Governor LePage: EBT Fraud is a Real Problem

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For Immediate Release: Tuesday, Jan. 7

    Contact: Adrienne Bennett, Press Secretary, 207-287-2531

    Attachment: Data Sheet

AUGUSTA – On Tuesday, Governor Paul R. LePage released information showing thousands of transactions involving the misuse of taxpayer-funded welfare benefits on EBT cards issued in Maine.

The Maine Department of Health and Human Services (DHHS) compiled the information based on transactional data from Electronic Benefit Transfer (EBT) cards issued by the State to eligible Mainers receiving benefits under the Temporary Assistance for Needy Families (TANF) program.

Data released shows that since January 1, 2012 more than 3,000 transactions were made at more than 22 “smoke shops” in Maine, which sell primarily cigarettes and other tobacco products. There are several examples of individuals using their EBT cards to spend hundreds of dollars at a time at liquor stores in Maine. One liquor store in New Hampshire had more than a thousand transactions totaling nearly $8,000.

There are nearly 650 transactions at retail establishments that sell primarily alcohol, such as bars and sports pubs. The data also shows that EBT cards were used at strip clubs in Maine. Transactions using cash benefits at these locations are prohibited under state and federal law.

EBT Cards issued in Maine have been used in all 50 states. There are examples of Maine benefits being used in 46 states by individuals that had been out of Maine for over a year.

“This information is eye-opening and indicates a larger problem than initially thought,” said Governor LePage. “These benefits are supposed to help families, children and our most vulnerable Mainers. Instead, we have discovered welfare benefits are paying for alcohol, cigarettes and other things that hardworking taxpayers should not be footing the bill for.” 

On May 21, 2012, Governor LePage signed into law An Act to Strengthen the State’s Ability To Investigate and Prosecute Misuse of Public Benefits. This law establishes that an EBT card may not be used in the following locations: A retail establishment where 50 percent of more of the gross revenue of the establishment is derived from the sale of liquor; a gambling facility, except that use of the electronic benefits transfer system is permitted in any portion of the premises of a gambling facility that is set aside separately for the sale primarily of staple foods; or a retail establishment that provides adult-oriented entertainment in which performers disrobe or perform in an unclothed state for entertainment.

In order to implement the policies and procedures necessary to enforce the law, DHHS established rules that prohibit the use of EBT cards in these locations. The LePage Administration has taken an active, work-focused approach in addressing welfare reform and continues to advocate for programs that will support those in need, but the Administration does not condone a welfare system susceptible to fraud.

“The Department is committed to maintaining program integrity by actively working to identify fraud, waste and abuse,” said Department of Health and Human Services Commissioner Mary Mayhew. “By using this data proactively, we can ensure resources will be available for programs like Additional Support for People in Retraining and Employment, which helps TANF recipients get back to work in meaningful employment.”

The Maine Department of Health and Human Services continues to work with the Bureau of Alcoholic Beverage and Lottery Operations, the Department of Public Safety and various other agencies to identify locations in which EBT transactions are prohibited.

Additionally, in 2013, The LePage Administration hired eight new welfare fraud investigators to assist in rise of prosecutions for welfare fraud and abuse. The Fraud Investigation and Recovery Unit investigated more than 2,600 complaints of fraud through December 2013. Including criminal cases and other investigations, the unit is now pursuing approximately 1,400 complaints as of January 2014.

If you suspect anyone of abusing welfare assistance, please call the Fraud Hotline at 866-348-1129. Seventy-one percent of the referrals came from the Administration’s new public reporting system, which consists of a form on the DHHS website and a new fraud hotline. The Administration established the hotline in 2011.

“We need to help struggling Mainers to earn success, not to learn dependency. Our Administration inherited a welfare system that wasn’t working. We’re making changes to get people off welfare and into work, giving them a better life, better opportunities and a brighter future for their families,” said Governor LePage. 

Note of Interest: Under pressure and criticism of a program used by one in seven Americans, administrators of the U.S. food stamp benefits program have cracked down in recent years on those committing fraud or misusing benefits. Kevin Concannon, former Maine DHHS commissioner and current U.S. Department of Agriculture undersecretary for food, nutrition and consumer services, recently said his agency was doubling efforts to prevent fraud, which accounts for 1 percent of food stamp benefits, but equals about $750 million each year. Concannon told a Reuters reporter in 2012: “Fraud is not a static concept – we know that where there is a will to commit malfeasance, bad actors will try to find a way” and “This is $750 million that isn’t being used to provide food to individuals and families.”

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