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Erik Burgess, Published February 17 2014

Clay prosecutors increasingly seek restitution instead of jail time for welfare cheats

MOORHEAD – Many of those who cheat the welfare system in Clay County are avoiding the gavel, as county prosecutors here increasingly turn to methods of recouping money that don’t end in a criminal conviction.

Social Services referred 71 welfare fraud cases to the Clay County attorney last year, but only 12 ended in convictions. Seven were handled out of court entirely with an Administrative Disqualification Hearing (ADH).

In 2012, 46 referrals were made to the county prosecutor, with only two criminal convictions and eight cases being settled through an ADH. In 2011, 31 referrals netted only seven convictions and two ADHs.

A small number of cases may have been wholly dismissed, but it’s likely the rest were handled through agreements in which those accused of welfare fraud were able to avoid a conviction in exchange for simply paying back what they owe, said Assistant Clay County Attorney Jenny Samarzja.

Samarzja said she didn’t know how many times it’s happened, nor does she know how much money the county has recouped due to these agreements.

“I know it does happen quite often, and I believe that is truly why the numbers seem so skewed,” Samarzja said, referring to the county’s conviction number in these cases.

Sandy Thorne is Clay County’s collections services supervisor. She oversees fraud investigations and would like the state to start tracking data on such agreements. But Thorne also said the ultimate goal is that the money is repaid.

“If someone has gotten the money in error, it needs to be repaid,” she said. “If that’s happening, and it’s happening without a criminal conviction, that’s OK.”

Avoiding conviction

Clay County has two welfare fraud investigators who receive tips, usually from financial workers, if welfare recipients are suspected of fraud.

There were 562 such referrals in 2013, and the county says those referrals stopped $451,191 from being distributed erroneously.

There were 403 referrals to investigators in 2012, 415 in 2011 and 333 in 2010, according to a presentation given by Social Services to the Clay County commissioners last week.

If the investigator substantiates the fraud, the recipient could be asked to sign an Intentional Program Violation (IPV) through an ADH.

A first-time violation via an IPV means a loss of benefits for a year. A second offense means no benefits for two years. A third violation is a lifetime ban.

But if someone is suspected of welfare fraud in an amount greater than $500, their case can be forwarded to the county attorney for possible criminal prosecution. In Minnesota, fraud in the amount of $500 to $999 is a gross misdemeanor, and more than $1,000 is a felony.

In some cases, the county attorney can send the case back and suggest an IPV be used instead of criminal charges.

But once criminal charges are filed, those accused of welfare fraud can avoid pleading guilty by agreeing with the county attorney to immediately pay back their overpayments in full, Samarzja said.

The defendant can agree to immediately pay the overages in full, and then the charges would be dismissed, she said.

In a second scenario, the court finds that there are facts that would support a conviction, but the court continues the case, usually for six months, on the condition that the defendant pay the overages back in full over that time.

Once the money is repaid, the charges are dismissed. If the payments are never made, the case can be reopened, Samarzja said.

Cass County, on the other hand, doesn’t have any welfare fraud investigators. The Legislature eliminated them statewide during budget cuts in 1999.

That means financial workers have to keep an eye open for possible fraud and then use the IPV process, said Alice Swenson, unit manager for economic assistance at Cass County Social Services.

Cass County Social Services will refer a “very few” cases to the federal inspector general’s office for further investigation, Swenson said.

More cases in Clay

The caseload for most of Clay County’s public assistance programs has increased steadily since 2008.

Supplemental Nutrition Assistance Program, or SNAP, cases have nearly doubled – from 16,910 in 2008 to 33,481 in 2013, according to Social Services data.

The state and federally funded health care assistance program in Clay County has gone from 14,818 cases in 2008 to 18,040 in 2013.

General Assistance, a state cash grant program, has gone from 1,631 cases in 2008 to 2,525 cases last year.

That could be one reason why the county attorney is turning to methods other than criminal convictions to recoup money, Samarzja said.

“Because if you have more cases and you have the same resources, you have to maybe be a little more creative with the way that you utilize those resources,” she said.

But she said the county has also been successful in recouping money without seeking a conviction.

“If we weren’t seeing success with it, I could tell you the patience of the prosecutor would grow thin, and we’d say, ‘Forget it,’ ” she said. “We try every other kind of criminal case, there’s no reason that we wouldn’t try these cases.”

Collection data presented by Social Services last week shows that Clay County has a growing amount of public assistance debt it needs to collect from recipients who received some amount of money in error or because of fraud.

The county was owed $1.3 million in overpaid public assistance in 2012, and that number went up to $1.6 million in 2013.

County commissioners decided last week to look into why the county is having trouble collecting those overpayments.

Samarzja said the county has many methods of collecting overpayments that don’t involve the county attorney’s office.

There are some accused of welfare fraud who wouldn’t be offered a deal to avoid conviction, Samarzja said. It’s a case-by-case determination that depends, in part, on the criminal history of the accused, she said.

“But most of these cases we’re very willing to work with these defendants because, in the long run, we feel it’s going to serve the state best just to get that money back,” Samarzja said.

Clay County welfare fraud criminal referrals:

2013:

- 71 cases referred to county attorney

- 12 convictions

- 7 Administrative Disqualification Hearings (ADH) out of court

2012:

- 46 cases referred

- 2 convictions

- 8 ADHs

2011:

- 31 cases referred

- 7 convictions

-2 ADHs

2010:

- 28 cases referred

- 8 convictions

- 7 ADHs

2009:

- 19 cases referred

- 8 convictions

- 11 ADHs

2008: 24 cases referred

5 convictions

19 ADHs


Readers can reach Forum reporter Erik Burgess at (701) 241-5518