Unfair welfare: Investigation reveals overpayments and biggest thieves

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Hundreds of thousands of people across Hawaii get some form of public welfare assistance, from food to housing to medical and more. While it helps most get a fair shot, some take far more than their fair share, and getting it back isn’t easy.

Lots of people pay for their family’s food on EBT cards, the 21st-century form of food stamps.

“Especially in Chinatown you’re looking at 35-40% of what we sell,” said Paul Min, owner of You Market #2. “The time’s getting hard, people need to get help.”

Welfare rolls are growing in the double-digits. Benefit offices are packed.

“Really busy, really busy,” said Wendell Gaui, a beneficiary waiting in a long line at one of the Department of Human Services offices. “It’s hard.”

“We are still not seeing a leveling out in general assistance, TANF beneficiaries, etc.” DHS Director Pat McManaman explained. “So the poorest of the poor are not yet benefiting from the economic successes in the state of Hawaii.”

In a time when so many need a hand-up, some are biting the hand that feeds.

“You would expect that as the program grows, the fraud is going to grow,” said Christopher Young, a deputy supervisor in the Attorney General’s criminal division, “like any other services given out by the government.”

So we took a look, and look how much we found in welfare overpayments: $48.4 million.

“It is significant,” McManaman said, “and I don’t think there’s any disagreement the state of Hawaii, the Department of Human Services, needs to do better.”

But now to get it back? Some pay right away, others have wages garnished, or even lose out on their tax refund. DHS has tightened up the amount of time it takes for disputed matters to get through the departmental administrative hearing process, cutting back on the duration of overpayments in those situations.

In the most extreme cases. Though, the state has to takes them to court. Felony theft charges get filed, and judgments just in the past year have been doled out for everywhere from $12,000 to $111,000.

More are currently pending. Pending cases include Diane Gorospe (also known as Diane Leong), a state welfare eligibility worker who allegedly racked up $27,000 in benefits for herself that DHS and the Attorney General allege she wasn’t eligible for. She has since quit.

No response from her, and her attorney declined to comment.

“When the suspect is one of your own so to speak,” KHON2 asked the DHS director, “how does that feel?”

“It never makes me feel good any time we have a situation of fraud,” McManaman said. “I think particularly when it’s a member of our own staff alleged, it is a betrayal of the public trust.”

So just how do overpayments get so big in the first place before somebody catches on?

“A lot of times we don’t discover these frauds unless somebody reports them,” Young said. “Someone says she has 6 kids in the home, who is going to go out and check that those 6 kids are actually there? Normally unless somebody complains or you get a disgruntled spouse, we’re never going to find out.”

Especially when the ranks of DHS investigators were decimated.

“During the recession we lost 16 positions in our investigation staff,” McManaman said. “During the last 2 years we’ve seen a restoration of 8 of those positions.”

“So what we saved in personnel costs, have we by now lost that much or more in fraud?” KHON2 asked the AG deputy.

It was a number they haven’t quantified, but responded: “Our perspective is the more you put toward enforcement,” Young said. “The more sound we can make the program, the more we can get the money to the people that should be getting the money.”

So will those with the purse-strings give DHS what it needs to catch a thief?

“How soon can DHS expect to get their positions back from you?” KHON2 asked House Vice Speaker John Mizuno, himself a former DHS worker and a frequent leader on Human Services issues.

“It would have to be next year,” Mizuno said, “because we’re closing up the budget we’ve accounted for all the positions.”

“So will you pledge to make it a priority next year?” KHON2 asked him.

“Absolutely it has to be,” Mizuno said, “Nearly $50 million is just too much.” What would it cost the state, a half million dollars, even a million dollars, for new employment positions in the investigations office? That’s an investment that’s well worth it.”

Worth it, yet not the only fix-it, because catching and convicting them is just the start.

In the past few years, nearly $2 million due back to DHS has been written off or waivered.

“Some of it at the end of the day quite frankly will be uncollectable,” McManaman said.

Others cases – even the criminal ones — are being paid back so slowly it barely makes a dent.

“The law says you can only order what the person can pay, so we end up with people stealing $50,000 who are ordered to pay $10 a month,” Young said, “Which means they’ll never pay off the full restitution ordered.”

“If we have to we can up the ceiling, and that’s something we should consider doing,” Mizuno said.

Mizuno is already getting started. Monday he gave KHON2 a draft of two bills ready to submit in the next legislative session. One would pay for more DHS investigators, and the other would get money back more quickly from those who owe.

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