Little Suffolk fraud after new law

Published 10:13 pm Tuesday, February 11, 2014

By Tracy Agnew, News Editor, and Kathryn Watson,

Suffolk fraud investigators in 2013 found 11 cases of welfare fraud by people who were receiving Temporary Assistance for Needy Families, Social Services Director Azeez Felder said.

However, none of the substantiated fraud cases came from people buying prohibited products or services with their benefits. A law passed in last year’s General Assembly prohibits TANF recipients from using the money for lottery tickets, alcohol or tobacco products or sexually explicit materials. They also can’t purchase tattoo or body piercing services, use it for gambling — at bingo or off-track betting parlors, for instance — or to visit an adult entertainment establishment.

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The money involved in Suffolk’s 11 fraud cases added up to $6,118 and was obtained by the fraudsters through lying about their household composition or not reporting all the income they were receiving, Felder said. Some were also receiving benefits through a similar program in another state at the same time they were getting them from Virginia.

Though the new law prohibits those purchases, it has come under scrutiny because, in many cases, there is no way for the state to know whether recipients have purchased prohibited materials or services.

“It’s hard to really monitor that or pinpoint what they’re using it for,” Felder said. “We do have a fraud unit. We do from time to time get calls from the community.”

Felder said recipients get notices on what they cannot use their benefits for, and posters in the Social Services building on Hall Avenue admonish recipients not to use their benefits for prohibited items and services.

A federal assistance program managed partly by the Virginia Department of Social Services, TANF benefits average $257 per family per month in Virginia, and are meant to provide families with children with a monthly cash payment to meet their basic needs.

State officials say they have no access to debit card transactions made with TANF benefits, which are issued on pre-paid MasterCard debit cards. Once the money is on the card, the state’s vendor handles the records. That not only prevents taxpayers from finding out where those tax dollars are spent but also prevents the state from conducting its own audits on individual transactions.

Making things even trickier, recipients can get cash withdrawals from the cards at an ATM and proceed to spend it any way they wish. Other benefits that don’t have those restrictions, like child support and unemployment, also are distributed on the same cards.

At this point, there aren’t even any penalties to enforce the prohibitions if someone reported an abuse. That’s something the state’s Department of Social Services is working on.

“What we’re doing is promulgating regulations through the State Board of Social Services to have penalties if we identify somebody, but it’s very difficult to identify anybody right now,” said Tom Steinhauser, director of the division of benefit programs for the state Department of Social Services. “Even people who look at the federal law say it’s basically a feel-good bill, but there are no real enforcement measures right now.”

The prohibitions on things like tobacco and lottery tickets took effect in 2013, thanks to a bill patroned by state Delegate Tony Wilt, a Republican from Harrisonburg. He’s up front about the reality that the law, which was fashioned after 2012 federal law, is nearly impossible to enforce.

“The hardest part is the enforcement,” Wilt told

To fix the records issue, Wilt filed a bill this session to issue TANF benefits through a separate card, the same way food stamps are issued. But the bulk of that bill was shot down in committee, leaving intact only a provision saying people can’t get their TANF benefits via checks. But people will still be able to get their benefits through direct deposit.

Even if benefits were automatically restricted at certain locations, the way food stamp benefits are, it would be nearly impossible to restrict access to all ATMs, Wilt said.

“Other states have looked at controlling the cash access to the card because you don’t want them to use them for drugs, tattoos, all those things listed,” Wilt said. “But they can still go, they can get cash from the machine and go get a tattoo. You and I know that there’s no way to stop that.”

For now, TANF transaction records will still be handed by the vendor — and away from state and taxpayer eyeballs.

Wilt and Steinuaser are the first to admit the system has its holes.

But at this point, they say benefits in Virginia are so low that it may not be worth it to spend a few million dollars on the system to make transactions traceable and enforceable on EBT cards, like SNAP benefits are.

“In Virginia, our benefits are so woefully low, it would be hard for anybody to be spending a lot of money at an ABC store or strip clubs,” Steinhauser said. “I’m sure that some people figure out how to do it and manage it, but our benefits are 15th lowest in the nation, and that compares to per-capita income where we’re the 10th highest.”

“I’m not going to spend a dollar to save a dime,” Wilt said.

To report suspected welfare fraud in Suffolk, call 514-7393.