Fed pen­sion thieves of­ten get away with it

The Washington Times Weekly - - Politics - BY JIM MCELHATTON

It took about eight years af­ter the death of a spouse of a fed­eral em­ployee in West Vir­ginia be­fore the U.S. Of­fice of Per­son­nel Man­age­ment stopped send­ing her re­tire­ment checks. By then, the dead woman had re­ceived more than $200,000.

Fed­eral in­ves­ti­ga­tors traced the miss­ing funds to a pair of sus­pects, but no­body was charged with theft. The U.S. At­tor­ney’s Of­fice for the South­ern District of West Vir­ginia de­clined to pros­e­cute the case less than two weeks be­fore the five-year statute of lim­i­ta­tions ex­pired.

The case il­lus­trates how re­tire­ment theft cases in­volv­ing pay­outs to dead fed­eral em­ploy­ees can go un­charged for var­ied rea­sons be­yond just how much money was lost.

Records ob­tained through the Free­dom of In­for­ma­tion Act show that from April 1, 2010, to March 31, 2011, the Jus­tice Depart­ment de­clined to file crim­i­nal charges in two dozen cases in which re­tire­ment ben­e­fits were paid out to dead ben­e­fi­cia­ries then spent by some­one else. Dur­ing the same pe­riod, pros­e­cu­tors filed crim­i­nal charges or won con­vic­tions in 40 such cases, not in­clud­ing two oth­ers in which charges were dropped.

In sev­eral of the cases turned down for pros­e­cu­tion, in­clud­ing six-fig­ure thefts, sub­jects ad­mit­ted spend­ing the money but told in­ves­ti­ga­tors that they didn’t know they weren’t en­ti­tled to the funds. Pros­e­cu­tors say fil­ing charges is more com­pli­cated than just prov­ing the money is miss­ing. They also have to show that the per­son who spent the money knew they were com­mit­ting a crime.

“The Jus­tice Depart­ment eval­u­ates tens of thou­sands of cases for pros­e­cu­tion an­nu­ally, based on the ev­i­dence gath­ered,” spokes­woman Jessica Smith said. “The depart­ment takes very se­ri­ously fraud and the theft of gov­ern­ment funds, as ev­i­denced by the suc­cess­ful pros­e­cu­tion of cases where there was suf­fi­cient ev­i­dence and crim­i­nal in­tent.”

Bennett Ger­sh­man, a for­mer fed­eral pros­e­cu­tor and law pro­fes­sor at Pace Univer­sity, said a host of fac­tors come into con­sid­er­a­tion when de­cid­ing whether to file charges in any case.

“The key fac­tor is, ‘Do you have a prov­able case?’ ” he said. “Then the ques­tion might be in terms of re­sources: How much time and ex­pense and man­power is it go­ing to take?

“They don’t have the man­power to take ev­ery case. It’s about pol­icy choices. You can’t pros­e­cute ev­ery case. You can’t pros­e­cute most cases. So you have to make choices to pros­e­cute wisely,” Mr. Ger­sh­man said.

In the West Vir­ginia re­tire­ment fraud case, in­ves­ti­ga­tors with the in­spec­tor gen­eral for the Of­fice of Per­son­nel Man­age­ment (OPM) seemed con­vinced there was fraud­u­lent ac­tiv­ity.

“Though there is likely evi- dence that [the sus­pects] fraud­u­lently con­verted these funds to their own per­sonal use, based on the de­cli­na­tions to pros­e­cute by the United States At­tor­ney’s Of­fice, this case is closed,” in­ves­ti­ga­tors wrote in a memo de­scrib­ing the case. The names of the sus­pects were redacted in memos ob­tained through an open records re­quest.

R. Booth Good­win II, U.S. at­tor­ney for the South­ern District of West Vir­ginia, whose of­fice turned down the case, said prose­cut­ing the theft of gov­ern­ment ben­e­fits is a top pri­or­ity for his of­fice. He cited at least nine re­cent ceased ben­e­fit re­cip­i­ent.”

The re­tire­ment fraud cases re­viewed by The Wash­ing­ton Times were in­ves­ti­gated by OPM’s of­fice of in­spec­tor gen­eral, which in turn pre­sented the find­ings to U.S. at­tor­ney of­fices across the coun­try for pos­si­ble crim­i­nal charges.

In an­other case in Mi­ami, pros­e­cu­tors de­clined to press charges for the theft of $188,171 in re­tire­ment ben­e­fits. In­ves­ti­ga­tors had traced the miss­ing money to a woman who told them she didn’t know she wasn’t en­ti­tled to the funds and of­fered to re­pay the money.

Records ob­tained through the Free­dom of In­for­ma­tion Act show that from April 1, 2010, to March 31, 2011, the Jus­tice Depart­ment de­clined to file crim­i­nal charges in two dozen cases in which re­tire­ment ben­e­fits were paid out to dead ben­e­fi­cia­ries then spent by some­one else. Dur­ing the same pe­riod, pros­e­cu­tors filed crim­i­nal charges or won con­vic­tions in 40 such cases, not in­clud­ing two oth­ers in which charges were dropped.

pros­e­cu­tions that his of­fice filed against peo­ple who stole ben­e­fits.

“Be­cause these are im­por­tant cases to us, we have pros­e­cuted most ev­ery case where we be­lieve we can prove each of the el­e­ments of the crime be­yond a rea­son­able doubt,” he said.

“Of­ten, the most dif­fi­cult el­e­ment to prove is crim­i­nal in­tent,” he said. “For in­stance, we could likely prove crim­i­nal in­tent where the in­di­vid­ual made false state­ments to the agency in­volved to keep the ben­e­fits com­ing when such ben­e­fits should have ceased or an in­di­vid­ual kept cash­ing checks made out to a de-

In­ves­ti­ga­tors pre­sented the case for pros­e­cu­tion to the U.S. at­tor­ney’s of­fice in Mi­ami. The case was “lost in the shuf­fle of pa­per­work” at the of­fice be­fore be­ing trans­ferred to a pros­e­cu­tor who turned it down based on “a lack of prov­able in­tent,” records show.

An­other pros­e­cu­tor later ex­pressed in­ter­est in the case but never for­mally ac­cepted it. The case was trans­ferred to yet an­other as­sis­tant U.S. at­tor­ney, but the in­ves­ti­ga­tor couldn’t reach that pros­e­cu­tor de­spite sev­eral at­tempts, records show. The case even­tu­ally reached the statute of lim­i­ta­tions and was closed. Offi- cials de­clined to com­ment on the de­ci­sion.

In a pre­vi­ous in­ter­view, Michelle Sch­mitz, as­sis­tant OPM in­spec­tor gen­eral for in­ves­ti­ga­tions, said of­fi­cials try to pre­vent the statute of lim­i­ta­tions from af­fect­ing cases. The statute pro­vides five years to bring charges af­ter dis­cov­ery of the fraud.

“There are many rea­sons why the statute of lim­i­ta­tions may run out on a case,” she said. “One must re­mem­ber that mul­ti­ple agen­cies and of­fices are in­volved in these re­tire­ment fraud cases.”

She said OPM ad­min­is­ters the re­tire­ment pro­gram and refers sus­pi­cious cases to the in­spec­tor gen­eral for in­ves­ti­ga­tion, then both agen­cies co­or­di­nate with the Trea­sury Depart­ment to stop fraud­u­lent pay­ments and re­coup money. The Jus­tice Depart­ment ul­ti­mately de­cides whether to file crim­i­nal charges.

“A back­log or un­ex­pected prob­lem in any of these of­fices can af­fect a case´s over­all time­line,” she said.

In a re­cent case in Wash­ing­ton, authorities an­nounced a guilty plea by Thomas F. Desanto, 58, of Hern­don, Va., who faces up to 18 months in prison un­der fed­eral guide­lines when he is sen­tenced next month.

In­ves­ti­ga­tors in that case found sev­eral in­stances in which they say Desanto sought to con­vince the gov­ern­ment that his fa­ther, a for­mer fed­eral em­ployee, was still alive. Desanto’s fa­ther died in 1991, but Desanto col­lected a to­tal of $134,639 in his fa­ther’s re­tire­ment ben­e­fits un­til April 2006.

Pros­e­cu­tors say the pay­ments con­tin­ued so long, in part, be­cause Desanto forged his fa­ther’s name on ad­dress ver­i­fi­ca­tion forms and used a phony driver’s li­cense to open a joint bank ac­count.

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