing backlog of pending
We found that ODAR's ability to process projected hearing requests
and address the growing backlog of cases will continue to be negatively
impacted by the caseload performance of some ALJs if their current
performance levels continue. In FY 2006, fully available ALJs
processed cases ranging from a low of 40 to a high of 1,805 (with
an average of 485). There is currently no official minimum number
of cases an ALJ is required to process.
Based on our analysis, at the FY 2006 production level, ODAR
would not be able to process all of the projected hearing requests
over the next 5 years. Based on the true backlog of 345,000 cases,
we estimate that if ALJs continue to process cases at the FY 2006
level, and the number of fully and partially available ALJs each
remain the same, the backlog will increase by about 150,000 cases
by FY 2012. However, if fully available ALJs performed at the
production levels of 500 or 550 cases, ODAR would be able to process
all hearing requests and make reductions in the backlog through
We recommended, and SSA agreed that it should (1) establish an
ALJ performance accountability process based on availability;
(2) assess offices' caseload performance and take appropriate
corrective actions; and (3) evaluate caseload management procedures
and share best practices among regions.
The Social Security Administration's Income and Resource Verification
Process for Individuals Applying for Help with Medicare Prescription
Drug Plan Costs (View
The Medicare Prescription Drug, Improvement, and Modernization
Act of 2003 established a new Part D Prescription Drug Program.
The Centers for Medicare and Medicaid Services are primarily responsible
for this program. However, SSA supplies applications for the low-income
subsidy, and assists the public with filing these applications.
SSA's primary role is to determine whether a person will be eligible
for a subsidy based on income and resources. We conducted this
audit to gauge the effectiveness of SSA's income and resource
verifications performed for individuals applying for the Part
D low-income subsidy.
Our review indicated that SSA properly denied subsidy applications
because individuals' income and resources exceeded limitations
specified by law. However, we estimate that SSA approved Medicare
Part D low-income subsidies to approximately 276,000 applicants
whose income and/or resources exceeded established eligibility
limits. The enrollment of these individuals in prescription drug
plans would result in estimated low-income subsidy expenditures
of approximately $473 million during a 12-month period. This occurred
primarily because SSA did not obtain information needed to verify
income and resource amounts on subsidy applications prior to issuing
We further estimate that SSA's new redetermination process is
unlikely to correct these errors in approximately 130,000 of the
276,000 cases. SSA believes it made correct subsidy award decisions
based on information available when it rendered eligibility determinations.
However, information now available indicates that SSA approved
subsidies to a significant number of individuals who did not appear
to meet eligibility limits.
We recommended that SSA (1) ensure that income and resource amounts
appearing on applications are subjected to verification; (2) work
more closely with the IRS to obtain timely income and resource
data, and use this data to verify eligibility; and (3) ensure
that its redetermination process identifies and terminates improperly
awarded subsidies currently in effect.
When SSA determines that a beneficiary has been overpaid, it
initiates recovery actions. In some cases, SSA will withhold the
entire monthly benefit to recover the overpayment. However, if
the beneficiary contacts a field office and can prove dire need
for that withheld payment, the field office may issue a "critical
payment" immediately. We conducted this audit to determine
whether SSA properly adjusted overpayment balances after it issued
For the period August 1, 2002 through August 31, 2005, we identified
72,883 critical payments that met our criteria, and randomly selected
250 payments to review. Our review found that SSA did not always
adjust overpayment balances when it issued certain critical payments.
For 73 (29 percent) of the 250 critical payments reviewed, SSA
did not adjust its records to account for the related overpayment.
As a result, SSA did not record $48,162 in overpayments. In total,
we estimate that SSA did not account for approximately 21,282
overpayments totaling about $14 million from August 1, 2002 to
August 31, 2005.
SSA generally agreed with several of our recommendations, including
that SSA: include a systems indicator that specifies a critical
payment was issued to replace an overpayment benefit withholding;
and periodically perform a supervisory review on a sample of critical
payments with overpayment indicators.
Citing limited information technology resources, SSA disagreed
with our recommendation to modify its system to ask staff whether
the critical payment adjustment also requires an action to account
for an overpayment.
Monetary Penalty Highlights
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 resulting benefit
overpayment. For fiscal year 2008 to date (through February 29),
Office of the Chief Counsel (OCCIG) attorneys have imposed $2,457,657
in penalties and assessments under the OIG's CMP program.
Woman Assessed $85,000 Penalty for Cashing Deceased Mother's
Based on an OIG audit identifying individuals whose benefits
continued to be paid after their deaths, our Seattle office investigated
a woman who had forged and cashed her deceased mother's Social
Security benefit checks since 2004. When our agents interviewed
the woman, she stated that she only realized her actions were
wrong when Department of Veterans' Affairs agents interviewed
her for using veterans' benefits paid to her mother after her
The investigation revealed that she had previously pled guilty
to theft of Government funds related to the misuse of veterans'
benefits. Moreover, during the course of that investigation and
prosecution, she had signed a sworn statement admitting that she
had knowingly misused her mother's Social Security benefits. When
the U.S. Attorney's Office declined to prosecute the Social Security
fraud, agents referred the case to OCCIG for CMP action. The total
benefit overpayment was $22,760, but OCCIG ultimately imposed
$107,760 in penalties and assessments based on the woman's actions
in receiving her mother's benefits and failing to report her death
Husband and Wife Conceal Resources to Receive SSI for 11 Years
Our San Francisco office investigated a husband and wife based
on a referral from the North Sacramento SSA office. Our investigation
revealed that the two had failed to report $13,200 in cash resources
when they applied for SSI in 1994. They continued to conceal those
resources on multiple SSA forms over 11 years, until they used
the money in 2005 to purchase burial contracts. Their daughter,
who helped them apply for SSI when they moved to the United States
from Fiji, had also failed to report her parents' cash resources,
which would have made them ineligible to receive SSI. SSA assessed
an overpayment totaling $39,515.
Agents referred the case to OCCIG for CMP action after the U.S.
Attorney's Office declined to prosecute the husband and wife due
to their advanced age. OCCIG negotiated a settlement in February
2008 in which the husband and wife agreed to pay a $10,000 penalty
based on their false statements to SSA, and an assessment in lieu
of damages of $28,000.
Inspector General in the Spotlight
On Feburary 28, 2008, Inspector General Patrick P. O'Carroll,
Jr. testified before the House Committee on Appropriations, Subcommittee
on Labor, HHS, Education, and Related Agencies at a hearing on
the Social Security disability backlog. Other witnesses included
Commissioner of Social Security Michael J. Astrue and Ronald G.
Bernoski, president of the Association of Administrative Law Judges.
Mr. O'Carroll shared with the Subcommittee details of the OIG's
work in assessing factors contributing to the backlog and assisting
SSA in its efforts to reduce disability processing times.
On February 5 and March 4, Inspector General O'Carroll served
as a guest lecturer in the Inspectors General Program at Georgetown
University's Public Policy Institute. In his lecture on "Public
Policy in Action," Mr. O'Carroll discussed the OIG's role
in the public policy arena and the relationship of an IG with
the Agency head, Congress, and other stakeholders.
SSA OIG Leadership Development Program Participants Selected
Inspector General O'Carroll recently announced the first OIG
Leadership Development Program (LDP), a succession-planning initiative
aimed at developing qualified candidates for future OIG management
vacancies. The LDP will give participants an opportunity to gain
leadership experiences through rotational details in various positions.
On March 5, 2008, the Inspector General announced the LDP participant
selections. From the Office of Investigations: Donald Jefferson,
Misha Kelly, Michael McGill, Elias Papoulias, Antonio Puente,
and Joseph Velling. From the Office of Audit: Jeffrey Brown and
Deborah Kinsey. From the Office of the Chief Counsel: Joscelyn
Funnie. Congratulations to all of the LDP selectees.
New "Fraud Advisory" Feature on OIG Website
Following a spate of telephone fraud schemes targeting Social
Security beneficiaries around the country, and in coordination
with SSA's Office of Communications, the Office of the Inspector
General recently added a new feature to its website. "Fraud
Advisories" provide the public with valuable information
about fraud schemes as they arise in different regions, and give
readers important tips to help them avoid becoming victims. Click
here to view current OIG
OIG by the Numbers
During the week March 24 - 28, 2008, the SSA OIG Fraud Hotline received
During Fiscal Year 2008 to date, the SSA OIG Fraud Hotline has received
a total of 18,835 allegations. Of those, 652 (82 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,
Eye on OIG is published by the Office
of the Chief Counsel to the Inspector General.