Fraud Investigations Protect Tax Dollars

County Governance, Operations, Policy
9/19/2013
money,fraud,investigations
​The welfare fraud unit investigates thousands of cases each year
Investigators do everything they can to protect taxpayers

​Everyone’s heard a welfare fraud story, but few know what really goes on behind the scenes. Sacramento County’s Program Integrity (Welfare Fraud) Division has seventy-five staff members including 24 sworn law enforcement officers, dedicated to investigating, preventing and prosecuting welfare fraud.

“Though the percentage of fraud cases is statistically low, we take the issue seriously and we follow up on all reports and on anything that we see that might indicate that something is going on,” said Paul Lake, the Director of the Human Assistance Department that houses the division. “We do everything we can to protect the taxpayers’ money and ensure that only those who are eligible to receive benefits do so.” 

Of the total 193,224 annual cases of benefit assistance in the county, including CalFresh (food stamps), General Assistance, and CalWORKs, the Division receives about 8,000 fraud referrals each year. Only about 500 cases are determined to involve actual fraud.  That’s about .02 percent of all welfare cases, and 6.25 percent of all fraud referrals.

The Division finds and investigates fraud using a multi-pronged approach.  Cases originate from anonymous complaints, eligibility workers, referrals from other law enforcement agencies, and by comparing various government agency databases.

“We run multiple data matches to identify potential fraud to help us prevent incorrect payments before they go out the door,” said Dave Hyde, Chief Investigator. “We want to identify errors quickly and discontinue cases to limit the monetary loss.” The successful award-winning database system has contributed to millions of dollars of savings annually since implementation.

Examples of the types of data that is compared include: Jail Matches (client is in custody and not eligible for aid), Death Matches (client is deceased), Fleeing Felon Match (client has a felony warrant for their arrest and not eligible), Out-of-County Electronic Benefit Card Usage (client living and using their benefits card) outside Sacramento). 

The Division’s Early Fraud Detection and Prevention Unit’s non-sworn Investigative Assistants visit client homes, neighbors and schools to determine eligibility or fraud. In 2010, the Unit received and completed 5,149 referrals. About 50 percent of these referrals resulted in a discontinuance, aid reduction, or aid denial for a period of time. No issues were found with the other 50 percent.

Sworn investigators, investigate the more serious cases.  If fraud can be proven, the investigators submit those cases to the District Attorney’s Office for felony prosecution. In 2012, working with a dedicated Deputy District Attorney, the investigators submitted 177 cases for prosecution and achieve a very high conviction rate.

The Division also tracks savings to ensure cost effectiveness. “Using state provided cost benefit formulas, our division has proven to be very cost effective,” said Shawn Loehr, Assistant Chief Investigator. “With the smart use of technology and careful program controls, our stats validate that we are on the forefront of uncovering fraud.”  For every dollar spent, the Division saves an average of $3.74.

“People found to commit fraud fall into different categories,” said Hyde. “Some are working and trying to make ends meet, but fail to report income; some use identity theft and forgery; and some fall into the category of organized criminal activity.”

“This Division is an essential part of maintaining the public trust and does a fantastic job,” Lake added. “Despite the periodic sensational case, most people coming into the system are doing so honestly, and it’s important that we remain vigilant to keep it that way.” 

Note:   The database system received the County’s 2009 Stars of Excellence Award in the Silver Award category, the 2009 NACo (National Association of Counties) Achievement Award, and an Honorable Mention in the California State Association of Counties 2008 Challenge Awards.   

Note:  In late October, in the 2013 CA Integrity Review Report, the U.S. Department of Agriculture named Sacramento County as a best practice model for handling  fraud cases .  Read more...

Contact Info:
​Chris Andis, Communication Staff - 874-2691
“With the smart use of technology and careful program controls, our stats validate that we are on the forefront of uncovering fraud.”