Saturday, July 25, 2009

18 charged with stealing $500,000 in LIHEAP funds

The arrest 18 people in Philadelphia who were ripping off a public assistance program of more than half a million dollars emphasizes the need for legislation that would eliminate the potential for fraud and abuse in the Low Income Home Energy Assistance Program.

The Philadelphia’s District Attorney’s office, which is prosecuting the case, pointed to poor administration and a failure of supervision and oversight over the Low-Income Home Energy Assistance Program, which provides grants to help low-income residents meet their heating bills.

Grants were awarded to people who used invalid Social Security numbers and fake addresses – meaning that tax dollars were stolen by people who were not eligible for benefits.

The arrests of twelve Department of Public Welfare (DPW) employees on fraud charges was just the latest in a series of embarrassing revelations regarding lax oversight by the department leading to cases of fraud and wasted tax dollars.

Auditor General Jack Wagner has urged the Department of Public Welfare to immediately implement all of the recommendations he made two years ago to eliminate the potential for fraud and abuse in the Low Income Home Energy Assistance Program.

Wagner renewed his call one day after the Philadelphia district attorney, relying in part on information uncovered by the Department of the Auditor General, charged 18 people – including 16 state and city employees – with stealing more than $500,000 of LIHEAP funds and related crimes.

The Department of Public Welfare, which administers the LIHEAP program, has refused to provide Wagner’s auditors with documentation to prove that it had implemented the Department of the Auditor General’s recommendations.

LIHEAP is a vital safety net that helps keep thousands of Pennsylvania families warm during the winter.

With the nation mired in its greatest recession in a generation, LIHEAP is more valuable than ever. DPW must prove that it has taken necessary action to fix LIHEAP, to assure needy families that funds will be available this winter, and to assure taxpayers that their hard-earned dollars are not being wasted or stolen.

LIHEAP provides financial grants and cash assistance to low-income families to help pay their winter heating bills. The federal government and Pennsylvania provided $280 million in LIHEAP funding for the 2008-09 winter heating season.

Wagner’s special performance audit, released in June 2007, made 25 recommendations after auditors found systemic weaknesses in LIHEAP programs in six counties -- Allegheny, Lancaster, Perry, Lehigh, Philadelphia and York.

Auditors determined DPW’s inadequate policies and procedures, insufficient supervision and inadequate oversight resulted in potential applicant and employee fraud and abuse. More than 1,000 cases of potential fraud and abuse were identified in the six counties, including more than 300 in Philadelphia County, 23 of which were cited specifically in the audit.

Auditors found applications containing invalid Social Security numbers or Social Security numbers of deceased people, as well as applicants filing multiple applications using different Social Security numbers or different addresses and applicants receiving excessive benefits.

Wagner referred over 900 LIHEAP applications to the Office of Inspector General for criminal investigation; OIG referred some of these cases to the Philadelphia district attorney.

At a press conference announcing the results of her investigation, Abraham said that the way LIHEAP was administered “practically assured that both fraud and theft would flourish. There was a total failure of supervision and oversight.”

The Department of the Auditor General contacted DPW in July 2008 to conduct a follow-up of the LIHEAP audit. Wagner said his auditors requested a written, detailed summary explaining the status of DPW's efforts in implementing each of the recommendations. DPW sent a letter responding to the request, but has failed to provide specific information on how it has addressed each of the 25 recommendations.

Every dollar wasted is a dollar that will not be available to families who need assistance. There are serious deficiencies in the administration of LIHEAP and the Department of Public Welfare must provide evidence that they are addressing the problems as soon as possible.

The LIHEAP special performance audit is available to the public at

In addition, known as the Home Energy Assistance in Time of Need, or HEAT ON Act, Senate Bill 352 suggested needed changes to maximize the benefits for eligible low-income households and ensure that funding is allocated in a timely and expedited fashion.

SB 352 suggested additional oversight that Auditor General Wagner deemed to be needed under the current system and directs the Department of Public Welfare to take appropriate actions if it discovers any false, misleading or inaccurate statements by applicants, participating energy vendors or state employees.

The legislation suggested several accountability provisions to ensure that funding goes to those most in need. Specifically, the bill provided provision:

•Expand the LIHEAP program year from October 1 through April 30 of the following year. The current plan began on November 5, 2007 and closed on March 21, 2008 for both the cash and crisis components;

•Require the Department of Public Welfare to verify a LIHEAP applicant's income with the Department of Revenue;

•Require the Department of Public Welfare to ensure all households receiving assistance are provided "budget billing" by their energy suppliers;

•Prohibit the Department of Welfare from discriminating in any aspect of the administration of the LIHEAP program on the basis of the heating fuel used; and,

•Require an annual audit of the LIHEAP program.