Fraud costs state as much as it recovers

Officials say aggressive strategy on food stamps pays off in the long run.

Georgia officials spend about as much investigating claims of food stamp fraud as they recoup for the state.

In the 2019 fiscal year, Georgia investigators spent more than $7.2 million to look into claims of fraud. Investigators found that $8.4 million in food stamps were wrongly distributed in 2,985 cases. State officials won’t say how much money they’ve recovered — the federal government releases that information — but in previous years it’s been in the neighborhood of 80%.

Maurice Ingram, senior manager with the Georgia Department of Human Services’ Office of the Inspector General, said the office doesn’t only deter

mine its “return on investment” by how many claims are established.

“What we look at is, by doing this work, if we had left the person on the program for X amount of years, how much would it have cost us?” he said.

In 2016, the most recent federal data available, Georgia found 3,851 instances of people intentionally defrauding the state Division of Family and Children Services to receive about $8.7 million from the Supplemental Nutrition Assistance Program — commonly known as food stamps. Those cases of intentional fraud make up 0.2% of the 1.7 million people who received food stamps that year.

Of that, the state recouped about $7.2 million — about 0.2% of the $2.7 billion DFCS distributed in food stamps in 2016. The agency spent almost $8 million investigating instances of fraud that year.

The state classifies food stamp “overpayments” in three ways: administrative error, inadvertent household error (when a recipient unintentionally provides inaccurate information) and intentional program violations — when a recipient either provides false information while applying for SNAP benefits or an individual or business “trafficks” them by trading benefits for something other than food.

Those who steal SNAP benefits are banned from participating in the program for one year for a first offense. There is a two-year ban for a second offense, and a third violation permanently bans a recipient from receiving SNAP benefits.

While most of the money wrongly paid out in 2016 went to those who were intentionally committing fraud, a majority of instances reported — 5,679 of the 11,037 cases — were due to an administrative error by DFCS staff, according to federal data.

Buzz Brockway, the vice

‘it punishes people who have jobs and prevents them from seeking raises because their benefits drop off a cliff when you reach a certain wage. the system has got to be rebuilt and reformed so that it benefits the people that it’s supposed to benefit.’ Buzz Brockway Georgia Center for Opportunity

president of public policy for the think tank Georgia Center for Opportunity, said while the percentage of fraud is relatively low compared with the number of people who receive the benefits, he believes it’s important for the state to investigate and punish those involved.

“You want to try to prevent fraud when you can by putting safeguards in place to make sure the programs are benefiting the people (they were meant to benefit),” said Brockway, a former state House representative.

Ingram said fraud claims are initiated through hotline referrals or internal tracking mechanisms — such as flagging an instance where someone is swiping his or her electronic benefit transfer card multiple times in a short time span, which he said implies someone is using the card to purchase someone’s groceries in return for cash. His office of about 80 employees receives about 5,000 fraud tips each year.

While individuals have been caught gaming the system across the state, Ingram said, instances of trading food stamps for cash or other things that aren’t groceries mostly occur in rural parts of Georgia where there are fewer large grocery stores, which have safeguards to limit fraudulent behavior.

He pointed to Shinholster’s Grocery and Meat Market in Irwinton, where Elbert Eugene Shinholster pleaded guilty in 2011 to $4.6 million in food stamp fraud and money laundering. The Middle Georgia man admitted to swiping customers’ electronic benefit transfer cards as though they were paying for groceries and giving them cash in return, after keeping 30% as a “courtesy charge.”

Cases of fraud tend to drop when the number of people who receive food stamp benefits grows smaller.

According to state numbers, there were 3,892 instances of food stamp fraud in 2015, when about 1.8 million people received benefits. The number of recipients dropped to 1.4 million this year, a decline of 22%. Meanwhile, there have been about 2,985 fraud claims, a decrease of about 23%.

Ingram said as the economy gets better and fewer people receive food stamps, the type of fraud changes.

When the economy is bad, people who qualify to receive food stamps may not provide all the required financial or household information as a way to increase their SNAP benefit, he said. As the economy improves, more fraud cases are committed by those who don’t qualify for food stamps at all.

“So while the number of claims go down, the kinds of investigations you’re doing are producing larger claim amounts,” Ingram said.

Brockway said the larger issue with food stamps is that he believes the system doesn’t work.

“It punishes people who have jobs and prevents them from seeking raises because their benefits drop off a cliff when you reach a certain wage,” he said. “The system has got to be rebuilt and reformed so that it benefits the people that it’s supposed to benefit.”