SNAP Fraud in the 21st Century with Guests Dawn Royal and Andy McClenahan

SNAP, welfare, or food stamps, regardless of the name they all point to benefits designed to feed the underprivileged.  Fraud has existed almost from the first day of the program’s inception back in 1939. SNAP has dramatically expanded over the decades, with a current national budget of $127 Billion. SNAP cards are now being cloned, with fraudsters getting away with millions, and the legitimate beneficiaries requesting repayments by the states.  This episode of the FraudKast looks at the SNAP program and the challenges associated with running such a large national program with millions of beneficiaries, and how fraud is taking place. 

DISCLAIMER: The information provided in this podcast is for informational purposes only and is not intended to and shall not be used as legal advice. The views and opinions expressed in this episode are solely those of the speaker/s and do not necessarily reflect the views or positions of LexisNexis Risk Solutions. LexisNexis Risk Solutions does not warrant that the information provided in this podcast is accurate or error-free.

Transcript

Narrator: Hello and welcome to the FraudKast brought to you by LexisNexis Risk Solutions, the series that shines a light on fraud and theft across numerous government benefit programs. FraudKast is hosted by Larry Benson, director of Strategic alliances for LexisNexis Risk Solutions Government Division, and the creator and principal author for the Fraud of the Day website. And now, here's Larry with today's guests.

Larry Benson: Welcome to the FraudKast. I'm your host, Larry Benson, and today we're going to examine SNAP benefits, also known as food stamps. Our experts are Dawn Royal, the past President and current Director of the United Council of Welfare Fraud (UCOF) and the Co-Chair of the Intergovernmental Committee, and Andy McClenahan, who's the Regional Director and Co-chair of the Intergovernmental Committee at the United Council of Welfare Fraud. Andy, Dawn, welcome.

Dawn Royal and Andy McClenahan: Thank you.

Larry: So great that you've joined us. Dawn, let me start by asking, can you just give us a basic outline of how the eligibility process works for SNAP?

Dawn Royal: Someone who needs assistance would complete an application, at the minimum includes their name, their address and their signature. Then they’re also required to provide additional information based on which state that they live in to, see if they meet eligibility criteria to receive the benefits from their state or their area. The trouble with this, which we kind of talked about before, is that name, address, signature. And why that's a problem is we have emergency benefits, if you will, they're called expedited benefits and if somebody is in a real jam, really needs some help, then they can get those benefits issued right away and then they just need to follow up with the additional verification on their financial condition. So that means that somebody could walk into a field office, put their name on an application, list themselves as homeless, make an X on the signature line, and get some SNAP benefits. So to restate, to get additional benefits, there's some more information that needs to be provided, but the minimum is name, address and signature, so it can be “name”, “homeless”, and an “X” on the mark.

Larry: So it sounds like this could vary by state.

Dawn: Yes, it does.

Andy McClenahan: There's different variances, so you've got 53 States and territories that administer the program. 10 states are state run, but they're county administered, so it's every single county, like for example California or Ohio. So they tried to make the bare minimum for an application, but those regulations go back to pen and paper. Or maybe stone tablet and chisel, I think. For that name address signature and I get it, I mean, you're serving the most vulnerable community here. And so you want to make sure that you're not providing a roadblock to people to access benefits, but those regulations are certainly antiquated.

Larry: So would you say that this process, that varies, it sounds like, not only state by state, but potentially county by county, does this leave the process open to fraud?

Dawn: Absolutely it does. The SNAP program or SNAP is being exploited, and there's a lot of things that could be done to prevent it, that just simply aren't. 

Andy: There is in fact, I think, so Dawn and I, Dawn went and testified in front of the House Agriculture Committee just back in June, and her testimony is on the UCOF, is the sort of the acronym. So it's not a COVID symptom. We've got her testimony on the website, and she brought up those points. And one of the things that she also brought up and that UCOF has been educating and trying to advocate for, not lobbying, but advocating for, is investments at the front end to sort of stop that fraud and to be able to check those identities when people come in with just a name, address, signature, or are providing self-attestation and client statements. The interesting thing that came out of that committee hearing was the revelation that, and finally getting some clarity on, what the federal government spends on program integrity. Now they share half the cost with the state governments 50/50 to administer the programs on labor and IT tools. But it was 1/20th of 1%, and just this last year the SNAP Fraud Framework Grant, which provides up to $750,000 to a state, and they have a $5 million budget, they only appropriated 3,000,000 of it, and so the investment is 1/20th of 1%. Now, that was prior to last week's announcement that they've signed a 5-year contract to provide income verification services for states, some of them which are already paying for it out of their own pockets. So you would have to include that, but it's an unknown number really. But Dawn's testimony on the 1/20th of 1% of the investment on the front end clearly exposed why that fraud is really occurring, that you just mentioned.

Larry: So if it's only 1/20th of 1%, the likelihood of being caught defrauding the SNAP program is pretty low, and I'm assuming that when you're saying that you can go county to county or state by state, so could I register for SNAP benefits in one state and then go off to another one and register for SNAP benefits over there and collect both?

Dawn: Well, yes you can. So with that name, address, signature you can get up to 45 days of benefits, a month and a ½, again with that name, homeless, X on the mark. But even if you provide all of the verification, you could go state to state and if you don't declare that you've been in another state, there's no way for us to know. Us being the agencies that issue the benefits. So you could stop in Colorado, get on the Interstate, go down a little bit of ways, you know, whatever next state you come to and submit another application. So years ago there was a pilot done and they developed the National Accuracy Clearinghouse, and its goal was to prevent this from happening. So this was going to be a big data warehouse that just gave states information that if an individual submitted an application in one state, and they submitted in another one, we would be able to know that they were receiving benefits in duplicate states. The program was wildly successful, the pilot was, and so in 2018 in the Farm Bill, it was signed into law that all states would be actively using the NAC, we call the National Accuracy Clearinghouse, so everything gets minimized to an acronym. That all states would be using the NAC by December 31st of 2021. In late summer, early fall, August, September-ish, Food Nutrition Service, USDA Food Nutrition Service, FNS decided that the current NAC project wasn't meeting their criteria for, I believe it was PII, right, Andy? And so they're going to recreate it. And so they are now still in the process of creating a brand-new NAC system and it's delayed now until 2027. So states won't be out there, or won't be utilizing, all states won't be utilizing the NAC until 2027. And the old NAC worked great. The original one was fantastic. It's as if they pulled some excuses out of the air, redeveloped it, redeveloped it without even talking to the states that we're using the old project, and here we are in another five-year delay that will cost the taxpayers billions of dollars.

Andy: That is the duplicate participation problem, the National Accuracy Clearinghouse, I mean, and that dates back to 2011. So, I mean, we're talking about a dozen years that it was first put out there. Hey, let's fix it. They did it. There was improvements along the way from lessons learned on that, but it was meant to replace the PARIS system. That's the Public Assistance Recipient Information System, or PARIS acronym that HHS uses for Medicaid duplicate participation. But when you have people that are, that states: (A) not everybody uses it, (B) sometimes they only provide their enrollment rolls once a year. That's not timely enough, and so, well, driving from Colorado, maybe one thing, you just get on the Internet and apply to at least fifty of the states that have online application portals and you're good to go. You're not going to get caught either under the current ones, unless you're using the people that are currently using the original piloted Clearinghouse. So it's a great point though by Dawn. 

Larry: Andy, let me understand this. We had a solution for the nation. It worked and now all of a sudden they've tossed it aside, saying we're going to go build something else, but by the way, we're not going to have it out till 2027, 2028, well, it's government, maybe 2029. And during that whole period, we're going to just lose tons of money.

Andy: Yeah, I think that the estimate from UCOF was that it's a lost opportunity of oversight, transparency, and accountability for the program to the tune of about $2 billion.

Larry: Is that per year? 

Andy: No, that's just the cost of opportunity just coming out of the delay from implementing what was being used. See, the interesting thing is that there were two data breaches that were used as a justification for an entire policy shift from what Congress had intended when they passed that provision within the 2018 Farm Bill. And it was because the entire database for the driver’s licenses out of the state of Washington and Louisiana. Correct me if I'm wrong on this. I mean, I know Larry, you're Mister fraud guy.

Larry: It's Oregon, I think.

Andy: OK, there you go. Sorry, I don't mean to disparage anybody in Washington or Louisiana, but their entire content of their driver’s licenses, their databases, and their photos, were stolen. And they're available, you can go buy them on the dark web, right? But, interestingly enough, that was the justification to push back and delay for you know, 6, 7, whatever how many years it will end up being before it's rolled out nationally, and that's just to the pilot states that they have identified. There's been no direction whatsoever that was given on how they were going to address the stolen driver’s licenses in the state of Louisiana or Oregon. No guidance is coming out.

Larry: Well, if you go, you combine those two, that's 9,000,000 licenses that have gone out the door. That's a lot of licenses, but let me continue down the path where we were just going about duplicates on the NAC program. And we know that identity theft is rampant. Does that even count if I strolled in with the identity of my father, who's been deceased since 2010, and just decided to use that? 

Dawn: The NAC would have caught it if you tried to use your dad's identity in more than one state.

Larry: Right.

Dawn: But that's what the NAC’s purpose was.

Larry: But I'm saying, now that they're no longer using the NAC, they'd never catch that.

Andy: Well, it's interesting. With the version that they're doing right now, doesn't do any data validations and from a government perspective, especially on a federal government perspective, we're not good with data, modernizing systems. I think there was some testimony just last week from the House Ways and Means Oversight Subcommittee in which Linda Miller, she's a former director at the PRAC, Pandemic Response Accountability Commission. She said that those benefits that are going out the door, they're self-attestation, and they’re identity fraud, and it's happening at scale. It's only addressing the, but the NAC was just doing the duplicate participation. It's a 10-year violation, you get kicked off the program for 10 years. That is pretty serious, but it was really meant to eliminate waste and abuse, sometimes fraud. But somebody may move to another state and the state may neglect to take the person off their benefits and they should be in another one. That's fine and that's good, but this is also the same system that identity fraudsters are using. Now they're being caught when they're trying to apply in numerous States, and they happen to hit a couple that are used in the National Accuracy Clearinghouse, that's fine. But to your point, if your father had a Social Security Number, he may be caught on a Social Security Administration death master file check, but there's 30 million people that don't have Social Security Numbers, that are deceased, that are not inside the current death master file. So there's the use of data by the federal government, it's not good. It's got to be appended. It's got to be supplemented. It's got to be validated using industry best standards and that's usually happening in the private sector.

Larry: Do they require a Social to get SNAP benefits?

Dawn: Continued benefits. So again, what we were talking about at the beginning, so the application, applications do ask for a lot of information, and I would say an overwhelming majority, a very high percentage, provides most of that information. We're talking about the minimum requirements again, are those name, address, and signature. But most provide additional information. And Social Security Number is generally one of those, but I mean we all know now of course that that's not exactly a good identifier or identifiable piece of information.

Larry: I was going to say that, you know, I've seen applications where they ask for Social Security Number and it's filled out, but they use somebody else's Social Security Number. So is it really being checked becomes the question. 

Dawn: And I think “No” would be the best response because yes, in as much that somebody is validating that there's a Social Security Number on an application. But states aren’t able or don't have access to technology to find out if, you know, Dawn Royal is using Dawn Royal’s Social Security Number 

Larry: So I could use Andy’s? 

Dawn: And I think it's gotten even worse now because so many states have gone to online applications and telephone interviews, and, so while they have worked very hard to increase access to the program, they haven't done anything to make sure that as they increase that access or make access easier, that there were fraud prevention tools that went along with it.

Andy: I'll say that you're kind of leaning into a contentious conversation on this Larry. With Social Security Number: (A) everybody's Social Security Number has been stolen in this country and (B) the validation …

Larry: I'm just wondering if I can just make one up.

Andy: Well, you can and that's the problem. The problem is that if it goes to the Social Security Administration, they can't numident it, they can't validate off of Dawn Royal with this Social Security Number, and if she if she's using somebody else's, it's going to come back, that it's not going to be validated. The issue is, is that there's no data checks that are being done to find the fat fingered Social Security Number, when you switch a 4 and an 8 or, you know, a 4 and a 9 or something? And you may do it intentionally. The matches don't use referential data to say, OK well, we have seen Dawn Royal with this Social Security Number in all of these different bases, whether it's in available open records or it's something that shows that this is the Social Security Number that's on her passport. That information can all be validated, and it can be verified to show that no, no, no, she provided the wrong Social Security Number. This is the number that it's supposed to really be. Now that won't happen in the new pilot that they're trying to do for duplicate participation, but it also happens rarely at the state side, and the Social Security Number’s a sticky issue because you get into resident non-citizens and entire non-citizens, and that can become a political hot potato. At the end of the day, there's two issues that come out of the questions that you have right here. One is that they're not using the power of data that's available, that's out there to help expedite getting benefits to people where you say no, no, no, this is the person who it is and all this information does check out, get them their benefits and this is accurate. A lot of those problems you're seeing right now in unwinding where they can't find people because they don't have contact information. Well, good grief, go buy it. The second issue is the antiquated systems that all the states are using. The pandemic exposed how much of a problem that was in the SBA, PPP loans, and the unemployment insurance. $247 billion in improper payments. I think if you were to take improper payments that came out of COVID, I heard this the other day, it would be the GDP of the 6th largest nation in the world. That's the improper payments that are going on. It does not include SNAP.

Larry: And that's just improper. That probably doesn't include fraud either.

Andy: Well, improper payments does include fraud, if they're looking… 

Larry: It does, OK.

Andy: But your point on this, that you started the questioning with, you know, and talking about the investments and what people are putting on the front end, is that there's no incentive right now for states or counties to stop and prevent fraud.

Larry: So what could we do to incent the states to start motivating them to actually determine who's who, who should get the benefits, and do the right thing? 

Dawn: We talked a lot about that with lawmakers over the last year, and we tried to come up, you know, we could make a laundry list of things that would make it better, but we tried to obviously be a little bit more concise. Funding, as Andy said, when we started, 1/20th of 1% is spent on the detection, prevention, and prosecution of fraud and SNAP. And that's just not enough. We're understaffed. We're under-funded. Investigators just don't have the tools to keep up with the different fraud schemes. So we came up with a way that we felt that would be palatable to Congress, and that was to increase retention amounts, and then mandate that that money be used for, again, detection, prevention, and prosecution of fraud. So when somebody receives benefits that they're not eligible for, states are required to recover that money. And then based on why those benefits were not issued critically depends on how much money the states get to retain. So historically, if that overpayment occurred because of fraud, then states got to retain 50% and that's been cut back to 35. So again, we suggest, UCOF suggested, bringing that retention rate back up to 50% and then putting a mandate that that money has to be used for detection, prevention, and prosecution of fraud. Because in a lot of states that retention money is just rolled back into the general fund. So even though there is this additional money into the budget, the fraud units don't have access to it. So funding is huge. And Andy brought up that last week there was a hearing in front of the Ways and Means Committee, and Linda Miller's testimony was brilliant and fantastic, and she said a lot of the things that we have been advocating for a long time. But one of the things that she talked about was funding. There is no funding, so whether you're talking about, I mean they were talking about unemployment, but whether you're talking about unemployment, whether you're talking about SNAP, whether you're talking about Medicaid, any of the public assistance programs don't have dedicated funding for this. So as program participation continues to go up, staffing continues to go downward. And again, just the underfunding of it. So having access to more revenue would then allow states or agencies to have more access to technology. Access to technology, again is, you know, it's certainly used in the private sector, but it is not used in government programs.

Larry: So right now… 

Andy: I'm sorry if I can just add on to what Dawn said real quickly.

Larry: Sure.

Andy: I mean, that is, she's spot on. If there was state increase in the state retention share of recoveries doesn't prevent it, let's just be clear about that. We're still in the pay and chase model. It doesn't stop the improper payments or the fraud, it's just going after it. And it's almost a money loser to go after fraud after it goes out there, it's difficult to collect. And SNAP’s a little easier because you've got the Treasury offset program and you can intercept people's tax returns and that sort of thing. In fact, the house just elected a new speaker, Mike Johnson, and he actually has called the food stamp program, or SNAP, as our nation's most broken welfare system. And just a couple steps put this into perspective. And so I used the improper payment, the 247 billion thing. In 2022, SNAP issued $114 billion in benefits. That's a lot. And in fact, it's almost double what it was when the appropriations were given in the 2018 Farm Bill. I believe it was 66 billion then. So we're looking at a tremendous increase in our spending, yet we don't have any fraud controls or oversight or accountability that's on the front end. That's a major problem. We've got over 41 million people that are on SNAP right now and that equates to just under 22 million households across the nation. And when they're not using benefits to stop that up, that money is going places. Well, where's it going? And at the United Council on Welfare Fraud, we're not looking at … eligibility fraud has been around since the second day of food stamps being issued. OK, so you know, and people lying about and fudging so they can get something. We're not looking to catch people who are fudging their resumes or getting an extra $11.00 a month so that they can help put food on the table. That's not, while that is program integrity, that's not the focus. The low hanging fruit is the billions that are going overseas. Funding nation states, organized crime, terrorist organizations. I was talking just yesterday to somebody who's got retailers that are funneling money back through hawalas to Hamas, who we all know what's going on right now in the Middle East with that. We are funding people who are actively trying to hurt this country, and those are the things that we will lean into. There's … so you've got the three types of fraud, the eligibility identity fraud and trafficking, the selling of benefits, right? And we haven't even touched on the trafficking yet. But the statistics that are out there, the quality control error rate, was released for federal fiscal year 2022 and they said 11.54% of all benefits issued during that rate were improper. Those are overpayments only. That's 114 billion or 113 billion. 1.1 billion a month. That's a lot of money. That's just on states not using data or not having firm guidelines, modern guidelines on how to detect an identity of a person who's no longer sitting in front of you, you know, filling out their paper application using pencil. There was a study that was done last year on the true cost of fraud, and this was something that was done a second year, and it was at the United Council on Welfare Fraud's 50th conference. They've been held in a conference every year, training the fraud investigators around the nation. It's the only professional organization that has a certification accreditation for welfare fraud investigators. They gave us a sneak peek at it and showed that, at a minimum, you're looking at $3.85 is the true cost of fraud for every dollar spent. Now take into consideration that it does include the $1.00 that's there, right? OK, so $2.85 in addition to the $1.00 of fraud. That's a problem. But if the benefits are all paid by the feds, the states have no incentive to protect the federal money. And hence that the recovery in the state retained share that is given by the feds to the states is supposed to give them an incentive to administer the program accurately. But it's not stopping it. And if you look at $3.85 across the nation, you're looking at just breaking it down to states, that's over 22.7, 22.8 billion of it is going to be the expense to the states because they're not stopping federal dollars. And to the feds, it's anywhere between 38.7 and 40.3 billion that's going out the door. Not including the payment accuracy rates. The issues that are around that program just require some oversight and some accountability. The public has lost confidence in SNAP. I mean, it's a joke. Go on to YouTube and you can listen to songs, poems, rap, anything that you want. They celebrate how easy it is for them to defraud the system. United Council on Welfare Fraud sent in some FOIAs to get some information. Earlier this year, there was a request to see, OK, how many people have high balances? We've heard, and we've seen, we know about stories where people have $25,000 in their EBT account for SNAP. Well, I've never passed up a meal if I can get one in my house and it shows. I would love to have an IRA account that had $25,000 in emergency funds that I could use to go buy some food. There were over 43,000 households that had over $5000. Their benefits never went below 5000, and that’s only on the ones that use their balances. The responses didn't include the 10, 12, a million people that didn't spend any of the benefits. And they provided an interesting perspective too, that there was over 5,000, I think it was 5,200, 5,258, that their balance never went below $10,000. Now the controls are not there and that's part of the issue.

Dawn: To dovetail on what Andy just said there, it's important when we think back when food stamps were created, it was created to prevent involuntary hunger, and then later it became the Supplemental Nutrition Assistance Program. And you know, it's still a very, very important program. Even as we testified in front of the House, we can't say that we're the most powerful country in the world if our citizens are hungry. You can't understate how important SNAP is. But why on Earth, if the program is there to prevent unvoluntary hunger, can somebody have a $10,000 balance on there. What are they doing with that money? Because it's to buy food for people who can't afford to buy it for themselves. So how do you accumulate $10,000 on an EBT card if you're hungry? It just doesn't make any sense.

Andy: Hey Larry, have you heard of a guy named Brett Johnson?

Larry: I have not.

Andy: He is sort of the godfather of Internet crime. He was one of the FBI's most wanted. He was utilizing the dark web to commit all kinds of crime. He now is out, he's been reformed and he now works for good. Sort of like Frank Abagnale, right? And he had on his YouTube, episode #57, that will stick with me. 57, Heinz 57. He's talking about, in that episode on YouTube, about the secret sauce. And he shows actually, in real time, and you’ve got to fast forward to it, like maybe to the 25, 30 minute mark on this episode. But he goes on to the dark web, buys using, I think it was $141 of Bitcoin, the secret sauce to the state of Massachusetts. And then he shows what he just paid for. And now, as a lifelong fraud fighter, I get cringe worthy I’m like, oh, good grief, you're giving out, you know, how to defeat all the systems. But listen, it's already out there, folks. I mean, take the blinders off here. He goes through screen by screen of the Massachusetts SNAP application, using the secret sauce, on this is how you fill it out to get the benefits. You'll get approved every single time, and it's identity fraud and it's passing all their checks. That stuff is out there. It's not hard and it's happening at scale. There's all kinds of hearings about improper payments. Well, newsflash, that didn't come out of COVID. The first GAO report on improper payments was in 2001. What are we doing about it 22 years later? This Farm Bill has got to address it. We've got to, as a country, especially to protect this program. It's such a good program, but it's not run right.

Larry: How much does this change if all of a sudden, the feds turn around and say, hey, we're going to let the states keep a small percent of those funds that you've been able to pull back that are tied to fraudulent payments? And we're going to let you use these towards programs to stop this?

Dawn: I don't know that it's going to be, it's not going to be magic. There's not a magic wand to take care of it. There's so many different types of fraud, it wouldn't be a magic wand, but what it will do is give the states access to resources and personnel. So like right now there are the private companies that offer identity verification, but they come with a cost. And as Andy said earlier, states just aren't that interested in spending a lot of state money to protect federal money. But this would provide that source of revenue to allow states to purchase technology that could help with the identity verification at the very front end, stop the benefits from going out the door. So all of the schemes that Andy just described, we would be able to at least make a dent in that. Well, much more than a dent because we would know that Dawn Royal would not be, she lives in Wyoming, there's no way that she would be receiving SNAP in Massachusetts, so we're going to have to raise a red flag on this. And of course, the technology is available that states could use that, but it's expensive. So that's one thing. And then just more people, more bodies. You know, data analytics are fantastic, but you have to have somebody to read the data and then you have to have somebody to act on it. And so, you know, right now that's been one thing that FNS has talked about before. It's like, well, you could go out and you could prevent fraud by just looking at EBT usage data. Well, yeah, you could, but you have to have somebody to do that. In my state, we don't have enough people to keep up with the fraud that finds us. We certainly don't have the staff to go looking for it. So that increased revenue, again, it would give us access to technology and more personnel.

Andy: That is such a huge point. So there's three different classifications of an improper payment or benefit recovery claim that has to go to get to claw back the money from the individuals responsible, or sometimes agencies. You have an intentional program violation. That is a type of fraud that has been determined by a Criminal Court or an administrative disqualification hearing, or they have signed a consent disqualification agreement that this is officially considered fraud.

That's an IPV, and that's the IPV rate of that 35% right now that we're hoping will go up to 50, with a caveat that it is being spent by the states for fraud prevention. I don't want to use the word program integrity because that word has been redefined to just only be talking about quality control, payment error rates, which also still require self-attestation and client statements. You know, you can verify it, but because they said so, so the client is right all the time. The problem with the other forms where you have an agency error, you know, an agency made the mistake and gave somebody benefits that they were not entitled to. The states don't get to keep any of that money, and they shouldn't for messing up, right? But it creates a burden on these people who suddenly have to pay back money that they were using to buy food. They can't make it magically appear, and maybe they weren't eligible for the full amount, but they still now are getting a reduced amount because they're going to reduce their EBT allotment each month to pay off that overpayment that the state screwed up. And that's wrong, that sucks. The biggest area, to Dawn's point, is the inadvertent household error and by definition, it's an inadvertent … it's a mistake, it's an honest mistake. The client didn't understand the question and there are people that fall into that category and that's very much a valid name for it. But the majority of inadvertent household errors, and when I say majority, personally from my experience on this, it's anywhere from 90 to 95% of all IAGs are fraud that never went through a hearing or a Criminal Court. I mean, the criminal courts don't have the capacity to deal with welfare fraud, nor the interest, there's tons more important crimes like murder, right? So an inadvertent household error, the retention rates only 20%, and there's no penalties for the people who have intentionally defrauded the government for SNAP benefits here. They just didn't get caught. So there's no incentive or accountability on the recipients here, and during my years overseeing my state, we only had the staffing and the manpower to get to about 50% of fraud referrals. So when we talk about those fraud rates and they say, well, well, it's really a low fraud rate, it's because they're not counting the people that you didn't have manpower or tools to go and look at. I mean, if you want to get rid of fraud in the SNAP program altogether, get rid of all the fraud investigators. You'll never have fraud in it because you won't be looking for it, right? That's a problem. Right now the definition by regulations is that every state's got to have at least one.

Larry: One (laughs).

Andy: One, right? There was a report by the GAO, back in, I think it was 2014 that showed it. I think Maine had one of the best ratios because at the time their, I think Governor LePage, was there, very conservative. They were working on a lot of welfare reform, and they actually staffed a front end fraud prevention detection investigations unit to combat that. But then you look at other States and I think Florida, there was one investigator for every 57,000 households, that are on benefits. You just don't have the manpower to do that. And now if I could wave a magic wand, I'd take that 87,000 investigators that are going to the IRS and send those over to work on welfare fraud. Because guess what? The return on the investment is going to be higher. In terms of not exposing additional IRS fraud, just stop all the improper payments that are going on in all the social service nets. And I know Dawn's waiting to probably chime in, I can almost hear her kicking me under the table. The issue isn't just SNAP, because through other programs, rules and policy options that states use to help, and I'm using that in quotes, administer the program, you end up with rules like broad based categorical eligibility where they don't have to test the assets, they don't have to test the income. They don't consider these things, and if the Social Security Agency gave SSI benefits, well than they’re automatically eligible for Medicaid, and then you're going to be automatically eligible for [unknown], well, guess what? SSI, they take client statements. If you say you’ve got less than $400.00, they're going to take your word for it. And now you're going to be on three programs, and maybe let's add in TANF, cash welfare. So the accountability that is out there, and if you got 20% of the country that is on SNAP, it's a perfect opportunity to put protections in place at the front end, address the staffing, address the front end, and address the inadvertent household error problem. 

Larry: Dawn, you look like you want to chime in here.

Dawn: One of our frustrations and one of the things that we have actively promoted for years and years, is the acknowledgement that fraud exists. So, you know, the old thing of until you admit there's a problem, you can't really work on this solution. And we've really struggled with that. To this day FNS clings to their talking point, I don't know what else to call it, their gaslighting, that fraud occurs in less than 1% of the program in SNAP. And that's just absurd. So, we again as an organization, we have always said it's much higher, and they said well how do you know that? Well, because we're in the trenches, we know that. And they're like, well, yeah, but where's your data? And as Andy brought up earlier, we can't quantify the cases that we don't have time to investigate. So you have an allegation, and it just sits back there, it gets stale, we don't do anything with it.

Larry: Sure, if you don't have anyone to investigate it, then it doesn't exist.

Dawn: Right. So that has bled down. FNS hasn't admitted that there's fraud in the programs, and so the states look to FNS, and they go well, hey, FNS is telling us there isn't fraud in the program and so there must not be fraud in the program. And I don't know, it's almost as if, if you identify fraud in SNAP that somehow that weakens SNAP, and it doesn't. Andy’s probably going to roll his eyes here, but I always talk about bank robbery, and he's heard this so many times he's like, no, not the bank robbery story.

Andy: Oh, I love it, great analogy.

Dawn: But, as a society, we understand bank robbery is bad. Somebody walks into a bank, and they take money that doesn't belong to them. Society says you can't do that. Even if your bank robber says, but I was only stealing money to feed my children. We feel bad about that, but the bank robber still goes to jail. And we find bank robbers and we send them to jail. And then the bank stays strong. But somebody walks into a different building, it's called Health and Human Services, and they steal money that doesn't belong to them, we'll call it SNAP. And then they say oh, but we were just doing it to feed their children and people go well, they were just trying to feed their kids. And so it's still theft, it's still stealing, but when you find the person who has committed fraud in SNAP, that makes SNAP stronger. It doesn't make it weaker. I mean, the disconnect and the thinking there just it can't possibly connect the two. Theft is bad. I will say FNS will say the word fraud now, they have their fraud framework. They do say the word fraud, but as Andy was saying earlier, you know they've called it program integrity for as long as I can remember. And they continue to call it program integrity, and then they still don't want to talk about the fraud component of it. But that is at the state level too, it's not just the feds, because the states look to the feds and then that's where they get their information. And so there's the federal reason, there's the state reason, I mean, all of the local reasons of like, hey, we don't want to spend a lot of money because there's not that much fraud anyway. And it's just a false belief, it's an absolute false belief.

Larry: Well, I think I shared the story with both of you that I met with one of the state Commissioners for SNAP and explained that we could probably resolve about $100 million worth of SNAP in his state in a year. And he said, why would I do that? It's federal money. It's coming to us and it's free and it gets spent in my state regardless of whether it goes to the legitimate party or the fraudster. So on that note, I think we've covered the topic pretty well. Is there anything else that you want to add?

Andy: Boy, this is just scratching the surface of the issue. I think that this is not complaining, it's not whinging, and it's not, you know, over dramatizing any issue here, but this Farm Bill is critical this year. We've already heard, we've already been warned. We've been told, and we've heard that this is not going to be a year of reform in the Farm Bill and appropriations. Well, we've got to do something about it, we've got to address it. It starts with getting, you know, trusting but verifying. Let's get the identity situation, the income situation, the asset situation, the residential situation. Trust but verify it, for crying out loud and, mandate that states put an effort into protecting it at the front end. To your point, the Farm Bill’s got to address that this year.

Larry: Now, I think what you've both been able to do is to shine a light on the challenges and we just have to push forward and make the program better. Because it'll improve it for all the SNAP beneficiaries as well as the tax paying citizen. And that's what we really need to do.

Andy: Dawn want to give him a website and LinkedIn references to go to UCOF? 

Dawn: Yeah, UCOF has a shiny new website, so it’s UCOF.net, and there's a lot of great information on there. Also a great way to connect with us, you can reach out directly to the organization and then we can definitely respond to that.We are also posting, just really good information on there. If you just want, without talking to somebody, you just want to find out the nuts and bolts of what we've been talking about. There's just really great information that's on there. As Andy was saying, we do have a presence on LinkedIn, Facebook also, and just trying to keep taxpayers aware of what's happening out there, never losing, you know, taking your eye off the ball of the fact that this is a taxpayer funded program. So, you know, while we've spent the last several minutes talking about federal dollars versus state dollars and all these different things, the states and the feds get their money from the same place, which is our pockets. And we definitely need to protect the taxpayers.

Larry: Alright, well, that's wraps up our presentation on SNAP. Andy, Dawn, I'm going to ask you to come back, and we'll have a follow on to get into more of the details, probably down the road sometime and I'd like to thank you both for your time.

Dawn: Thank you.

Andy: Absolutely, thank you for having us.

Narrator: Thank you for listening to this episode of the FraudKast. If you're interested in learning more, head over to our website at FraudKast.com for more episodes, transcripts and social media links. And remember that's FraudKast with a “K”, not a “C”. And to stay current on what's occurring in the world of fraud, be sure to check out Fraudoftheday.com.