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EYE on OIG - March 7, 2006


In The News

SSA OIG to Co-Host 2006 PCIE/ECIE Training Conference and Retreat

We are pleased to announce that OIG will be co-hosting the annual 2006 Training Conference and Retreat for the President's Council on Integrity and Efficiency (PCIE) and Executive Council on Integrity and Efficiency (ECIE) . The PCIE was established by Executive Order 12805 on May 11, 1992, to coordinate and enhance governmental efforts to promote integrity and efficiency, and to detect and prevent fraud, waste, and abuse in Federal programs, and is comprised of Presidentially-appointed Inspectors General. The ECIE, comprised of Inspectors General appointed by the head of their agencies, was also established by Executive Order.

This year's conference will take place May 1- 4, 2006, at the Renaissance Portsmouth Hotel & Waterfront Conference Center in Portsmouth, Virginia. The theme, Adapting to Change, will focus on changes in the Inspector General community from the time of President Carter's signing of the Inspector General Act of 1978, to the present, with particular emphasis on the changes brought about by the events of September 11, 2001 and by Hurricanes Katrina and Rita.

SSA OIG is working with our co-host, the Smithsonian Institution's OIG, to plan a dynamic event featuring addresses from local dignitaries and elected officials, as well as panels and speakers on topics such as the role of Inspectors General in disaster relief efforts and emerging challenges in the area of IT security.

SSA OIG Special Agent BadgeOI Case Highlights

Two Federal Employees Conspired to Steal $247,000 in Government Funds

OI's Baltimore Office conducted an investigation in which an SSA employee and a National Aeronautics and Space Administration (NASA) employee were found to have stolen almost a quarter million dollars. Between 1996 and 2005, the SSA employee misdirected 11 attorney's fee payments to a bank account owned by the NASA employee, who was not an attorney and had never acted as one for SSA claimants. As part of the scam, the NASA employee fraudulently processed government purchase orders payable to the SSA employee via a non-existent organization that provided neither goods nor services to NASA. Also, the two employees conspired to bill NASA for training seminars and training handbook items that were never offered.

In September 2005, both employees signed a plea agreement charging them with mail and wire fraud in connection with this scheme. In December 2005, the SSA employee was sentenced to 18 months in prison, to be followed by 12 months of electronically monitored home detention, and was ordered to pay full restitution to SSA and NASA. The NASA employee is scheduled to be sentenced in March 2006.

Man Assumed Identity of Dead Brother While Collecting Disability Benefits

The Fort Lauderdale OI Office opened an investigation of a Florida man serving a term of supervised release with the Florida Department of Corrections. The investigation showed that since 1996, the man had been collecting disability benefits under his own identity, while working under his deceased brother's identity. OI agents determined that the man had submitted his brother's Social Security card and a fraudulent driver's license to the probation office as identification, and reported work activity to his probation officer under that identity. The brother had died in 1976. The man pled guilty to one count of theft of government funds, and was sentenced in October 2005 to 60 months in prison and 3 years of supervised release. He was ordered to pay full restitution to SSA ($91,642).

Employee of Organizational Representative Payee Steals More Than $109,000 in Benefits to Support Gambling Habit

In November 2005, an employee of the Scott County (Iowa) Community Services Department (SCCSD) was sentenced to 12 months and 1 day in prison after pleading guilty to theft of government funds. This sentence was based on a joint investigation by OI's Des Moines Office and the Scott County Sheriff's Office. The investigation revealed that the employee had diverted funds from a collective account that she managed for SCCSD, which serves as an organizational representative payee for several hundred Social Security beneficiaries and SSI recipients. The investigation determined that from May 2001 until her employment was terminated in November 2002, the employee had diverted $109,471 from this account for her own personal use, using the funds primarily to support her gambling habit. In addition to the prison term, the employee was sentenced to 2 years of supervised probation, and was ordered to pay full restitution to SCCSD.

Car Dealership Vice-President Guilty of Social Security Fraud and Firearm Violations

Acting on an anonymous tip to the OIG Fraud Hotline, the OI Detroit Office began an investigation of a Bay City, Michigan car dealership. The investigation revealed that an employee had been working at the dealership under his wife's SSN while collecting disability benefits under his own SSN. Pursuant to a plea agreement, the employee and his wife each pled guilty to conspiracy to defraud the United States, and testified against the vice-president and general manager of the car dealership at his trial. A jury found the vice-president guilty of making a false statement to SSA, and he was sentenced in October 2005 to 24 months probation and restitution to SSA of $91,577, to be paid jointly and severally with the employee and his wife, who were previously sentenced.
While out on bail in the disability fraud case, the vice-president was sentenced by the same judge as a result of being a felon in possession of a firearm, and making false statements to a licensed firearms dealer in connection with purchase of firearms. The firearms case was uncovered by SSA OIG and worked jointly with agents from the Bureau of Alcohol, Tobacco, Firearms, and Explosives.

OI/OCCIG Joint Case

Woman Assessed a $15,000 Civil Monetary Penalty (CMP) for Faking Mental Disability

The Atlanta Cooperative Disability Investigations (CDI) Unit investigated a 41-year-old woman who applied for Title XVI disability benefits due to blindness in one eye, a heel spur, and mental illness. The DDS had determined that the woman's physical problems alone were not disabling, and there was no recent mental health treatment, so DDS scheduled a psychological evaluation. The woman's behavior at the psychological exam was so bizarre that DDS referred the case to the CDI Unit. The examining doctor reported that the woman was totally unresponsive during the clinical interview. The doctor observed her drooling, rocking back and forth, staring blankly into space, and sucking her bottom lip loudly while scratching her forehead. Family members related a history of mental illness and said the woman was totally dependent upon them for her activities of daily living.

A routine criminal record check revealed that the woman was on probation. The probation officer reported that the woman came to her appointments alone, could carry on coherent, relevant conversations, and was expected to start a residential cleaning job in the near future. The probation officer observed no unusual behavior. The woman had completed a community service program and her supervisor commented on what a good worker she was. A local deputy sheriff concurred with the probation officer's observations; he had contact with the woman after arresting her. The DDS denied the woman's claim, and a $15,000 CMP was imposed against the woman by OCCIG for false statements made during her disability claim.

Judge's hand with gavel on top of deskOCCIG Activities

Phoenix Man Caught Collecting SSI Benefits While Selling Collectible Kachina Dolls

In January 2005, OCCIG entered into a settlement agreement with a Phoenix man who had been selling collectible Native American Kachina Dolls while collecting SSI Benefits. On March 14, 2003, the subject had completed, signed and submitted to SSA a Statement of Claimant or Other Person in which he reported that he did not work or receive any income other than SSI benefits. An OIG investigation revealed that the subject received income from the sale of the popular, collectible Kachinas. The subject crafted and sold the sterling silver enhanced Native-American artwork dolls for anywhere from $300 to $1500 each. His customers included major art galleries throughout the State of Arizona. As a result of this concealed income, the subject improperly received over $36,000 in SSI benefits. Upon completion of our investigation, the subject's benefits were terminated and he agreed to pay a $5,000 penalty and $46,040 assessment in lieu of damages, for a total CMP of $51,040.

OA Activities

Office of Hearings and Appeals (OHA) Reversal of Disability Denial Decisions Involving Investigative Information from CDI Units (A-07-05-15091)

The OIG manages the Cooperative Disability Investigations program together with SSA's Offices of Operations and Disability Programs. The CDI mission is to obtain evidence of material fact sufficient to resolve questions of fraud in SSA's disability programs. CDI Units report material facts in a report of investigation, and during the period July 1999 through July 2005, CDI investigative results were used to support over 8,000 Disability Determination Services (DDS) decisions to deny SSA disability benefits. This allowed SSA to avoid improper payments of approximately $492 million. OHA is responsible for conducting hearings and issuing decisions determining whether a person may receive benefits. Hearings are held before an administrative law judge (ALJ).

In this review, our objective was to identify circumstances that may have resulted in the allowance of benefits at the hearings level when a prior investigation conducted by a CDI Unit may have contributed to a denial decision.

Our review of case folders for 100 ALJ decisions found that ALJs may not have always been aware that a CDI unit investigation was conducted and may not have always considered the investigative report in making the disability decision. These circumstances may have resulted in the allowance of benefits when a prior investigation by a CDI unit contributed to a denial decision.

We made six recommendations aimed at resolving this issue. While SSA expressed concerns over the cost and/or feasibility of two of these recommendations, the Agency agreed with the intent of the recommendations and is working to implement four of them. Additional details on our findings and recommendations, as well as SSA's response, can be found in the report, which can be accessed from the link above.

Assessment of the Adequacy of SSA's Controls Over the Use of Signature Proxies on Applications for Benefits (A-14-05-15078)

To eliminate the need for retaining paper applications, SSA is evolving its "claims taking process" to an electronic environment. SSA implemented three signature proxy alternatives to the pen-and-ink or "wet" signatures - 1) Attestation, 2) Click and Sign, and 3) Witnessed signature. The signature alternatives apply to cases processed on or after June 21, 2004, in SSA's automated claims systems, the Modernized Claims System and the Modernized SSI System.

We assessed the adequacy of SSA's controls over the risks of using signature proxies to sign applications for benefits. While additional claims processing controls were implemented, such as modifications made to annotate the Agency's claims systems for signature proxies and the retention of a record of the application in the Online Retrieval System, we believe the Agency should take additional steps to improve the process to help mitigate risks.

The Agency agreed with six of our seven recommendations.

SSA's Identification of Special Disability Workload (SDW) Cases (A-13-05-15028)

Studies SSA conducted in July 1999 identified approximately 130,000 SSI recipients who appeared, based on their earnings, to be insured for benefits under the OASDI program. However, at that time, the SSI recipients were not receiving OASDI benefits. Subsequent studies in 2002 identified additional SSI recipients who appeared to be eligible for OASDI benefits but were not receiving them. As of November 2004, there were approximately 466,000 cases of SSI recipients identified as possibly being insured for benefits under the OASDI program. The Agency categorized these individuals as SDW cases.

Our review was undertaken to determine whether SSA had (1) identified and taken actions to implement system enhancements to prevent future SDW cases and (2) identified the universe of SDW cases.

In each of SSA's 10 regions, specialized teams of technical experts worked with field offices, Federal/State Disability Determination Services, program service centers and SSA's Office of Central Operations to review and assess some of the SDW cases. The Agency advised us that 127,287 cases had been completed through September 2005.

While SSA has undertaken several studies to identify all SSI recipients who appear to be insured for OASDI benefits, it has identified additional groups of cases with potential OASDI entitlement not included in the universe of SDW cases. Further, the Agency has implemented system enhancements to assist with processing SDW claimant cases. However, failure to identify potential OASDI eligibility factors and programming weaknesses limited the Agency's ability to identify SSI recipients who may have been eligible for OASDI benefits.

We recommended that SSA (1) ensure enhancements to systems identifying SSI recipients who may potentially be eligible for OASDI benefits are made a top priority and implemented timely; and (2) continue to process SDW cases, and pay OASDI benefits for those SDW cases determined to be eligible for benefit payments.

SSA agreed with our recommendations.

Around OIG

OIG Component Renamed to More Accurately Reflect Role and Functions

The Office of Executive Operations has been renamed the Office of Resource Management (ORM). The new name more closely parallels the functions of this component. ORM has lead responsibility for managing OIG's fiscal resources including formulating and executing the budget, managing physical facilities, developing OIG's strategic plan, and monitoring organizational performance. ORM also develops and maintains administrative policy, coordinates records management and leads OIG's activities relating to competitive sourcing. All aspects of OIG's human resources operations, including recruitment, training, performance management, awards, recognition, and personnel policy within OIG also fall under ORM's purview. Finally, as the manager of organizational resources, ORM provides information technology to all OIG employees. This includes developing and maintaining software, installing and maintaining computer equipment and providing general user support to employees around the country.

The component structure and leadership in ORM has not changed. Stephanie Palmer remains the Assistant Inspector General. Her deputy is Robert Meekins. John Byrnes is the Director of the Budget and Logistics Division and Ellen Schwartz is the Human Resources Division Director. The Information Technology Division has two co-directors. Mike Arbuco leads software development and Gary Czarnecki leads hardware and infrastructure projects.

Fight Fraud ImageSSA OIG Fraud Hotline Stats

From February 12 - 18, 2006, the SSA OIG Fraud Hotline reported the following:

Allegation numbers issued - 2,987
Total allegations received this fiscal year - 35,428

Our website provides guidelines for reporting fraud and a way to submit an allegation to our Fraud Hotline. For more information, visit

Valerie Wood, Editor
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  Last reviewed or modified Monday Jan 14, 2008