Food stamp fraud in Florida rarely prosecuted despite high cost to taxpayers

Last year in Florida, $12 million in taxpayer money was lost to food stamp fraud.

As the state struggles to fight fraud with only 49 investigators, Action News Jax uncovered most people who are caught are never prosecuted for the crime.

Across the state, more than 3 million people rely on food stamps, including 168,000 people in Jacksonville.

"We've seen a decline in fraud. It’s not as dramatic as we'd like," Jack Heacock, director of Florida's Division of Public Assistance Fraud, said.

Each year, the state receives 22,000 to 24,000 reports of fraud.

DOCUMENTS:

Through April of this year, Heacock said his team of 49 investigators uncovered more than $4 million in food stamp fraud. The majority of cases involved people who lied to get benefits, or those who illegally sold or traded their benefits.

"Let’s say, for example, you come into a store and traffic $100. You'll get $50, and the merchants get $100,” Heacock said.

In June, Leroy Robinson was found guilty of wire fraud in federal court. Prosecutors said he used a local seafood business to collect bogus food stamp reimbursements, which he traded for cocaine.

The cost to taxpayers was more than $1 million.

Robinson’s case is one of only a few that make it to trial.

Documents from State Attorney Melissa Nelson’s office show in 2016, 145 public assistance fraud cases were opened in Duval County, but only six led to convictions.

The vast majority --142 -- were sent to a diversion program. Out of 196 opened cases in 2015, 43 led to convictions and 187 cases were referred to diversion.

Action News Jax spoke with a woman in one of those cases. The local mother of three asked we protect her identity.

"I saw it and in my desperate need, came out and I took it,” she said.

The woman was caught using someone else’s food stamps. Although grateful for having avoided formal charges, she said she lost her job and is on the verge of being evicted.

"I regret it because I'm paying for it now," she said. "We can barely eat now. I don't have a car now. And I got a really bad job that's barely helping us, barely. And it just wasn't worth it."

"We're not dealing with monopoly money," Assistant State Attorney Cyrus Zomorodian said. "This is taxpayer money that we'd like to get back for the public good."

Zomorodian told Action News Jax each case is handled differently.

The decision to send a defendant to the diversion program depends on several factors, including criminal history and the amount of public money that was taken.

"We have violent crime in our community. We have burglaries, arsons, robberies. And we also have theft and fraud,” Zomorodian said. “So we have to divide our resources the best way we know how."

Zomorodian said the conviction rates may actually be higher because some cases may involve charges that were upgraded.

According to officials with the Florida Department of Children and Families, 93 percent of food assistant applications are made online.

In 2013, the agency began using a new customer verification program to help combat fraud. We learned 8 to 11 percent of applicants opt out of the verification process.

Of those, about 75 to 83 percent are approved with manual identity verification. DCF officials tell Action News Jax that since the program went online, it has saved taxpayers more than $660 million.

DCF sent Action News Jax the following information:

About 93 percent of all Florida food assistance applications are received electronically. DCF obtained a federal waiver in 2012 to implement an automated identity verification solution. The Customer Authentication/Identity Verification tool was implemented in a partnership with our vendor statewide in August 2013. This tool leverages technology that has been used in the financial sector for years, presenting several questions that only the actual person should be able to answer. The tool also returns data checks to ensure the applicant is not incarcerated or deceased.

Authentication confirms that the person who completed the application (and whose identity verification—such as a driver’s license, ID card or other form of identification-- may already be on file in the case record) is the same individual. While completing the web application, the individual comes to a screen that provides information about the authentication process, that they can either complete or not (opt out). If the applicant opts out, DCF must make contact to complete a verbal authentication by asking specific questions only the true individual would know the answers to. If they choose not to do so, or are unable to answer the questions, then they are required to go to a service center and have a face-to-face authentication with a member of our staff.

Since 2015, the monthly average of applicants that choose to opt out from Customer Authentication oscillates between 8 and 11 percent. Approximately 75-83 percent of the applicants who opt-out from answering the automated customer authentication questions are approved after the applicant has been manually identified and their eligibility for benefits has been determined.

The approximate Customer Authentication cost avoidance is as follows (rounded to millions):

FY 2013-14* $222 million
FY 2014-15 $237 million
FY 2015-16 $210 million
FY 2016-17** $89 million

*Customer authentication was implemented statewide in August 2013.
**July-December 2016.

Total cost avoidance savings (federal and state taxpayer funds not issued improperly due to fraud/potential fraud) for all benefit programs since implementation through SFY 2015/16 (2013 through July 2016) is $669.1M, a 670:1 return on investment.