State's Welfare System Plagued by Fraud

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The state's welfare system is plagued by widespread fraud that has cost the state millions of dollars, a special grand jury said in a report released on Friday.

Some of that money has been misdirected by the very state employees responsible for getting it to needy Kentuckians, the grand jury found. In other cases, welfare recipients have found ways to collect more from the state than they're eligible for.

"The grand jury has made one thing perfectly plain - the state's welfare system is riddled with fraud," Attorney General Greg Stumbo said. "This is a perfect example of the fox guarding the henhouse."

Stumbo called for an independent investigator to delve into the

The grand jury was impaneled to investigate the state's welfare
system in June 2005 after the attorney general's office discovered
evidence of "widespread mismanagement." State Auditor Crit
Luallen assisted in the investigation, identifying tens of
thousands of suspicious transactions.

Ten people have been indicted on 136 felony charges related to
welfare fraud this year. Eight of those indicted were employees or
former employees of the Kentucky Cabinet for Health and Family
Services, the agency that administered the state welfare program,
or its contractors.

"The evidence that we have heard over the past five months
concerning the welfare system in Kentucky leads us to suspect that
the indicted cases of fraud - both those we returned and those
brought elsewhere - are just the tip of the iceberg," the grand
jury said in the report.

The grand jury said a broad range of criminal behavior was uncovered. In some instances, people continued collecting welfare benefits after the true recipients died. In others, case workers directed benefits to themselves.

"This shows the cabinet's fundamental failure to prevent the theft of funds by its own employees, and it's an outrageous waste of taxpayer dollars," said Assistant Attorney General Pierce Whites. "Citizens expect welfare funds to be delivered to needy children and desperate families who cannot get by any other way."

Soon after the grand jury began its investigation last year, Gov. Ernie Fletcher's administration ended a $1.4 million contract with the attorney general's office to review allegations of wrongdoing within the welfare program. Since then, the welfare agency's office of inspector general has been investigating complaints or referring them to prosecutors in counties where the abuses were alleged.

Fletcher spokeswoman Jodi Whitaker referred questions to the
Cabinet for Health and Family Services. Mark Birdwhistell, head of
that agency, did not dispute the grand jury's determination that
abuses of the welfare system were widespread. He said the state
needs updated technology to effectively monitor the program.

"I think the welfare system in Kentucky is in desperate need of
modernization and putting the appropriate technology and
infrastructure in place to ensure we're getting the appropriate
controls and checks and balances in the system," he said.

(Copyright 2006 by The Associated Press. All Rights Reserved.)