Fraudsters Go Unprosecuted, Costing Taxpayers Millions

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All this talk about cutting budgets, but what about cutting the fraud? Let’s take the Supplemental Nutrition Assistance Program (SNAP) aka food stamps, as an example. The Washington Examiner recently reported the findings of the Heritage Foundation, which notes that for cases in 2011, SNAP benefit fraud levels reached 39 percent in the District of Columbia, 25 percent in Maryland, and 16 percent in Virginia. Most of these people in DC and Maryland were never even prosecuted. The level of fraud is costing taxpayers not just millions but BILLIONS of dollars. (Eligibility rules are questionable, but we need to be cracking down on fraud if we want to save the government money!)

According to the Heritage Foundation, the number of food stamp recipients has increased to 45 million Americans, but the percentage of cases investigated for fraud has not increased or even remained constant. The foundation doesn’t offer year over year comparison. Based on the data collected in FY 2010, the U.S. Department of Agriculture, Maryland and Virginia distributed about $130 million in food stamps to individuals who were not eligible. While there is a difference between fraud and ineligibility, the article notes that for every $100 in benefits disbursed, Virginia and Maryland ”doled out $6.11 and $5.04 respectively, to those not eligible.’? The article also says that the national average noted at the time of the report was $3.05 disbursed to ineligible recipients for every $100. (Now how can that be when each state thinks it has no more than 1% fraud?)

(How are fraudsters getting away with it?) Many recipients had invalid Social Security Numbers and were receiving the same benefits from federal and state programs. For many of the cases, the recipients also happened to be dead – this has become a widespread problem throughout government benefit programs. (Let’s start with finding the recipients who are dead or are using phony SSNs? I bet your budget could use some of that money.)

Furthermore, just about anyone may be eligible to receive food stamp benefits. For example, the article cites a recent quote from a piece in The Wall Street Journal? ”’Millionaires are now legally entitled to collect food stamps as long as they have little or no monthly income.”’ It is interesting to note that 35 states ”have abolished asset tests for most food-stamp recipients.” (If regulations are not being enforced, why do we have them? Benefits for everyone!)

Source: Today’s ”Fraud of the Day” is based on an article entitled, ”Food Stamp Fraud Costs Billions; Rampant Fraud in Maryland and Washington, D.C.” by Hans Bader, published by The Washington Examiner, December 12, 2011.

Food stamp fraud is costing the taxpayers billions, notes the Heritage Foundation. Fraud levels were 39 percent in the District, 25 percent in Maryland, and 16 percent in Virginia, for cases investigated in 2011, according to data uncovered by the Washington Examiner.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.