L.A.'S FOOD STAMP SCANDAL CHEATERS CLAIM EXTRA AS SOME MISS MEALS.

Byline: TROY ANDERSON Staff Writer

Los Angeles County's welfare system is the target of an investigation amid accusations that it fosters a culture that tolerates fraud in its food-stamp program.

Los Angeles County Supervisor Michael D. Antonovich said he plans to ask county Department of Public Social Services officials and prosecutors this week to investigate fraudulent food-stamp trafficking that federal authorities estimate cost taxpayers $241 million last year.

``The criminal practice known as food-stamp trafficking has become a multimillion-dollar industry that involves organized crime across the nation and here in Los Angeles County,'' Antonovich said.

The investigation comes in the wake of allegations by county employees that the department exacerbates fraud by failing to adequately verify the eligibility of food-stamp recipients.

The state Department of Social Services also plans to review allegations by Gamil Youssef, a former welfare case reviewer who recently was awarded $250,000 to settle his lawsuit claiming he was retaliated against after making allegations of fraudulent activity in the county department.

``The California Department of Social Services takes all allegations of fraud seriously, and we'll work with the county to review this matter,'' spokesman Michael Weston said.

Leniency denied

County department officials deny fraud allegations and said their verification requirements remain stringent.

Shirley Christensen, special assistant to the director of DPSS, also said Youssef's allegations were investigated by an auditor and dismissed.

But James Baker, assistant head deputy in the District Attorney's Office's Welfare Fraud Division, said investigators have told him some county welfare workers bend the eligibility rules because they believe requirements hinder efforts to help the poor.

``The problem with the culture is that in trying to give benefits to the poor, many workers will not look behind the face of the application,'' Baker said.

``If a person fills out their application and there is basic proof that they are required to bring in, the basic culture is not to question other than what is absolutely required.''

Youssef said some workers feel pressured to issue benefits without the required eligibility proof.

``Sometimes they provide us documentation completely in Spanish, Russian or whatever,'' Youssef said. ``The more you ask them for information, the more they complain, and the administration puts pressure on you to give them benefits.''

Weston said state officials encourage counties to sign people up for food stamps to increase participation rates and draw in more federal dollars to bolster the local economies.

But Christensen said that while the agency's administrative federal reimbursements are based on the number of food stamp cases handled, workers are not pressured to grant benefits to ineligible applicants.

Since fiscal 2001-02, the county department's federal reimbursements for administration of the food stamp program have risen 28 percent -- from $86 million to $110 million. During that same period, county records show, the number of households receiving food stamps rose by 11 percent, from 281,451 to an estimated 312,300.

``We may have fewer people aided, but it still could represent a larger number of cases,'' Christensen said. ``You may have a larger number of cases with two- or three-person families and, of course, staffing levels are based on caseloads, not persons.''

Some prosecuted

Since 2004, the District Attorney's Office has prosecuted more than three dozen people -- primarily in the San Fernando, Santa Clarita, Antelope and San Gabriel valleys -- for collecting more than $10 million in public aid and food stamps while taking expensive vacations and owning businesses, real estate and luxury cars.

Last month, Tigran Malkhasyan, 41, of Pasadena was arrested on federal conspiracy charges for allegedly defrauding the federal food-stamp program of $6.1 million. According to the U.S. Attorney's Office for the L.A. area, he purchased benefits for 50 cents on the dollar and used some of the proceeds to buy luxury cars for relatives and friends.

The county and state social-services agencies have been working to reduce error rates that measure the number of ineligible people given food-stamp benefits and eligible people given too many benefits. The rates also help track fraud.

California faced $185 million in penalties several years ago after the federal government found the state had the highest food-stamp error rate in the nation. The county's share of the liabilities was $143 million.

A recent local memo noted the county department's error rate had dropped from 22.9 percent five years ago -- the highest in the state -- to 7.4 percent this year.

``We could not have massive fraud and have that kind of quality-control performance rate,'' Christensen said, noting the department has 61 fraud investigators in 31 offices who review 35,000 food-stamp cases annually.

But Baker said the department refers few food stamp fraud cases to his office, and he attributed the reduction in the error rate to ``smoke and mirrors'' from a federal procedural change requiring recipients to report income every three months rather than every month.

The change to quarterly reporting was opposed by the California District Attorneys' Association, Baker said.

``It's made fraud prosecution virtually impossible,'' Baker said. ``It was sponsored by the federal government to lower all food stamp error rates. They went before Congress and said, `Look at how much we have saved now,' and Congress had no clue that they did it by eliminating monthly income-reporting requirements.''

But a spokeswoman for the U.S. Department of Agriculture Food and Nutrition Service defended the 2002 legislation and said it provided states with broad flexibility to simplify program requirements and provide low-income families with more stable food assistance.

``Households continue to face strict program-violation (penalties) if they intentionally provide false information about income or other circumstances that affect eligibility and allotment levels,'' spokeswoman Susan Acker said. ``Permanent disqualification can occur under circumstances of repeated fraud attempts.''

Benefits unclaimed

Meanwhile, the nonprofit Washington, D.C.-based Food Research and Action Center has estimated that more than $1.9 billion in food-stamp benefits nationwide were left unclaimed this year.

This included $463 million in Los Angeles County, where barely half of the people eligible for food stamps received them -- the fifth-worst rate in the nation.

``Our position is we want the people entitled to get food stamps to get them, and if you are not entitled and are cheating and lying to get them, our job is to prosecute those who are stealing,'' Baker said.

``That's why our motto is: `Protecting the needy from the greedy.' Obviously, if there is a lot of cheating going on, then the people who really need food stamps can't get them.''

troy.anderson(at)dailynews.com

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