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Updated: Friday, 16 Nov 2012, 11:00 PM EST
Published : Friday, 16 Nov 2012, 10:30 PM EST
INDIANAPOLIS (WISH) - Six months after first uncovering thousands of illegal welfare transactions, I-Team 8's repeated questions are prompting changes at the Statehouse that could help save taxpayer dollars. Lawmakers are now calling for more to be done to stop fraudulent transactions.
As I-Team 8 first reported in May , the money comes from a federally funded program called TANF (Temporary Assistance for Needy Families). It’s loaded onto debit cards each month and can be withdrawn as cash from any ATM.
The money is intended to help low income families get back on their feet. In Indiana, approximately 12,000 families are enrolled. Applicants to the program must have dependent children, and total family income cannot exceed the federal poverty line.
More than $61 million was dispensed under the program in Indiana last year.
Most recipients use the TANF benefits to purchase basic family needs like food, shelter, utilities, clothing and diapers. Cash can also be used for things like household supplies, public transportation and hygienic care - items that are not covered under the EBT program, sometimes referred to as food stamps.
But, I-Team 8 also uncovered thousands of cases where that money was allegedly used illegally — withdrawn in places like casinos, bars and liquor stores. In Indiana, it is a Class C Misdemeanor to withdraw TANF funding at those locations. Violators could face up to 60 days in prison and a $500 fine.
Our investigation first sparked frustration from lawmakers. Now, it’s sparking action.
“Without somebody bringing it to our attention, we simply would not have known it,” said Sen. Patricia Miller (R-Indianapolis). “These are taxpayer dollars. These are their neighbors paying the bills. And, I think we need to be accountable to the taxpayers that we stop fraud and abuse.”
UNCOVERING DEEPER PROBLEMS
Last spring, I-Team 8 asked the Indiana Family and Social Services Administration for documents showing all TANF transactions made in 2011. We received more than 400,000 records.
I-Team 8’s research uncovered at least $120,324 in questionable withdrawals. At least $68,185 of those withdrawals was listed in FSSA’s database as being made in locations that were illegal under Indiana law at the time.
But, that only comprised about one-third of the total number of transactions.
So, we made a second request for information.
Three months later, we received an additional 600,000 lines of data.
As we analyzed them, the totals grew.
We uncovered about $20,000 more withdrawn from liquor stores in Indiana and more than a dozen other states, and an additional $1,600 withdrawn at addresses outside casinos, including two on Las Vegas’ famed Freemont Street and a $40 withdrawal from a casino in Arizona.
I-Team 8 also found withdrawals made in 44 different states and Puerto Rico that are legal under Indiana law, but raised questions about potential abuse, including tobacco stores from California to New York, withdrawals from Universal Studios in California and an Oriental rug store in St. Louis.
The new data also showed withdrawals that weren’t “rounded off,” like one for $8.72 at a fireworks store in Missouri and one for $37.54 at a wine and liquor store in Sacramento. The lack of round numbers could mean that the transaction occurred at a “point of sale,” not an ATM.
Asked about the additional findings, Miller — who authored a bill last year adding strip clubs and adult establishments to the list of banned locations — shook her head.
“More needs to be done,” she said. “As long as we have any instance of fraud, we need to try to improve it.”
Following I-Team 8’s investigation in May, FSSA said it was in the process of identifying all potential cases of fraud and would be investigating. Late last month, the agency issued an update to lawmakers, saying it had identified less than 1 percent of all transactions as being illegal. It also said instances of illegal withdrawals had dramatically dropped following our investigation.
In December of 2011, FSSA said it investigated 21,012 cases of alleged illegal withdrawals. Of those, FSSA said 101 were identified as taking place in a restricted location. By September of 2012 — four months after I-Team 8’s investigation — FSSA told lawmakers it had investigated 15,642 cases, and identified just 54 illegal transactions.
Asked if she was encouraged by the steps, Miller nodded.
“I'm sure the fact that this has been looked at is good, and that FSSA is now taking a much stronger stand. They're policing it more appropriately. But, there's still a ways to go,” she said.
“I think they're certainly trying,” agreed Sen. Jean Leising (R-Oldenburg). “On the other hand, if I was one of my taxpayers listening I would say — why can't we do more?”
CRACKING DOWN ON VIOLATORS
I-Team 8 asked FSSA administrators to sit down for an interview on the new changes. A spokesperson declined, but issued this statement outlining changes
that have been made in the wake of our investigation.
Just two weeks after our investigation first aired in May, the FSSA’s Division of Family Resources (DFR), which administers the TANF program, says it met with the Marion County Prosecutor’s Office. At that meeting, the agency said prosecutors requested better demonstration that recipients have been informed of the restrictions placed on TANF withdrawals.
As a result of that meeting, FSSA said notices were sent to all TANF recipients in September, warning them that withdrawing benefits from a location banned under state law could result in criminal charges. Similar documents were also sent out with all new and replacement EBT cards.
After I-Team 8's hidden cameras showed some local liquor stores failing to post legally required signs near their ATM machines warning TANF recipients that withdrawing money there is illegal, FSSA says it also enlisted the help of Indiana's Alcohol and Tobacco Commission (ATC). According to FSSA, ATC agents began visiting businesses with alcohol and Type II gaming permits on July 27. ATC also agreed to establish a new liaison to communicate with FSSA on TANF and EBT related issues, the agency said.
FSSA also says it's developing new software that will alert investigators to illegal withdrawals. The agency says the $25,000 program will crosscheck addresses on monthly EBT transaction reports with addresses of known locations where TANF withdrawals are illegal. That will help provide DFR with a list of possible violations, it said.
First time violators would be sent a warning letter, notifying them that any future infractions will be sent on to local prosecutors. A second violation would trigger a second letter, telling the client that the case had been referred on for possible criminal charges.
FSSA says the system is set to go online in January 2013.
LACK OF PROSECUTION
In our initial investigation last spring, FSSA told I-Team 8 that prosecutors were already involved.
When asked by I-Team 8 if the agency was referring cases of possible illegal TANF withdrawals to county prosecutors, FSSA DFR Deputy Director Adrienne Shields nodded.
“Yes we do,” she said.
Shields also said FSSA was pressing to recover any illegally spent funds,
“If there are criminal charges, yes. That's what we will ask for is repayment to the program,” she said.
In the weeks following our initial investigation, I-Team repeatedly asked how many cases the agency had turned over, and how much money has been recovered because of it.
FSSA didn’t answer those questions until this week when it admitted it has never referred a single case of alleged TANF misuse on for prosecution.
“To date, DFR has referred no one for prosecution, as we have been in the process of developing the procedure by which we will refer,” a spokesperson wrote in an email to I-Team 8. “We expect to be fully-functional starting in January.”
For Miller, the lack of prosecution so far is a major problem.
“Without prosecution, we cannot take action against the TANF recipient,” she said. “The federal government prohibits someone being removed from TANF program without a conviction for fraud or abuse. You can't take them off of TANF. You can't fine them. You can't make them pay back the money. We're hamstrung with what we can do.”
Last spring, Miller sent a letter to other lawmakers, calling for new measures to help root out cases of illegal withdrawals in the TANF program. Among her calls was one for FSSA to investigate software that could block illegal withdrawals at banned ATMs — similar to those now being used in California casinos.
But, implementing such a program hasn’t been easy.
“I'm still looking at the blocking issue. It's a little more difficult than we thought at first, primarily because these pieces of equipment are moved around. An ATM is moved frequently. It may — from our point of view — be at a grocery store, when in fact it's now at an off-track betting facility,” Miller said.
Others worry a "blanket" blocking program could end up blocking access to legitimate withdrawals.
“These machines are provided by a vendor, and then sometimes the vendor moves them to a different site,” said Rep. Tim Brown (R-Crawfordsville), chairman of the legislature’s Health Finance Committee. “We have to be careful. Are we going to impact [those who rely on TANF funding] by creating a software program that may impact more machines than just the casinos?”
“If [ATMs] are that mobile, then I'm not sure that's the answer,” agreed Leising.
In the meantime, Leising and others are searching for more "out of the box" solutions.
"Maybe they should have to repay the exact amount they've taken illegally," Leising said.
Leising says she will also introduce legislation requiring children of TANF recipients to attend school. If the bill passes, those students would not be allowed to miss more than 10 school days each year, or TANF benefits would be withheld. The bill would also require
TANF recipients to attend parent-teacher conferences at their child’s school.
“We’re trying to break the cycle,” Leising said. “There's no doubt in my mind that we would see an improvement in attendance by tying this together.”
Miller says Indiana is waiting on additional guidelines from the federal government before moving ahead with additional legislation.
HR 3630 was passed by Congress in February, tucked inside what’s become known as the Middle Class Tax Relief and Job Creation Act of 2012. It requires states to “maintain policies and practices as necessary" to keep TANF cards from being used at ATMs in liquor stores, casinos and strip clubs. States that fail to employ such policies by 2014 will face a 5 percent cut in annual TANF funding from the federal government.
The U.S. Department of Health and Human Services is expected to outline exactly what policies will be required in early 2013, Miller said.
Still, all three legislators promise the issue will not be ignored in the upcoming legislative session.
"We have to keep our finger on it, because if you don’t, things will backslide,” Brown said. “The minute you stop looking, then things become unraveled so to speak, and it's a very important issue to wisely use taxpayer dollars.”
“The state wants to do the right thing,” agreed Miller. “The people I'm working with want to do the right thing.”