COUNTY FRAUD LOSS UP 17,000%.

Byline: Troy Anderson Staff Writer

Fraud and waste by Los Angeles County employees and contractors resulted in record numbers of convictions and firings in 2003 involving some $1.5 million, records released Monday show.

Overall, the county loses an estimated $250 million a year to waste, fraud and abuse.

The number of investigations opened as a result of tips to the county's fraud hotline jumped from 279 in 2000 to 512 last year, an 84 percent increase, while the number of substantiated cases rose 23 percent, from 77 to 95.

The actual dollar loss uncovered in these cases soared 17,000 percent, from $8,876 in 2000 to $1.5 million last year.

Auditor-Controller Tyler McCauley said he doesn't think the increase is the result of stricter enforcement because he had fewer investigators to work on cases.

``Over the years the fraud has continued to go up,'' McCauley said. ``We've also had some problems with our contractors. We've had some employee fraud, too, and, as you can see from the reports, it continues to increase.''

McCauley said the $250 million in losses could be reduced significantly if more safeguards were in place.

``You cut that in half if you have internal audit functions and cut that in half if you have a fraud hotline,'' McCauley said. ``I'm not trying to pretend we don't have any fraud here. But if you have aggressive internal audits and aggressive investigators, you cut into it.''

Jon Coupal, president of Howard Jarvis Taxpayers Association, said the report of record numbers last year is a ``good-news, bad-news situation.''

``The good news is there seems to be an increase in enforcement against waste, fraud and abuse,'' Coupal said. ``The bad news is there appears to be more misconduct.

``In this era of very limited budgets and at a time when the county of Los Angeles is complaining louder than anybody over revenue reductions, they need to more adequately ensure that taxpayer funds are being well spent.''

In explaining the huge increase in actual dollar losses from 2000 to 2003, McCauley said his Special Investigations Unit uncovered some cases last year involving large sums of money.

Investigators said a Child Support Services Department employee misdirected $220,000 in child support payments to his personal checking account. The case was referred to the District Attorney's Office for prosecution.

In another case, two former employees of a contractor with an office in Glendale were arrested on charges of embezzling $800,000 from a program that provides job-training services to immigrant refugees.

That case is part of a wider investigation into fraud and misuse of taxpayer funds involving contractors with the senior services, welfare and children's services departments in eight different programs. County officials suspect millions of taxpayer dollars is missing.

McCauley's investigators estimate that they actually uncover $3 million to $4 million a year in fraud, which doesn't include the damage from lost productivity.

They identified nearly a dozen county employees who used county computers for unauthorized purposes, including health and consumer-affairs employees who investigators said distributed pornography. Investigators said they also found child pornography on the computer of a Fire Department employee and referred the case to the District Attorney's Office.

In another case, a Department of Children and Family Services worker inappropriately used a state foster-care computer system to access confidential case information for personal use. Disciplinary action is pending.

An Internal Services Department employee used his county computer to illegally access personal information from the computer of a private citizen. The case was referred to prosecutors for review.

All together, county workers and contractors committed 31 cases of fraud in the fourth quarter of 2003, up from 26 cases in the previous quarter.

In the same quarter, the fraud investigators opened 163 new cases, including 31 in which fraud was substantiated, 56 in which it was not and 41 in which there could be no conclusion due to insufficient information.

Tony Bell, an aide to Supervisor Michael D. Antonovich, said the board is working to implement programs to reduce the opportunity for fraud.

``It is our hope that we can take these numbers, find out where the root of this fraud is coming and get to its source. There is no excuse rationalizing fraud at any level. So we will be working with Tyler McCauley on this.''

Troy Anderson, [phone]

troy.anderson(at)dailynews.com

AT A GLANCE

County workers and contractors committed 31 cases of fraud in the fourth quarter of 2003, including the following:

--A Parks and Recreation employee stole $33,000 from a county-run camp. The employee was fired and is awaiting sentencing after pleading no contest to felony charges.

--Four boxes of bus tokens valued at $3,600 and Target gift certificates worth $15,500 were reported missing from the Department of Children and Family Services.

--A Health Department employee was sentenced to two weeks in jail and three years on probation, fined $200 and ordered to pay $3,596 in restitution after being convicted of forging a county check.

--Health Department doctors were improperly supervised, which resulted in inadequate supervision of residents, payment to physicians for hours not worked and transfers of patients to other medical facilities for services. Disciplinary action is pending.

CAPTION(S):

2 boxes

Box:

(1) WAR ON FRAUD

SOURCE: Los Angeles County Auditor-Controller

(2) AT A GLANCE (see text)