Theft After Death

Theft After Death

Many government benefits claimed after beneficiaries die.
Story by Ann Ali
Email | Bio | Other Stories by Ann Ali

When the Social Security Administration or the U.S. Railroad Retirement Board issues a monthly payment, some recipients' family members think the checks are supposed to keep coming forever and someone should always benefit.

When the beneficiaries of government programs die, the benefits are supposed to stop, but many times they don't.

U.S. attorney Charles Miller announced three grand jury indictments earlier this summer charging relatives of beneficiaries of government programs with fraudulently taking the benefits after the death of the beneficiary.

And the public that fills the government coffers suffers each time money is improperly awarded from those programs.

One of Many Forms of Fraud

While the death of a government beneficiary spurs action from a variety of agencies, inspectors say it's just a fraction of the fraud.

"It's difficult to quantify," said Jonathan Lasher, deputy counsel of the Inspector General in the Office of the Inspector General with the Social Security Administration in Baltimore. "When you're dealing with a series of programs that pays out billions of dollars every year, you do the best you can to protect it."

Lasher said his agency sees cases in which individuals try to receive benefits to which they're not entitled, cases in which someone claims to be another person and cases of Social Security employees committing fraud.

"There's a lot of ways to get a hold of government money you're not entitled to," Lasher said. "We investigated last year a total of about 10,000 cases, and that's all of our cases, not just the deceased payee cases."

Lasher said about 10 percent of Social Security fraud is the misuse of a number and about 2 percent is employee fraud, but most cases involve people conspiring to receive benefits from Social Security they're not entitled to.

Lasher said 13 percent of the cases for fiscal year 2007 were deceased payee cases.

Lasher said there also is a difference between Social Security paying out money to a deceased payee -- which it shouldn't -- and SSI money being stolen.

"A deceased payee case, that's money that was not rightfully paid out," he said. "But if we send you a benefit check and someone comes along and thumps you on the head and takes it, that's not a theft from the government any more.

"It's important to note that the victim in these cases is SSA, which is why we investigate; when benefits are paid to a living beneficiary and then stolen by a third party, such a theft would not generally be within our jurisdiction."

At the U.S. Department of Veterans' Affairs, benefits fraud ranges from stolen and exaggerated disability claims to stolen identity and education benefits fraud.

"We investigate when someone makes a false claim for benefits based upon either completely fabricated or grossly exaggerated experiences," said Jim O'Neill, assistant inspector general for investigations with the VA. "We also obviously would be interested in anybody who was not a veteran but claimed to be and was getting benefits.

"Frequently, but not exclusively, it's a family member or friend -- somebody who knows enough about the person to convincingly portray the person."

He also said if a widowed spouse is due compensation and he or she remarries, it must be reported to the VA because that person no longer is eligible, and often fraud occurs if the VA isn't notified of the new marriage.

O'Neill said his office has a responsibility to investigate every felony committed against the VA and its programs, which is a tremendous responsibility, and limited resources make it hard to drop everything and go after each deceased beneficiary case.

How it Happens

While investigators can only pursue what they know is out there, death records usually are the first stop on the way to potential criminals.

"We match VA monetary benefits with Social Security's death file," O'Neill said. "We assign these out to agents, and when time permits they investigate."

Lasher said the office of vital statistics and audits from the Inspector General's Office "further tighten that net to be sure deaths don't go unreported."

"There's a number of ways we find out about a death," Lasher said. "Social Security receives death information from multiple sources -- funeral homes, state agencies, other family members -- so it's not as easy as it might sound to continue receiving the money.

"Your parent passes away and you think, 'If I don't tell Social Security, I'm going to keep getting the money,' but it's not that easy."

O'Neill said the VA also matches its records against the SSA's death index file and then checks first if payments are just piling up because the veteran had no survivors and no criminal intent is involved. In that case, he said, the VA simply recovers the money.

He said the VA has arrested 275 individuals for theft of deceased beneficiary benefits since 2000, which is a small fraction of the 800 to 1,000 people they arrest each year.

Tips and complaints are treated very seriously when going after fraud.

Lasher said the most allegations to Social Security are reported by law enforcement, followed by SSI employees, with "citizens" and "anonymous" rounding out the categories.

"I know they have, in a number of years, done projects with folks over a certain age," he said. "They go confirm the person receiving benefits, and it's hard to claim innocence once you're caught."

Lasher said cases get harder when deaths go undetected, such as a murder with a hidden body, that vital statistics or a funeral home doesn't know about.

"Most of our cases aren't about stealing someone else's benefits; it's about stealing benefits you aren't entitled to," he said. "It's hard to have someone pass away without Social Security aware of it, and when it does happen, we will act and investigate."

Lasher said there have been enough deceased payee cases that the Office of the Inspector General made a national project code years ago to detect and investigate those cases.

R. Booth Goodwin, assistant U.S. Attorney and chief of the economic crime section for West Virginia's southern district, said many people try to justify benefits fraud, saying their parents promised them or they just didn't know better, but nearly everyone should know better.

William Tebbe, assistant inspector general for investigations within the U.S. Railroad Retirement Board's Office of Inspector General, said once the Board is aware of a death, it contacts the surviving spouse to adjust the benefits, making it hard for him or her to continue collecting full benefits.

Tebbe said once the agency receives information about someone who has been paid benefits and shouldn't have, it conducts an investigation or gets it to the point where an allegation is substantiated. The agency then takes the case to the U.S. Attorney, whose office then decides whether to prosecute the person the agency has identified and the courts take over.

Who's on the Case

Benefits fraud cuts through all agencies and states, so federal investigators place all hands on deck to tackle it.

"As apparent from the indictments handed down ..., theft of government funds is not isolated to one program or agency," Miller said in a news release. "Many people rely on these benefits; each of these agencies has dedicated special agents charged with investigating theft of the funds they administer, and with my office, we are united in combating the threat to these programs and the beneficiaries they serve."

Goodwin said individuals call suspicions in to his office, and while it's not their place to investigate since they could eventually serve as the prosecutors, they're happy to field the calls.

"They should call here because it's very likely you could be dealing with a (U.S.) Railroad Retirement Board matter, and if you look in the front of the phone book, there's no number for the board, so we'll help sift through it," Goodwin said. "We are the central place where these matters are brought to a head."

He said West Virginia has a substantive federal presence, and most agencies have their "feet on the ground," but even the ones that don't can keep in touch, thanks to the age of e-mail and teleconferences.

"It is generally a cooperative effort among all federal and state agencies," Goodwin said. "Often, these sorts of cases are exclusively the jurisdiction of the Office of the Inspector General for each of the agencies, and while postal inspectors or FBI agents can investigate these sorts of crimes, they've got a lot of other crimes to investigate as well, and that's why these agencies have dedicated agents."

Tebbe said about 10 percent of his agency's cases are jointly worked with other agencies, because of overlap, and while the U.S. Postal Service follows any fraud that's done through the mail, its interest in benefits theft has decreased.

"We don't work those kinds of cases very often since most of those benefits are direct deposit," said Cathy Cantley, West Virginia's public information officer for the U.S. Postal Inspection Service. "We just don't see that much of it because usually they're defrauding specific agencies, and every agency has its own investigators."

What We're Out

Goodwin said theft of government benefits is not isolated to just one government program, but Social Security is the biggest one.

"From a taxpayer point of view, the more money that is being spent to prevent or detect or prosecute this type of crime is money that is not being spent elsewhere," Lasher said. "Not only do we, all of us, pay into the Social Security fund, but the businesses pay into it, and they match as well."

According to the Social Security Administration's Office of the Inspector General's semi-annual report to Congress from October 2007-March 2008, the agency made more than $38 million in SSA recoveries, restitution, fines settlements and judgments and participated in multi-agency investigations that resulted in more than $18 million in savings. The report also projected more than $162 million in savings from investigations resulting in the suspension or termination of benefits.

The U.S. Railroad Retirement Board's semi-annual report to Congress for the same time period said 13 civil judgments resulted in more than $2.5 million in monetary accomplishments.

Goodwin said one $20,000 fraudulent case may not seem like much, but three of them eventually will catch the public's eye.

"A lot of it relies on honest people because you just can't police everything," he said. "Our hope was to highlight the problem because it is a significant problem that directly affects the demographic profile of our state.

"As with any place, we have people who try to cheat the system, and that's no different here than it is in New York or Wyoming."

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Bottom line quit stealing government benefits you are NOT entitled to

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