Maine benefit bartering. Growing form of fraud: EBT cards to buy drugs

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But also in Robinson’s possession that day were six state-issued electronic benefit transfer cards — essentially debit cards loaded with welfare benefits, with some benefits available as cash — from state and federal programs meant to help poor families and children.

Those cards had been reported lost or stolen by their owners 114 times and re-issued by the state, meaning the cards and benefits were most likely being traded for illegal drugs, officials said.

In the synopsis of the federal drug-trafficking case against Robinson filed in U.S. District Court in Portland, prosecutors referred to the EBT cards as “a common currency for drugs.”

Sam Adolphsen, chief operating officer for the Maine Department of Health and Human Services, said the repeated re-issuance of an EBT card is “certainly a red flag.” But currently the state cannot deactivate benefits regardless of how many times recipients lose their cards or say they are stolen.

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Those tasked with investigating drug crimes and welfare fraud in Maine say the two crimes increasingly intersect.

40 cards in 11 months of drug busts

Matt Cashman, a 19-year veteran of the Lewiston Police Department and an investigative supervisor for the Maine Drug Enforcement Agency, told the Legislature’s Health and Human Services Committee in April that in the previous 11 months MDEA agents had seized 40 EBT cards in 25 separate drug enforcement operations.

“From interviews of defendants and others with knowledge of ongoing activity, MDEA has learned that it is common practice for drug dealers to take custody of a drug user’s EBT card either as direct payment or in lieu of immediate payment,” Cashman told the committee. “In those instances where a dealer takes the card in payment, the EBT cardholder will give the dealer their PIN.”

Cashman went on to say that in the instances where a drug dealer takes the card in lieu of payment, once benefits are reloaded to the card they extract their payment and frequently an “interest” fee.

In his testimony, Cashman detailed six specific cases, not including the Robinson case. In most cases, the cards were not issued to the suspects who were holding them, Cashman said.

In one case agents discovered that an incarcerated dealer’s EBT card was being used in Alabama and had been regularly used there by another individual for more than two years.

In October 2014, the MDEA received another complaint about the selling of controlled prescription drugs at a Lewiston residence and was told that the seller possessed 20 EBT cards, Cashman told the committee.

“MDEA’s investigation led to the seizure of controlled prescription drugs and four EBT cards,” Cashman said. “The defendant had four aliases and the fraud case was turned over to DHHS investigators.”

Adolphsen said EBT card transactions that occur outside Maine account for more than $10 million a year in benefits.

He also said that MDEA agents have noted that out-of-state transactions seem to frequently take place in the same cities that are often the source of illegal drugs being imported to Maine.

Places such as the Bronx and Brooklyn boroughs of New York City, as well as Worcester, Lowell and other towns in Massachusetts, have been linked to drug-trafficking in New England, Adolphsen said. “They are almost always related back to a red flag for welfare fraud or a drug issue,” he said.

Roy McKinney, director of the MDEA, confirmed those areas are all key points in the illicit drug supply chain.

Investigators search arrest logs

During the last legislative session, Cashman testified in favor of a bill by state Rep. Wayne Parry, R-Arundel, that would have increased the penalties for both cardholders and those who accept the cards as tender in a drug deal.

The measure would have required those seeking replacement EBT cards to have their photos on the new cards. Currently, recipients must volunteer to have their photos on their EBT cards.

So far the MDEA has yet to confiscate any EBT cards with photos on them, McKinney said. He said he does not know for certain that placing photos on EBT cards would be a deterrent to their use as tender in illegal drug sales, but he assumes it would.

Beyond being seized by drug agents during warrant searches, cards with other people’s names also frequently turn up when drug suspects are booked at county jails.

“I’ve seen photos where they have a card in another person’s name, but they also have a pile of cash on them,” McKinney said. “It’s part of the landscape. Unfortunately, there is fraud in every system and people will take advantage of it.”

Parry’s bill, which also would have made it easier to prosecute those who trade their EBT cards for drugs, was rejected by the Legislature. Some argued that a drug dealer might obtain an EBT card through theft or other deception and the card’s rightful owner may not have necessarily turned it over willingly.

Adolphsen said the presence of EBT cards in drug busts has become so commonplace that welfare fraud investigators at DHHS now regularly check the arrest logs in local newspapers for drug crimes and cross-reference suspects to see if they are also receiving state welfare benefits. McKinney said when MDEA agents find cards, they report that fact back to DHHS so the fraud unit can investigate.

Adolphsen, like those who advocate for the poor in Maine, also said that the vast majority of benefit recipients abide by the law and the state’s efforts to curb abuse and fraud in the program are aimed at ensuring those who truly need help receive it.

“There are a lot of needy people in the state, and that is without a doubt,” said Adolphsen, “and we are helping those people. And that’s the primary population that needs us policing the fraud because that fraud and cheating undermines the programs.”

Adolphsen said vigorous efforts to deter abuse and fraud also help the programs retain credibility with the taxpayers who fund them.

“We want taxpayers to have the peace of mind that their funds are going to people that legitimately need it,” he said.

Enforcement increasing 

Since 2011, DHHS has doubled its number of fraud investigators, from nine to 18, and has subsequently increased the number of cases it refers to the state Attorney General’s Office for prosecution.

A public hotline and online system for reporting suspected fraud has helped investigators find other cases.

More than 4,000 tips came to investigators in 2014. Last year also marked a high point in referrals for prosecution at 81, resulting in 27 indictments and 26 convictions.

So far in 2015, DHHS’s Fraud Investigation and Recovery Unit has referred 67 cases that have resulted in 16 convictions, but the unit is on pace to send more than 100 cases to the AG by the end of the year, according to Sorensen.

He also believes that the word is getting out that DHHS is taking the issue seriously. Sorensen noted there is no easy way to measure the deterrent effect of beefed-up fraud enforcement.

Adolphsen recalled a telephone conversation between a jail inmate and his mother that was recorded by investigators in which the inmate was trying to convince his mother to forge his signature so his welfare benefits would be reloaded onto an EBT card.

According to Adolphsen, the mother resisted. “She says to him, right on the phone to her son, ‘I’ve got to be careful about this because (Gov. Paul) LePage is on top of this stuff,'” Adolphsen said. “That’s the kind of thing that’s difficult to measure, but we know it’s happening.”

Recipients of SNAP, the Supplemental Nutrition Assistance Program, can’t withdraw cash on their EBT cards the way recipients of the Temporary Assistance for Needy Families program can. But EBT cards with only SNAP benefits loaded onto them are sold for cash or traded for drugs, often at a discounted value.

In July a Lewiston woman was charged with selling her $1,000 of monthly SNAP benefits to a Brunswick man, who was charged with trafficking in welfare benefits and theft by deception.

Recipients also falsify information, sometimes by claiming dependents who don’t actually live with them to increase the amount of money being loaded onto an EBT card.

In January, another Lewiston woman was sentenced to three months in jail after she falsely claimed her 16-year-old daughter was living with her and collected more than $10,000 in SNAP and Medicaid benefits. 

Under federal law, welfare recipients who are found to have used either EBT cards or their benefits to procure illegal drugs face a two-year suspension of benefits for a first offense and a lifetime suspension for a second offense, according to testimony provided to the Legislature by Maine Attorney General Janet Mills.

Proportionate response? 

Some are asking whether the beefed-up investigation unit at DHHS, which costs between $700,000 and $800,000 a year, is worth it, given the amount of money being recovered from those found guilty of defrauding the system.

So far in 2015, judges have ordered about $230,000 in restitution, and over the past five years about $950,000 in restitution has been ordered, according to Mills.

It remains unclear how much of that restitution is ever actually paid back to the state. Tim Feeley, a spokesman for Mills, said he was unaware of any easy way to track how much gets paid back in cases of welfare fraud.

Advocates for the poor say they agree that fraud in the system should be taken seriously and should not be tolerated, but they worry that the response by law enforcement and DHHS could be disproportionate to the actual problem.

“We should root out fraud where it does exist, in every (government) program,” said Robyn Merrill, executive director of Maine Equal Justice Partners, a nonprofit group that provides legal support and advocacy for the poor, “not just programs that support people with low income, but the response should be proportionate to the extent of the problem.”

For example, Merrill said, in Maine only a tiny percentage — 0.009 percent —  of the more than 200,000 people receiving SNAP benefits  have been caught cheating the system, according to U.S. Department of Agriculture audits. 

Merrill said her organization tries to encourage policymakers to instead focus their energy on programs that change the economic dynamics of those in poverty. 

She said stories like the one of Paul Robinson’s arrest and others in Maine in which EBT cards have been taken as evidence in drug busts are often used to justify cutting funding to programs.

“These stories are held up and sensationalized and then used as justification to make cuts to programs that impact people who genuinely need the help and are following the rules,” Merrill said.

DHHS officials, including Sorensen and Adolphsen, say the efforts to stop abuse in the system are more about making the system fully accountable to the public that funds it.

Merrill said laws already make it illegal to traffic welfare benefits and EBT cards, but the ongoing “drumbeat against welfare fraud” is stigmatizing a large group of Mainers who are only guilty of being poor.

“Just look at how people are being painted,” Merrill said. “It has a chilling effect and this is worrisome because people who genuinely need the help to meet their most basic needs or the most basic needs of their kids might be more fearful and reluctant to reach out when they need to.”

According to federal court records, Robinson, who also went by the street names “Pretty” and “T,” pleaded guilty in July and was sentenced to 10 years in federal prison. 

The six EBT cards in his possession when he was arrested had been reissued 9, 12, 13, 15, 18 and 47 times, respectively, Adolphsen said. 

All of those cardholders are being reviewed by DHHS investigators.

sthistle@sunjournal.com

Testimony of Matthew Cashman, Maine DEA on use of EBT cards in drug crimes by thisdog

Federal prosecutor's synopsis in case of Paul Robinson

EBT cards in circulation in Maine

According to the most recent data available from the Maine Department of Health and Human Services, about 133,000 state-issued electronic benefit transfer cards are in circulation in Maine.

The breakdown includes 104,391 cards that are loaded with federally funded Supplemental Nutrition Assistance Program benefits, which can’t be withdrawn as cash; 28,505 cards that are loaded with cash benefits, including a state-funded Supplemental Security Income program and a federal refugee cash assistance program that serves 51 individuals; and another 5,774 cards that have cash benefits from the state and federally funded Temporary Assistance for Needy Families program.

According to DHHS, the majority of TANF recipients are also receiving SNAP benefits.

Over 20 percent of Maine children under the age of 5 live in poverty, while the state’s overall poverty level is 20 percent higher than the rest of New England, according to the U.S. Census Bureau.

In all, state and federal welfare programs serve about 200,000 Maine residents.

What is fraud?

According to Maine law: “Fraud includes intentional deception or misrepresentations, oral or written, which an individual knows to be false, or does not believe to be true, made with knowledge that deception or misrepresentation could result in some unauthorized benefits. The requisite intent is present if the misrepresentation was made knowingly or with reckless disregard for the truth.”

To report fraud or abuse of DHHS benefit programs, including MaineCare, SNAP and TANF:

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