About $722,000 "questionable transactions" out of $96 million were discovered in 2012

By DAVID A. LIEB, Associated Press

JEFFERSON CITY, Mo. (AP) – A state audit released Tuesday raised questions about whether hundreds of Missouri welfare recipients actually are living out of state or using their benefits for alcohol, tobacco and gambling instead of their children.

Missouri Auditor Tom Schweich identified about $722,000 of what he called “questionable transactions” out of $96 million in electronic card transactions in 2012 for the Temporary Assistance for Needy Families program.

That amounts to a mere fraction of a percent of the total dollar value of benefits examined by the auditor’s office, and Schweich said there’s no way of knowing for sure that the benefits were misused. But he said the questionable expenses “could be much more widespread,” because auditors also had no way of catching people who cashed benefits at a Missouri bank and then spent it on inappropriate things.

“When you’re talking about at least $700,000 a year in questionable transactions that really adds up over the years,” Schweich said. State officials need “better procedures in place to identify these, to follow up and then to collect the money back if they need to.”

The Missouri Department of Social Services said in a written response included in the audit that it is working with state computer personnel to develop an electronic system to identify potentially inappropriate or extended out-of-state use of welfare benefits. In the meantime, the department said it is performing manual reviews of transactions.

A department spokeswoman declined to make additional comments Tuesday beyond what was included in the audit.

House Speaker Tim Jones described the audit’s findings as “simply shocking.”

“Clearly, more must be done to prevent fraud and abuse in the TANF system, and we will make this a priority during the upcoming session,” Jones, R-Eureka, said in a written statement.

The joint federal and state program provided monthly payments to about 40,000 low-income Missouri families in the 2012 fiscal year.

The audit found 366 cases in which recipients used a total of $461,000 of benefits exclusively out of state for at least three months. Although nothing prohibits out-of-state use, the audit said that may indicate the recipients no longer lived in Missouri and thus should not have been getting the benefits.

The audit also found 1,615 cases in which recipients used a total of $261,000 of benefits at locations appearing to be associated with alcohol, tobacco, gambling or adult entertainment. Although not illegal at the time, new federal and state laws now prohibit the electronic benefit cards from being used at those places.

Schweich cited several “egregious” cases of transactions that occurred over extended periods in states far from Missouri, thus appearing unlikely to involve Missouri border city residents simply shopping at stores across the state line. The audit cited cases where someone used $4,276 of welfare benefits over nine months in Texas, $1,972 of benefits over 11 months in California and $1,191 of benefits over five months in the Virgin Islands.

Most of the potentially inappropriate places where the audit said electronic welfare benefit cards were used were at establishments with words such as “liquor,” “beer,” “spirits,” “lounge,” “pub” or “tavern” in their names. The audit cited 1,334 of those cases totaling $204,198 of expenditures.

The audit also identified 148 cases totaling $34,357 of expenditures at what appeared to be tobacco establishments, 135 cases totaling $21,399 of expenditures at what appeared to be gambling or bingo establishments and 16 cases with $1,101 of expenditures at what appeared to be adult entertainment businesses.

The Department of Social Services noted in its audit response that it had reviewed 1,300 cases in 2012 for potentially inappropriate out-of-state transactions. The department sought to recoup $47,887 from 36 of those cases, the audit said.

Schweich said the department didn’t adequately identify questionable transactions and “didn’t follow up very well” on potential problems.

© Copyright 2013 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.

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