Washington Journal Dawn Royal and Andrew McClenahan
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Committee Highlights: Fraud and Trafficking00:08:56
unidentified
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When I first heard the number, I was actually stunned.
In the Supplemental Nutrition Assistance Program, which of course is known by SNAP, the predecessor of which was Food Stamps, 1 20th of 1% of the entire SNAP budget is spent on the prevention, detection, and prosecution of fraud.
Andrew McClenahan, so what does the Intergovernmental Committee do at the Council?
And what did you do before you joined the group?
unidentified
Sure, thanks.
The Council, as Don mentioned, has investigators around the country.
So these are employees of the state agencies that are administering these programs.
It's not an independent organization that does this sort of like a doge or something.
So the investigators that we train, that we provide certified welfare fraud investigator training for, are primarily detecting fraud at the beginning on eligibility fraud or the trafficking of benefits and then trying to recover that money back.
The problem to which you asked is like what is how much money is being lost to fraud.
That number is not known.
We have two different issues: we have a SNAP fraud issue, and then we have an error rate issue, and they're not the same.
Prior to my current decision in the private council, in the private sector, I was the director for the Office of Program Benefits Integrity in the state of Florida.
So, administering all of the SNAP, Medicaid, TANF, WIC, those sort of programs.
Explain what you mean when you talk about these fraud.
unidentified
So, you have eligibility fraud, which is usually a first person, maybe somebody is hiding members of their household who are receiving income or adding members to their household that do not truly belong within the household there.
And that's the type of fraud that we most commonly see.
And Dawn, as an investigator, works on that day in and day out.
We also have trafficking and benefits.
That's when somebody's going to sell their benefits.
That primarily takes place within SNAP and the going rate 50 cents on the dollars or exchanging money for the EBT benefits that are meant to go to food to cash, guns, human trafficking, things that are non-food approved items.
And then finally, you've got eligibility fraud, which is the hot topic right now with the EBT skimming and the account takeover issues that are impacting real eligible citizens.
And that's primarily done through both skimming devices and the lack of identity verification tools that have provided a vulnerability that transnational fraudsters are exploiting currently and stealing benefits.
I testified in front of the Doge Committee and just told them about our antiquated processes.
Fraud investigators often get hamstrung because of old rules, conflicting rules.
We're challenged with different administrations and their interpretation.
There's the old saying, if you will, that integrity should never interfere with access, meaning whether somebody is actually eligible for the benefits should never interfere with their ability to give the benefits.
So if somebody makes a false statement on an application, the administration just wants to get the benefits out the door as quick as they can.
Then they throw it back on the investigators to collect it, the pay and chase model.
So we were bringing that to the attention of the committee, that that's very frustrating.
There's a lot of technology that's available that's used in the private sector.
And the different states and counties that administer the benefits just don't have access to that type of technology.
So it's costing the taxpayers billions of dollars.
We wanted to bring it to the committee's attention that the taxpayers have a stake in this.
And it's time that somebody started to look out for the taxpayers.
When the investigators, Don Royal, who are looking into this, who are part of the council, when they find the fraud and the waste and abuse, what is the penalty?
Is it just that somebody loses their benefits, or can people be prosecuted?
Can they be put in prison if the fraud is extensive enough?
So specifically in SNAP, there are sanctions that are available, a disqualification sanction that's available.
So the investigator would need to prove that somebody intentionally made a false statement in their application.
And their first offense would be a 12-month disqualification, their second, a 24-month disqualification, and the third would be permanent.
And that's generally speaking.
There are specific conditions that carry different penalties.
And then there are statutes, both state and federal, that allow somebody to be criminally prosecuted.
So, depending on the severity of the misstatement, the amount of money that was paid, either to or on behalf of the individual, then the states have a criteria that they use to determine whether they would refer that for criminal prosecution.
In Medicaid, it's a little bit different.
There aren't penalties other than criminal prosecution.
Somebody can't be disqualified for future use of Medicaid.
So, you know, again, if you have an infraction, if you will, an intentional program violation that doesn't necessarily warrant criminal prosecution, then we can claw back and recover some of the money.
But essentially, there are no repercussions in Medicaid.
Our guests are Don Royal, a director with the United Council on Welfare Fraud.
Andrew McClanahan, a co-chair of one of the committees.
They are taking your phone calls on phone lines as usual.
It's Republicans 202-748-8001.
Democrats 202-748-8000.
Independents 202-748-8002.
And then a special line just for this segment: if you receive federal government assistance, if you have questions on this topic, 202-748-8003 is that number.
Andrew McClanahan, as folks are calling in, what is a fraud investigation that you've participated in that sticks out in your mind in terms of how egregious it was?
unidentified
I think that that's an easy one for me to answer.
It's involving the Opalaca flea market.
Back in around 2010, the state of Florida welfare fraud investigators with the Florida Department of Children and Families identified trafficking with retailers that were inside a flea market that hadn't been approved.
It was originally, I believe it was five to eight retailers.
The USDA Office of Inspector General is responsible for the authorization and the administration and the monitoring of the retailers.
However, in a trafficking case, you have both a willing recipient and retailer that's involved in that pro se or that hand-to-hand sort of transaction, that similar transaction that you have.
And we were finding millions of dollars coming out of a flea market.
We went down there and there was no food.
It was food that was from a nearby produce distribution center that was their dumpster food that was put out on display.
You had plastic fruits and vegetables that would be on grandmother's Thanksgiving room table.
We were looking at over three and a half, about $3.6 million a month coming out.
After we stopped it the first time, the fraud stopped for about three days, and which picked right back up.
And FNS kept approving these dishonest retailers.
There's an issue that they have in not being able to vet retailers that are committing crimes.
When it was all said and done, back in, I believe it was 2017, when we finally went down and raided the flea market.
There were 18 retailers that were charged.
It was over 100,000 households just within the state of Florida.
And we were looking at over $100 million in fraud.
It was for cash, guns, drugs.
In fact, one retailer even had a human trafficking, I think they referred to it as a boom-boom room where you could exchange sex for EBT.
That was, I think, the ugliest side of the fraud and the waste that we see that's occurring within any of our safety net programs.
I would say our most common recipient fraud is when a member of the household fails to disclose the non-custodial parent.
So last year, we prosecuted a case where the father of the children actually lived in the home and the applicant failed to list him, his employment, and his income.
And when I moved to the part of the state, I was working for the U.S. Attorney's Office and wanted to move to a different part of the state and literally just stumbled into welfare fraud investigation.
It was a job that I felt I was qualified for.
And it turns out to be my niche.
It's something that I'm very passionate about.
I'm very fortunate that when I was growing up, I was aware that there were welfare programs, but I came from a very solid, very stable home and never had any firsthand knowledge of the programs.
So it wasn't until I became an investigator that I learned how incredibly important they are.
I don't think the United States can call itself the most powerful country in the nation if the citizens are hungry or if they don't have access to medical care because of their inability to pay.
So I see my role and the role of my colleagues across the nation to make sure that these programs stay strong.
So when somebody needs assistance, then they're ready and able to help.
Also spent a decade in the inspector general community.
I've dedicated my entire life, I think, to both public service and to protecting these safety net programs.
I believe that they're important.
I believe that they help.
But I don't believe that we should have fraudsters, both domestic and foreign, that are taking up the same cue lines that our citizens are in seeking assistance, or that they should be taking money from out of our taxpayer resources that are devoted to this.
I mean, just the amount of fraud, waste, and abuse that is occurring within all of our safety net programs.
I mean, we could end homelessness overnight if we were focused on preventing fraud, as Dawn said, in that pay and chase model, where it just doesn't work.
Should they be the ones overseeing these sort of investigations into fraud, waste, and abuse?
And what was your opinion of Donald Trump in one of his first moves, removing most of the inspector generals at government agencies?
unidentified
Well, I have no opinion on politics.
We're a politically agnostic organization that works with both sides of House and Senate, as well as the executive agencies.
So I don't really have an opinion on that.
The inspector generals at the federal level are primarily responsible for overseeing the retailers or the if it's in Medicaid, it's your organizations and the licensed physicians and those sort of things, the providers that provide health care benefits.
The states, the counties, and the territories are responsible for the recipients.
And that is done at the state level or at the county level in some organizations.
And state inspectors generals also are involved in this, looking at the recipients.
It's the United Council on Welfare Fraud, UCOWF.net.
If you want to check out the group that Don Royal and Andrew McClenahan both represent, and they're here to take your phone calls, and we've got about 20 minutes left to do that.
This is Kathleen in Mississippi up first on that line for those who receive federal government assistance.
The problem is they have a report, if you don't report to your Medicaid office, you can get cut off.
The other problem is you can make $1 over and you can get cut off.
The other problem is you have to go through extreme things just to get to tell the people what's happening.
With me, I had social security assistants out of Medicaid and Medicare.
They cut me down from $340,300 a month that I had to go back and pay $10 a month for three years just to get me down to $107 because I was getting, I think, $811.
So I have worked our whole life.
So I don't understand.
We don't have pensions.
We live in these red states where the House get one tax thing cut down and the Senate get another tax cut for Trump.
So we recognize that there is a benefit cliff, meaning that when somebody reaches the maximum amount that they could lose their benefits, and then, of course, the family could be less better off, if you will, struggling harder without those benefits.
But we need to keep in mind that these are safety net programs, that they were devised to prevent involuntary hunger or to help somebody in a crisis situation bridge that gap until they're able to help themselves.
So while the callers scenario sounded very difficult, and I do have compassion for that, broadly speaking, we want to make sure that people, again, that are using the program are eligible for the program.
And families should feel great at that point where they're no longer receiving their benefits.
And again, I understand that it's hard, but that you don't need to rely on these social welfare programs should be a source of pride.
Thank you for taking the call, and thank you, folks, for doing what you do to try to protect these programs from fraud.
My question is: how do we stop lawyers from helping people who aren't eligible and shouldn't be getting it from spending years beating down the people who authorize it until they finally find a way to give people something they don't deserve?
And then, on top of that, they even get back pay for all the years that they were trying to get it.
And I have specific examples that I know personally of people that have done that.
So, of course, due process is important, whether it's on the eligibility determination or if somebody's benefits are being reduced or even cut off.
All recipients have an opportunity for what's called a fair hearing to determine if those benefits were issued correctly.
Just so you know, nationally, we're just at about under 12% for states correctly administering the programs for either overpayments or underpayments.
But the due process is important to have there.
Now, the issue to that caller's point here is that we've got, because these are entitlement programs, primarily you're looking at a clear and convincing burden of proof to remove somebody off the program.
It's kind of a nebulous description, and it's somewhat more difficult to get to that other than the preponderance of the evidence, which is the typical standard to remove somebody from the program.
So, I'm glad that people seek legal representation if they've been incorrectly served or administered these programs.
That prior caller, obviously, having to repay something for three years, that should be avoided.
And all of these things can be prevented if we shift to that sort of front-end eligibility verification, verifying somebody's eligibility, verifying their identity to prevent those overpayment collections that need to occur, as well as tying up the legal process in both the administrative and the criminal courts.
Don Royal, a question for you from Sheila on X, who's been watching along and tweeting, saying, Is it still true that when people who needed these services at some point in their lives die, any money or property that they have left is then reclaimed by the federal government?
Earl is next, just across the Potomac River in Alexandria, Virginia.
Line for Democrats.
Good morning, sir.
unidentified
Yes, good morning.
For me, I wanted to make a comment.
I think it is helpful for me to get actual numbers and percentages.
For example, get a sense of what's the total number of safety net benefits that are given out.
What percentage of that you think is fraudulent?
And what percentage, you know, you mentioned about this couple, one father making $100,000.
That seems more like an exception than the rule.
And so I think what you all are doing is great work.
And so I don't want you to mistake what I'm saying, but it seems like there seems to be a lot of righteous type of outrage for some of these small areas as opposed to you have a lot of tax fraud going on and other types of fraud that people seem not to be outraged about.
And so again, help me in saying, okay, we're dealing with $2 billion of safety net.
This percentage is being abused or fraudulent because just throwing out fraud and abuse doesn't help me put a percentage on it because we know with any program, there's going to be an acceptable level of fraud, whether you're dealing with military spending, whether you're dealing with Social Security.
So that is more helpful to the average citizen to understand.
Well, the numbers change, and they're also dependent per state on the numbers that you're receiving.
And the USDA Food and Nutrition Services has a dashboard that they provide with the amount of benefits that are issued, what the average amount is per person, and those sort of things.
Now, they have a state activity report that shows everything from the amount of benefits that were issued to how much it costs to administer the program, all the way to how much fraud was stopped, the number of people who were removed by the programs, and the different methods of recovery and what type of overpayments there are.
So that sort of changes.
Now, those reports are not published online.
And when they are, they are sort of commingled together in those state activity reports.
And I believe the last one that they have posted was the fiscal year 2021 for the federal fiscal year.
And if you're looking at around $120 billion being pushed out every single year, and even if it's only 10% of that is fraud, now we know that at least 11.6% of that is improperly issued.
That is just from the administration of the program.