Welfare fraud is tough to monitor

FARGO -- Tom Gravel looked at the piece of paper and saw his name, but the signature wasn't his.

The principal at West Fargo Community High School had just learned from Cass County Social Services that someone forged his name as part of an application for welfare assistance.

"What they told me is if I wanted to pursue any further criminal matter, that was up to me," he said.

Police are glad he did.

"We normally would never even have known this existed," West Fargo Detective Derek Cruff said.

Years ago, that wasn't the case. The state once had five investigative units dedicated to probing suspected welfare fraud, but they fell prey to state budget cuts in 1999.

Prosecutors say the case against the woman accused of forging Gravel's name within a few weeks of her release from prison is believed to be the county's first welfare fraud prosecution in more than a decade.

At a time when spending of federal taxpayer dollars is under intense scrutiny and North Dakota's coffers overflow with cash, some wonder if it's time for the state to revive fraud investigation units.

"We are in a little different environment now, so maybe they could afford to look at doing it again," said Mark Boening, a Cass County assistant state's attorney.

Caseloads grow

A mounting caseload at Cass County Social Services leaves staff less time to look for fraud, said Alice Swenson, unit manager for economic assistance.

The county's economic assistance caseload more than doubled in the past decade, from 4,446 in October 2001 to 8,998 last month. Those clients receive Medicaid benefits, Temporary Assistance for Needy Families (TANF), food stamp benefits through the Supplemental Nutrition Assistance Program (SNAP), or a combination of the three.

Swenson's staff grew by 44 percent during the same time period, but program rules also became more complicated, she said.

"If you're flying through cases, trying to get them processed for clients to get their benefits on time, you don't have the extra time you did back then," she said.

Statewide, the number of households on the food assistance program has increased 47 percent since 2005, from 18,927 to 27,896, said Carol Cartledge, director of the DHS Economic Assistance Policy Division.

The growth -- which DHS officials say is smaller than in many other states -- is partly due to program changes called "simplified reporting" that make it easier for households to stay on the program longer, Cartledge said. Also, they now may apply online, improving access to the program.

Meanwhile, TANF cases have dropped from 3,859 families in July 1997 to 1,988 families last December. Cartledge attributes the decline to TANF's strict work requirements compared to the program it replaced, as well as the state's healthy job market.

Detecting fraud

Caseworkers try to verify income, employment status and household information by checking applications against databases of government agencies such as Job Service, the Social Security Administration and the Internal Revenue Service.

Proof of income and job status, such as paystubs and statements from employers, also is required.

"Most of it falls upon the client to provide us with verification of what they're telling us," Swenson said. "Unless we have reason to suspect it's faulty, we would take that at face value. We wouldn't double-check everything they provide us from an employer."

DHS encourages people to report suspected fraud to its fraud hotline, (800) 472-2622, by email to broth@nd.gov or to their local county offices.

"Our goal really is to assure that help goes to qualifying households," DHS spokeswoman Heather Steffl said.

Caseworkers who suspect a client is lying may pursue an intentional program violation, which carries administrative penalties that can result in a loss or reduction of benefits or disqualification from the program.

Statewide, DHS reported 167 cases with intentional program violations in the food assistance program and 29 such TANF cases since Oct. 1, 2009.

During that same time, there were three food program cases that led to court convictions and one TANF case conviction.

But police and prosecutors say that doesn't mean welfare fraud is rare.

"The biggest impediment to welfare fraud prosecution is the fact that there are no dedicated welfare fraud investigators," said Assistant State's Attorney Tristan Van de Streek, who is prosecuting the current Cass County case. "We, of course, would like to see more welfare fraud cases, because we believe it's happening."

Case is first in years

In the Cass County case, authorities say Diane Marie Godejohn of Fargo applied for food assistance on Sept. 10, two days after her release from prison on an identity theft conviction. Godejohn is charged with deceptive writings, a Class C felony.

Godejohn could not be reached for comment last week. Her appointed public defender didn't return a message Friday.

Cruff, the West Fargo detective, said Godejohn allegedly took school stationery and forged Gravel's name -- listing him as "Dean of Students," which isn't his title -- to make it look like her son was still enrolled in school, thereby increasing her welfare benefits. As a result, she was allegedly overpaid $1,169 in benefits by the time a caseworker doing follow-up work contacted Gravel in August.

But it was Gravel, not the caseworker, who contacted police.

"Social Services never actually contacted us," Cruff said. "We had to go get a court order for them to talk to us."

Cruff said he understood Swenson's hands were tied because the office follows the state's interpretation of federal privacy rules concerning welfare case information -- an interpretation some in law enforcement disagree with.

"I'd love to see fraud investigators again in the state, somebody that we'd be able to cooperate and work with," Cruff said. "We work with fraud investigators all the time from different states. We have great results. We're able to talk with them, work with them. It's only when we deal with our state here that we seem to have problems."

Swenson said Cass Social Services has referred cases to the state's attorney "from time to time," but she couldn't recall when it last happened.

"It was many years ago," she said.

Cases are more often referred to federal agencies such as the Office of Inspector General, Department of Agriculture and Department of Health and Human Services, she said.

"All in all, most of our clients are pretty forthcoming and (there is) not a lot of reason to question what they provide us," Swenson said. "But we do have occasion where we have to follow up on other things."

That's harder to do without the fraud investigators who were licensed peace officers and had access to tools and information not available to caseworkers, she said.

"We're really at a disadvantage not having a local fraud unit," Swenson said, adding, "They were designated specifically for that task, and it got done rather than, 'We'll get to it when we have time.' "

Program 'paid

for itself'

Judy Tollefson was one of the two investigators in the Cass Multi-county Fraud Unit, which served five counties: Cass, Richland, Sargent, Steele and Traill.

Now a captain with the Cass County Sheriff's Office, Tollefson said welfare fraud cases were "pretty easy" to investigate and basically boiled down to two types: applicants who failed to disclose income or assets and those who lied about the makeup of their households.

The fraud unit "essentially paid for itself," she said.

State data showed that in 1997, the fraud unit found $153,000 in overpayments, which prevented future fraudulent payouts of at least $272,000, according to Forum archives.

However, in Gov. Ed Schafer's 1999-2001 budget, the state Office of Management and Budget eliminated $562,000 in federal and state money set aside for the state's fraud units. At the time, an OMB official disputed a cost-benefit analysis used to justify the program and said the five fraud units, which covered 24 counties, hadn't proved themselves more likely to catch welfare cheats than counties without fraud investigators.

State Sen. Judy Lee, R-West Fargo, now chairwoman of the Senate Human Services Committee, recalled the 1999 session as a painful budget process, one in which Schafer asked for a 5 percent reduction in department budget requests.

"There were lots of places we were very sad about having to do what we did, but there just wasn't the money to do everything," Lee said.

After eight years in action, the Cass fraud unit folded and referrals for prosecution dried up.

Clay investigating fraud

Those in favor of reviving the fraud program point across the Red River to Moorhead.

Clay County Social Services has two full-time investigators assigned to fraud cases: a criminal investigator and a fraud prevention investigator.

Sandy Thorne, the county's collections services supervisor who oversees the fraud investigations, said the program is successful at identifying and preventing fraud.

"A lot of it is just that deterrent factor," she said. "They know that somebody is out there verifying information and checking up on things."

Last year, investigators found discrepancies in 224 of the 338 cases they reviewed, mostly relating to income, residency and household makeup, according to county figures.

The investigations found $45,701 in overpayments that now must be repaid and $115,875 in savings from the case actions. A state formula figures it usually takes three months to catch fraud once it begins, so that $115,875 gets extrapolated to $347,625 in actual savings, Thorne said.

Investigators also identified $56,000 in overpayments on 13 cases that ended up being charged criminally.

Clay County investigators used to work closely with their counterparts in Cass County, Thorne said.

"Being a border county, there's a lot of people that have a Moorhead address but they live in Fargo and they're collecting Minnesota benefits, and so it really was a joint investigation between the two counties," she said. "And now we're kind of having to figure out those without the benefit of an investigator in North Dakota."

Federal funds pay for half the cost of Clay County's two investigator positions. County tax dollars cover the other half of the criminal investigator, while the state picks up the rest of the tab for the fraud prevention investigator.

North Dakota DHS officials said they weren't familiar with what federal money would be available if the state were to revive its fraud unit program -- a prospect on which they declined to opine.

"That would really be a decision of policymakers," said Steffl, the DHS spokeswoman.

Lee said reviving the program is "certainly a possibility" if a lawmaker introduces it or DHS proposes it as a budget request. However, it would have to be weighed against other priorities, and lawmakers currently are "up to our eyeballs" in healthcare reform, she said.

"I certainly would support the idea of implementing that again if it looks like we can do it appropriately," Lee said.

Boening, the assistant state's attorney, said it's "a little hard to believe there isn't welfare fraud going on," and reviewing paperwork is the best way to catch it.

"From the taxpayer's point of view ... if there's some federal assistance available to investigate these cases, from where I sit, it probably makes sense to use that," he said.

Mike Nowatzki is a reporter at The Forum of Fargo-Moorhead, which is owned by Forum Communications Co.