Child Support And Welfare — Is Corrupt Racketeering The Norm?


 

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In Connecticut a Maximus-run welfare program sinks into chaos

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© 1997 by Jonathan Rabinovitz, New York Times

November 24, 1997 — Last April, Connecticut became the first state to hire a private company to handle its entire program of child-care benefits for families on welfare and the working poor, a bold move toward privatization that was watched closely by other states.

But now the company, Maximus Inc. of McLean, Virginia, may lose the contract because the troubled system it was hired to fix has only become worse. Hundreds of families have waited for months without receiving aid they were promised, the company has been unable to process a deluge of paperwork and its phone lines have been overloaded with pleas for help, state officials said last week.

For a typical family with two children, the assistance amounts to $380 a month, and the delays have imposed severe hardships, recipients said. One woman said she had fallen behind in her rent and utility bills so that she could pay for day care while she worked.

On Wednesday, Maximus received a letter from the state warning that it would lose the $12.8 million contract if marked improvement in the system, which covers about 17,000 people, did not occur by December 16, 1997.

Still, state officials said they were committed to keeping the job with a private company, whether it be Maximus or another. "The answer is not to return to the old way of business," said Claudette Beaulieu, a Social Services Department spokeswoman.

To help the company, the Social Services Department even sent in a half-dozen state employees for a day and a half to offer advice on improving the system.

Ray Ruddy, Maximus's chairman, defended his company on Friday, saying that it had handled the challenging task of revamping the child-care assistance program better than any government agency would. Faced with the deluge of phone calls and paperwork, "How would a government have reacted?" he asked. "Would they have been able to double their staff? Order computers? Bring in more desks? Would they have been able to move that quickly? I don't think so."

Maximus's troubles are seen by many as a test of how well a profit-seeking company can handle tasks that have traditionally been the domain of government.

While private companies have long handled contracts for some social welfare tasks, the services they can provide was substantially expanded last year under the new Federal welfare law. As a result, a host of large companies is seeing a new business opportunity in a challenging administrative task: determining who is eligible for aid and how much they should get.

Along with the 22-year-old Maximus, which has annual revenues of $150 million and is listed on the New York Stock Exchange, huge companies like Lockheed Martin and Andersen Consulting [since bankrupted in the Enron scandal] are trying to get into the business of managing welfare services.

Still, there is little question that Maximus was not aware of the complexity of the task when it accepted the contract in April.

The company agreed to take over four child-care assistance programs that covered about 24,000 people, most of whom were either on family welfare or were just moving off it. Maximus also agreed to re-examine each family's eligibility for benefits, as well as to process new applications.

And Maximus promised to install a computer system and administrative measures to help insure that recipients were not illegally pocketing their aid. Indeed, the company's more rigorous procedures have led to a few thousand recipients being dropped from the rolls and at least 33 cases being referred to the state's welfare-fraud unit.

Yet the requirement that people essentially reapply for benefits, plus new forms and monthly invoices, have combined to create administrative chaos.

By last month, Maximus officials had been unable to process thousands of applications in time to get the checks out to parents and care providers, state social service officials said. People who had been waiting for checks began contacting them in droves.

In just three days in mid-October, the company's service center in Hartford received 35,000 phone calls from people who had not received their benefits. Maximus workers would arrive in the morning to find 250 voice-mail messages. Recipients who telephoned for help were kept on hold for as long as an hour.

Julie Ball, the owner of Angels-in-Training Home Day Care in Meriden, said that by late September she was owed $2,800 in state aid for four of the six children in her program. To complicate matters, she was nine-months pregnant. Maximus officials repeatedly told her the check was in the mail, but it had failed to arrive.

On September 30, the day after her baby was born, she spoke to a Maximus official at 9 P.M. from her hospital bed. "I was crying and asking, how am I going to make my mortgage and my car payments," she said. "I had been buying lunch for these kids out of my own pocket."

While Mrs. Ball has since been reimbursed, not everyone is so fortunate.

Michelle Rogers, 21, who has a 5-year-old daughter and has fought to get off welfare, said on Friday that she got a check for $119, which covered one-third of her child-care bill for August, but had received only $19 since then. She has not been able to make the full payment of $85 a week to the woman who cares for her child and owes the baby sitter several hundred dollars.

"I've left messages with the supervisor and the supervisor's supervisor, and no one has ever called me back," said Ms. Rogers, who no longer receives welfare because she works as a customer service representative at People's Bank.

Lynn Behrmann, president of the Connecticut Family Day Care Associations Network, a group that includes about 800 people who provide day care in their homes, said that while the situation has improved, hundreds of providers have not been paid. Mrs. Behrmann, who runs Little Duckling Day Care in Manchester, said she is still owed about $1,350 for one client for August, September and October.

Yet some child-care providers say Maximus has started to get the situation under control.

Jerry Stevenson, the principal of Jermar Inc., which runs five day-care centers throughout the state, said that despite initial troubles, his problems "have been ironed out."

To critics, Maximus's experience so far suggests that privatization has its limits.

"This is not the silver bullet that everyone thinks it is," said Janet L. Van Tassel, executive director of the Legal Assistance Resource Center of Connecticut. "Turning over a service to a private contractor isn't any guarantee that it's going to be any better than having state employees do it."

State Senator Mary Ann Handley, a chairwoman of the legislature's Human Services Committee, has scheduled a hearing for Tuesday night to investigate the situation.

Mr. Ruddy, the company's chairman, said Maximus would have the problems cleared up soon. Maximus officials noted that they have determined that 13,000 of the 17,000 people who are eligible for benefits are receiving checks for at least one of their children.

Seeing future business at stake in other states, Maximus has increased its staff here from 67 people to 110, with another 23 expected in the next few days. It has also begun routing excess phone calls to a company phone bank in California.

"This is a new program — the first of its kind in the country — a privatized child-care program," said Kevin L. Geddings, a Maximus spokesman. "Quite honestly, we're all experiencing some growing pains."

EJF note: Time hasn't proven kind to this experiment or to the competence of Maximus

 

Maximus at center of New York complaints

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© 2000 by Pete Millard, The Business Journal of Milwaukee

March 17, 2000 — Maximus Inc., the welfare-to-work contractor facing investigations on several fronts in Wisconsin, also is enmeshed in a $104 million contract controversy in New York City.

New York City comptroller Alan Hevesi said this week that the awarding of $469 million in 17 welfare-to-work contracts by Mayor Rudolph Giuliani's administration raised the appearance of "corruption, favoritism and cronyism."

The largest share of the city's contracts, valued at $104 million, went to Maximus. George Leutermann, the Maximus executive in charge of winning the New York City contracts, also oversees the Maximus office in West Allis, which has handled former Aid to Families with Dependent Children cases and other welfare recipients in Wisconsin since August 1997.

"We object to the registration of the 17 contracts on the grounds that we have sufficient reason to believe that there was corruption in the letting of the contracts," Hevesi wrote in a March 13 letter to Giuliani's office.

The charges were first reported in The New York Times.

Hevesi pointed out in his letter that Maximus was "repeatedly granted access to, and information from, (New York City's) Human Resource Administration (HRA) that was not afforded to other vendors."

Maximus gained an unfair advantage over other companies competing for the contracts because it had a five-month head start in preparing its bid, according to documents cited by Hevesi.

Maximus officials denied any allegations that the New York City contract process was improperly handled.

"We believe we participated in an open and fair competitive process in New York City, similar to processes we have encountered in other cities and states," said Tom Grissen, president of the company's government operations group, based in McLean, Virginia. "There is no basis for, and we categorically deny, any of the allegations of inappropriate behavior by the firm in New York City."

The New York City welfare-to-work contracts were awarded by the mayor's office according to negotiation acquisition rules instead of through a competitive sealed proposal process for the purpose of saving time, said a Giuliani spokesman in the HRA office.

Even though Hevesi objected to the letting of the contracts, the mayor's office put the contracts in motion March 14, 2000.

If the city had used a competitive sealed proposal process, Hevesi said, not only would the process have ensured fairness and openness, but the vendors selected for the welfare-to-work contracts would have been different.

Hevesi plans to forward his findings to other authorities for investigation. A spokesman in his office said the information could be forwarded to the U.S. Attorney's Office in New York City, the city's Department of Investigations and the Manhattan District Attorney's office.

"This will lead to independent investigations outside this office," Hevesi said. "Others will have to pursue what happened, and when and where and who benefited and who didn't benefit in this process."

Hevesi's office is viewing one of the Maximus subcontractors particularly close. The comptroller's office said that 30 percent of the $104 million contract has been shifted to a welfare-to-work company called Opportunity America, which is run by Richard Schwartz, a former Giuliani campaign manager and aide.

The New York Times reported that internal Maximus correspondence it had obtained indicate Leutermann and Tony Kearney, a Milwaukee consultant, were meeting with New York City's HRA in January 1999. The Times cites records that show pages of welfare caseload analysis charts and tables were faxed to the West Allis Maximus office in February 1999.

Information related to the contracts was not supposed to be released until May 5, 1999, according to rules in the city's competitive bidding process.

Kearney, who was involved in the creation of a welfare reform program in Milwaukee County called Wisconsin Works (W-2), was simultaneously acting as a consultant for Maximus and the New York City HRA office, according to The New York Times. Leutermann had previously told the Times that Kearney had nothing to do with the New York City project.

Kearney and Leutermann both have had a long relationship with the HRA commissioner, Jason Turner, a former state of Wisconsin employee who is credited with helping create Wisconsin's W-2 program, the newspaper reported.

In Wisconsin, Maximus is facing reviews or audits by the Wisconsin Department of Administration, the state Department of Workforce Development, the state Legislative Audit Bureau, the U.S. Department of Labor, and the U.S. Equal Employment Opportunity Commission. The Wisconsin reviews stem from allegations of employee discrimination, nepotism and payroll irregularities.

Rejecting favoritism claim, New York court upholds city welfare contract by Eric Lipton

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© 2000 New York Times

October 25, 2000 — An appeals court handed the Giuliani administration a major victory yesterday, ruling that Comptroller Alan G. Hevesi overstepped his authority in March when he rejected $104 million in welfare-to-work contracts while raising what the court called unfounded allegations of corruption.

The unanimous decision by the Appellate Division of State Supreme Court, sitting in Manhattan, overturned a lower court ruling in April, and cleared the way for the city to reinstate Maximus Inc., the Virginia contractor selected by the city to help thousands of welfare recipients find private jobs.

Mr. Hevesi had claimed that Maximus improperly took advantage of special access to top Giuliani administration officials, among other improprieties, while it pursued what would have been the largest welfare contract in its history.

The comptroller also alleged that the city improperly disregarded its rigorous contracting rules in using an abbreviated review process for all the welfare-to-work contracts.

"There was no evidence of favoritism by the use of this process," the appellate ruling said. "There was no evidence that Maximus was afforded unfair access."

The five appeals court justices also reasserted that the City Charter establishes the mayor's power as the final arbiter on city contracts. They said Mr. Hevesi had a "mandatory duty" to approve the Maximus deal after the mayor had dismissed Mr. Hevesi's objections in March.

The Maximus contracts were the cornerstone of Mayor Rudolph W. Giuliani's far-reaching plan to overhaul work requirements for welfare recipients. The company had proposed establishing neighborhood work centers, where applicants would be evaluated and, if necessary, get job training to prepare them for placement in jobs at businesses. Mr. Hevesi's action and the lower court ruling effectively suspended operations by Maximus in New York, although other smaller contractors were providing similar services.

The Giuliani administration claimed yesterday's ruling as vindication of the mayor's long-running and oft-contested drive to trim hundreds of thousands of poor people from the welfare rolls, and of Jason A. Turner, the commissioner of the Human Resources Administration.

"It is a victory for this administration and it is a victory for the City Charter," said Corporation Counsel Michael D. Hess, one of several top Giuliani officials who gathered at a City Hall news conference to celebrate the decision. "It is a setback for all the people in this city who have vigorously opposed welfare reform and their position has been beaten down by this decision."

Maximus officials also expressed pleasure with the decision.

"We were always confident that the decision of the court would vindicate Maximus," David V. Mastran, the company's chief executive, said in a statement.

Mr. Hevesi's office said it needed time to study the ruling before deciding whether to appeal, but, because the decision was unanimous, his own staff acknowledged late yesterday that such a step would be difficult.

"We are disappointed with this decision," said David Neustadt, a spokesman for Mr. Hevesi. "We think it was in error."

Mr. Neustadt said the comptroller still stood by his original allegations regarding Maximus and the contracting process. Those allegations were based on documents that showed that company officials met with Mr. Turner and others even before the contract was advertised, and the revelation that Maximus did not fully disclose that it intended to subcontract about $30 million worth of the $104 million award to a company set up by a former Giuliani official, Richard J. Schwartz.

Maximus and Mr. Turner are also still the subject of criminal investigation by local and federal authorities related, in part, to the allegations Mr. Hevesi first raised in February. And Mr. Turner paid a $6,500 fine this month after acknowledging that he violated city conflict of interest rules by using an aide and city office equipment to complete work on a personal business matter.

"We have had 10 to 12 violations of federal, state and city law," said City Councilman Stephen DiBrienza, a Brooklyn Democrat and frequent critic of the mayor and Mr. Turner. "This case speaks more to questions over the comptroller's power versus the mayor power, rather than the legacy of Jason Turner."

But Deputy Mayor Joseph J. Lhota said late yesterday that Mr. Hevesi owed the Giuliani administration an apology for what Mr. Hess called the comptroller's "grave error," in refusing to approve the contracts.

Mr. Neustadt, who handled all inquiries for the comptroller yesterday related to the ruling, declined to offer an apology, but he disputed suggestions by Mr. Hess that the comptroller opposes efforts to move welfare recipients toward self-sufficient lives. "That is nonsense and he knows it," Mr. Neustadt said.

The ruling coincidentally came on the same day that about 125 critics of the Giuliani administration's welfare policies, including Mr. DiBrienza, assembled on the City Hall steps to call for Mr. Turner's resignation. The rally organizers said late yesterday that they still wanted Mr. Turner to resign, citing nearly a dozen other rulings or lawsuits against the administration in recent years regarding its treatment of the homeless, AIDS patients and others in need.

Mr. Giuliani, speaking before the court issued its ruling, scoffed at the notion, and defended Mr. Turner's management of the welfare-to-work programs, saying that objections to his style surface "because he is taking on a political mentality that was very different, and was very much attuned to the idea that you help people by making them dependent."

The court's ruling did not indicate whether the justices considered allegations that surfaced after Mr. Hevesi rejected the contract, including an admission by Maximus that it made a mistake in judgment by hiring Mr. Turner's father-in-law for a job in Wisconsin while it was seeking the New York City deal. Maximus also hired and then placed a family friend of Mr. Turner into a contracting job within the Human Resources Administration as it prepared to bid on the city welfare-to-work deal.

Officials have said those matters are under review by the criminal investigators, although spokesmen for the United States attorney's office and the Manhattan district attorney's office have consistently declined to discuss the inquiries.

Even if Mr. Hevesi does not appeal yesterday's ruling, it is not clear if the city and Maximus want to reinstate the deal. Maximus pulled its staff out of the city in April after the ruling by Justice William J. Davis of the Supreme Court, who agreed with Mr. Hevesi that the contracting process had been "corrupted."

The city is not under extraordinary pressure to immediately reinstate Maximus because Mr. Hevesi approved 15 welfare-to-work contracts with other companies. A top official from one of the other winning contractors said last week that the city had been having a hard time finding enough welfare recipients to keep all the other contractors busy.


 

Protest overruled: Denver firm, not Maximus, will enforce child support in El Paso County, Colorado

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© 2000 by Pam Zubeck, Colorado Springs Gazette

December 15, 2000 — A Denver firm will take over El Paso County's child support enforcement operation January 1, 2001, the County Commission decided Thursday in overruling a competing firm's challenge.

The decision may draw a lawsuit from Maximus Inc. of Virginia, which claims a biased selection committee member tainted the process.

Maximus attorney Murray Weiner said the company is considering legal action but would not elaborate.

Policy Studies Inc. officials said their Springs office, on the second floor of the Bank One building at Pikes Peak Avenue and Tejon Street, will be in business on time.

By March, the firm expects to be at full strength — 60 employees, who will establish paternity, file support orders and use tools ranging from phone calls to property liens to elicit support payments from noncustodial parents.

The $18.6 million contract, by far the county's largest, is important because the vendor takes care of all aspects of child support collection for roughly 13,000 parents who have support orders and 5,000 others seeking orders.

Maximus took over the job in 1996 from the District Attorney's Office to become the first private company with a full-service support enforcement contract in Colorado.

When it was time to rebid the five-year contract, the commissioners awarded it to PSI on November 7, 2000, after a unanimous recommendation from a five-member selection committee. That group was composed of social service workers and Catherine Brown-Swain, a children's advocacy group volunteer.

In late November, Maximus protested, citing Brown-Swain's bias against Maximus. The company said the former child-support division worker had been critical of Maximus' handling of her own child- support case and went to the Maximus office in the midst of the bidding process to complain about Maximus' poor performance. She also picketed the Maximus office November 29.

If Brown-Swain's scores for various qualifications were eliminated, Maximus would have tallied more points than PSI, Maximus argued.

Brown-Swain has denied she acted improperly.

Commissioners Jeri Howells and Betty Beedy expressed concern about Brown-Swain's actions, but the board stalemated last week 2-2. Commissioners Duncan Bremer and Chuck Brown backed the November 7 decision.

On Thursday, Commission Chairman Ed Jones, who was absent last week, voted against reconsideration. "I would not say she (Brown-Swain) had influenced any of the other members," he said. Jones noted that had Brown-Swain's vote been tossed out, the other four committee members still backed PSI.

Weiner said, "In a situation where you have two commissioners saying they were concerned about the integrity and appearance of the process... I think the commission has to say, 'Gee, then there's a problem,'" he said.

Jones shot back, "This issue is not the only issue where we have members of the board who respectfully disagree. Three to two wins."

PSI president Robert Williams said furnishings and equipment will be delivered next week. Some Maximus workers will be hired and retrained in PSI policies.

PSI officials have pledged to do a better job than Maximus, which has drawn criticism from clients who alleged employees are rude and ineffective.

"That concerns us," PSI's president of privatization Michael Henry said. "One thing we will do immediately upon taking over is provide customer service training for all staff that interact with the public. Customer service is the main focus of our office."

Pledge

Policy Studies Inc. officials have pledged to do a better job than Maximus, which has drawn criticism from clients who alleged employees are rude and ineffective.


 

Whistle-blower clouds Maximus' future in Maryland, is fired for her honesty

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Men's News Daily

March 27, 2002 — Just a few weeks ago, a private corporation that administers Baltimore's Child Support enforcement program seemed on the verge of securing a three-year contract extension from the state of Maryland. Maximus Inc. was originally awarded the contract to run the child support programs in Baltimore and Queen Anne's County in 1999. Earlier this month, Maryland's House voted 85-43 to pass a bill that would extend the Maximus contract. The Senate voted 34-8 on a welfare reform bill that also favored Maximus. Maryland's Governor, Parris N. Glendening, last month stated his opposition to extending the privatization contract, setting up a possible veto of the legislation. Given that it requires 85 House votes and 29 Senate votes to override a veto, Maximus' position seemed secure. But that was before an executive head in Maryland's Department of Human Resources side-stepped her supervisors and sent an "extraordinary" letter to the co-chairmen of the Joint Audit Committee alleging that Maximus had engaged in an "apparent" pattern of corruption and wrongdoing.

Teresa L. Kaiser, executive director of the Child Support Enforcement Administration, has offered auditors a virtual road map for the investigation of possible criminal wrongdoing on the part of Maximus. According to Kaiser:

• Maximus manipulated its own performance scores so that it would appear more successful than it actually was in executing its child support collection function.

• Maximus improperly reopened old cases to get credit for securing court orders

• Maximus continued to collect child support payments from non-custodial parents whose children had passed the age of majority, and refused to issue refunds even when the errors were exposed. Maximus operated outside of the law by diverting payments from one jurisdiction to another without securing a Judge's order.

Kaiser's letter was addressed to Del. Samuel I. Rosenberg, a proponent of privatization, and Sen. Nathaniel J. McFadden, a critic of the legislation that would extend Maximus' contract. Rosenberg and McFadden co-chair the Joint Audit Committee, and would be responsible for initiating an audit of the company. In her letter, Kaiser concedes that it is "extraordinary" for a state employee to by-pass the Department's chain of command and address the legislators directly. But, according to Kaiser:

"The nature of the apparent wrongdoing, the number of families affected and the political nature of this issue at this time require that those who are asked to investigate be unimpeachable and without political motivation."

Kaiser also said she believes she has placed herself at risk both professionally and personally by blowing the whistle on Maximus' alleged misconduct [she was later fired, see below]. It remains to be seen whether any of Kaiser's charges will be confirmed by the audit process. But if even one Senator is dissuaded from seeking an override of any potential veto by Governor Glendening, Maximus' days in Maryland could be numbered.

The potential of child support to become what one Arkansas player termed a "cash cow," providing officials with "steady income for little work," has been exploited elsewhere. The Washington Post reported in July 2000 that a top adviser to Prince George's County, Maryland, executive Wayne Curry received contracts without competitive bidding for child support enforcement within days of leaving the county payroll. In March 2002, Maryland announced a criminal investigation of Maximus Inc., which runs Baltimore's program. The alleged misconduct included collecting money from parents even after their children had reached adulthood and then refusing to refund it. The whistle-blower expressed fear for her personal safety, according to the Baltimore Sun.

From a criminal investigation of Maximus Inc.

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In an April 2002 letter to the House Chair of the Joint Audit Committee, the Executive Director of the Department of Human Resources. Child Support Enforcement Administration expressed specific concerns about the Departments contractor (Maximus), which was hired during fiscal year 2000 to operate the Baltimore City Office of Child Support Enforcement. Specifically, the Executive Director expressed her belief that the contractor, through inaction or inappropriate actions affecting case files, was attempting to enhance the results of its performance, and overstate the success of the child support privatization project that was soon to expire. This letter included a request for a legislative audit of the contractor's operations to determine the validity of her concerns. The Executive Director based her concerns on certain statistical reports that to her, showed trends and activity of an unusual nature for Baltimore City. She advised that she then requested additional computer extracts of child support data, which indicated to her the possibility of further contractor improprieties, resulting in the following five concerns:

1. Closing cases in violation of standards and regulations,

2. Creating multiple cases using a single valid court order,

3. Reopening old cases without apparent justification,

4. Diverting collections made by other subdivisions without processing the wage withholding orders, and

5. Collecting improper support payments, and failing to disburse collections to custodial parents or refund collections to absent parents.

At the Executive Directors direction, Child Support Enforcement Administration staff then conducted a review of approximately 200 closed Baltimore City cases to determine if Maximus closed the cases in accordance with standards and regulations. According to the initial results of that review, an overwhelming number of cases were closed improperly. The Department's Office of the Inspector General subsequently reviewed these same cases and reached the opposite conclusion, which was that case closure was appropriate for most of the cases. For the remaining four issues, the Executive Director advised that only cursory reviews were performed of a limited number of cases from the related computer runs. It was the result of the Administrations closed case review and the preliminary work on the other issues, which served as the basis for the Executive Directors April 2002 letter to the House Chair of the Joint Audit Committee. Because of the nature of the concerns and the need for an independent assessment of the situation, in April 2002, the Joint Audit Committee requested this Office to conduct a performance audit addressing the Executive Director's concerns.

Specifically, they were requested to determine if the Executive Director' s concerns were supported by case file documentation and to determine the extent of the problems, if any, using statistical sampling.

In March 2003, the Maryland Department of Human Resources, Child Support Enforcement Administration ("DHR") issued a request for proposals ("RFP") for the privatization of child support services in Baltimore City and Queen Anne's County. This RFP extended the pilot program for privatization that began in November 1996. In the original pilot program, a contract was awarded to Lockheed IMS, which experienced difficulties in the performance of the contract. Maximus, Inc. ("Maximus") began providing services and was the incumbent contractor. Three addenda to the RFP were issued.

In May 2003, DHR informed Maximus that it was not recommended for contract award. Maximus protested the decision. Among other things, Maximus alleged that the recommendation for contract award to PSI should be overturned because the technical evaluation of the proposals was arbitrary, capricious, and unreasonable, the financial evaluation of proposals was arbitrary, capricious, and unreasonable, PSI was not a responsible offeror, PSI did not submit a responsive proposal, and DHR's procurement process violated several aspects of Maryland procurement law. The procurement officer denied the bid protest of Maximus. Maximus filed an appeal with the Maryland State Board of Contract Appeals ("MSBCA").

The MSBCA agreed with the procurement officer. The MSBCA determined that DHR's ranking of Maximus' technical proposal was not arbitrary, capricious, or unreasonable. The MSBCA found that the evaluation was based only on criteria set forth in the RFP and that the members of the evaluation committee were not unduly influenced by beliefs they may have held concerning the merits of privatization or allegations of criminal or civil misconduct by Maximus in its prior performance of services. The MSBCA noted that the evaluation committee's determination of the relative merits of the offerors' technical proposals is given "great weight" and the MSBCA does not "second guess Agency decisions on technical issues."

Maximus alleged that DHR failed to assess the credibility of the offerors' proposals and verifying the accuracy of factual representations contained therein. The MSBCA held that an agency is entitled to rely on the accuracy of the data provided to them and the truthfulness of the affiant providing that data.

Maximus asserted that certain members of DHR were biased against Maximus and engaged in deliberate misconduct in reviewing its proposal. Maximus asserted that the members of the evaluation committee were against privatization and were attempting to end it by recommending contract award to PSI, an offeror that they knew would fail. Maximus asserted it had endured many false allegations regarding its performance and the composition of the evaluation committee had been altered to reduce Maximus' chance of being selected. The MSBCA found that Maximus did not present any evidence that any members of the evaluation committee opposed the concept of privatization or that any member deliberately selected an offeror that would fail. Three members of the evaluation committee testified at the hearing on the matter and that all denied any such animus toward Maximus.

Maximus alleged that the financial rankings were arbitrary and capricious because the option years (and not just the three-year base contract period) were included in the evaluation. The MSBCA found that the RFP provided for the evaluation of the total price and the forms included in the RFP included the base years and the option years in the "total price." As a result, the MSBCA determined that the financial evaluation was reasonable.

Maximus also asserted that the technical and financial proposals were not evaluated independently of each other. The MSBCA found that the initial evaluation of the technical and financial proposals was conducted independently. The MSBCA determined that the requirement of independent evaluation was not violated when the DHR evaluation committee received BAFOs from the offerors.

The MSBCA also upheld the procurement officer's discretionary determinations regarding the responsibility of PSI and the responsiveness of its proposals.

 

Note: Maximus filed a petition for judicial review of the MSBCA's decision in the Circuit Court for Baltimore City. The Circuit Court affirmed the MSBCA's decision in March 2004 [but before that Teresa L. Kaiser was fired].

 

Practice Tip: A protestor alleging bias has a heavy evidentiary burden in proving specific intent to harm or favor an offeror. Likewise, a protestor that alleges the arbitrary, capricious, or irrational evaluation of its proposals faces a high burden in proving the procurement officer did not act in a reasonable manner.

Teresa L. Kaiser fired by new governor

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Center for Family Policy and Practice

January 2003 - Vol. 5, No. 1 — Maryland Child Support Enforcement Administration Executive Director Teresa L. Kaiser was fired by newly elected Republican Governor Robert L. Ehrlich, Jr. on January 16. Kaiser was critical last year of Maximus, Inc., a private company that contracts with Baltimore to administer the child-support program there. Kaiser came under pressure from the chairman of the Maryland House Appropriations Committee, Howard Rawlings, after ordering an audit of Maximus last year. Maximus' chief lobbyist, Bruce Bereano, is a friend and supporter of Governor Ehrlich and Maximus donated $10,000 to his inaugural fund.


 

Dream deferred

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Abstracted from article by Jason DeParle, Washington Monthly

September 2004 — The 1996 welfare bill, a landmark in social policy now up for renewal before Congress, has been widely deemed a success. And on one level, the praise is deserved. After 60 years of federal control, Congress handed new authority back to the states, with fixed funding, work rules, and time limits of no more than five years for most recipients. The states responded by cutting the rolls and raising employment rates, each dramatically. Poverty plunged for its target populations — children, minorities, and single mothers. The late '90s economic boom gets part of the credit, and so does an unsung expansion of workers' aid, including child care, health care, and tax credits. But the timing and the depth of the employment surge puts the welfare law at the center of the trend.

If the welfare law has worked, however, it has largely worked as a deterrent, creating enough hassles that those with other options make other plans. Some states require a month-long job search before applicants can collect benefits. Some, including Wisconsin, route recipients through rounds of job-search and motivation classes so tedious they make the competent flee. It is much less common for the system to do what it often claims, to provide individualized services that get at the underlying issues in poor women's lives, like drug abuse or depression. With the rolls down 60 percent, there has been lots of talk about the "hard to serve" cases that remain, without much serving of them.

In part, that's because poor women themselves are resistant to the idea. "Personalized casework" means a stranger dipping into their business. In part, it's because lots of front-line workers, particularly in the big cities, aren't a whole lot more capable than their clients. Some, good and bad, have just come off the welfare rolls, and I've met more than one caseworker who returned to public aid. Even good ones often find themselves trapped in unsupportive bureaucracies. Some of the lawmakers reconsidering the law have now recognized that the bureaucracy needs to do more. But their solution — demanding that states ratchet up the number of clients routed through the current programs — ignores the quality of the programs themselves.

I spent seven years following a group of families through Wisconsin Works, or "W-2," the most lauded welfare program in the country and one now being emulated as far away as Israel. With generous funding, small caseloads, and the clout of the state's four-term governor, Tommy G. Thompson, W-2 is often thought of as a best-case look at the welfare bureaucracy. It wasn't a reassuring one. Behind the scenes, the celebrated program compiled a disturbing and largely hidden record of financial waste and human neglect. If the law is going to live up to its billing — "the greatest social policy change in sixty years," said Thompson, in his current job as Secretary of Health and Human Services — the system can't afford to rest on a record like this.

"Our dismal performance"

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Some social-work careers begin in flights of youthful idealism; for example Michael's began in 1998 at Ladies Night at a Milwaukee pickup joint. He was out with a high school friend, Jose Arteaga. Growing up together in the inner city, they used to have long, philosophical talks about how the ghetto had gotten so screwed up. Now at 30, Michael was poor and screwed up himself, and Jose was a rising star — director of case management — at Maximus, Inc., one of the five private groups running the Milwaukee welfare program. Jose had an inspiration: Michael should come aboard as a caseworker. Yeah, Michael thought. Right.

It was late, and they were drinking, but they each had a reason to act like they were serious. Michael's reason was simple: He needed a job. In the decade since he had dropped out of Marquette University, he had driven a taxi, delivered pizzas, swabbed toilets, rushed into a marriage, had a son, and gone through a bitter divorce. He had started a landscaping business with a friend and gotten cut out just as it took off. In the two years since, Michael mostly had brooded and drank. He owed 10 months of back child support, and his girlfriend was due to give birth in a week. He needed some cash.

Jose's motives were more complex. Among the five Milwaukee agencies running W-2 (including the YWCA and Goodwill Industries), Maximus was the only national, for-profit company — a welfare agency that traded on the New York Stock Exchange! By allowing states to privatize their programs, the 1996 law set off a gold rush among such firms; one Wall Street analyst saw more than $2 billion a year up for grabs. Formidable rivals like EDS and Lockheed Martin, the aerospace giant, were fighting for the business, but with a longer record and tighter focus, Maximus was thought to have an edge. The W-2 contract was a coup. No welfare program was followed more closely, and Maximus hoped to leverage the publicity into market share nationwide. The company went public on the eve of W-2's launch, and the stake of the founder, David Mastran, soared to more than $100 million.

But behind the scenes, the Maximus program was soon in disarray. W-2 was built on the theory of "full engagement": 40 hours of weekly activity, of which 30 would involve actual work. Yet many clients waited months for assignments. Others ignored their assignments and got paid anyway. Six months after the program's start, Steve Perales, the second in charge, warned that "virtually no referrals are being made to the CSJ unit," the one that assigns community service jobs. While 1,100 clients were supposed to have assignments, just 507 had gotten them, and "only about 88 are actually participating." That is, in the country's most famous work program, only 8 percent of the clients were working. "What they were doing, I don't know," George Leutermann, the head of the program, later told me. "They were doing nothing."

One reason was the shortage of caseworkers. Under state rules, each "Financial and Employment Planner," or Fep, was supposed to manage no more than 55 clients. Some Maximus Feps had more than twice as many. Ten months after the program's launch, the state took its first quantitative look at the agencies' performance. The audit, called a 740RC report, was of interest not only as a mid-term report card, but also because it hinted at the criteria the state would use for contract renewal the following year. With Maximus using the Milwaukee program as a national exhibit, a failure to keep the contract would wreck the business plan. All the Milwaukee agencies performed poorly on the report, but Maximus did especially badly: 67 percent of its clients had no work assignments. Railing about "our dismal performance," Leutermann wrote a memo blaming subordinates for "a major setback" that "portends continued problems." But after months of refusing, he also agreed to hire more caseworkers.

A few nights after their drinking session, Jose showed up in Michael's kitchen with a bottle of tequila and a sheaf of paper. Taping flowcharts to the wall until 1:00 AM, he offered a crash-course on W-2, as it existed in theory.

Point Number One: Only Work Pays. Free money was gone. Clients had to earn their checks in a simulated workweek. The bulk should be spent actually working, while the rest could be devoted to activities like training, treatment, or classes. For every hour clients missed, their checks got reduced by $5.15, the equivalent of the minimum wage.

Point Number Two: W-2 Provides the Jobs. The jobs progressed along a four-part ladder, with each a step up in difficulty and pay. At the bottom rung, even the physically or mentally impaired might, say, perform light assembly tasks in a supervised setting. At the top was the ultimate goal: regular, unsubsidized employment. In between, most clients would be assigned to community service jobs — answering the phone at a food bank, perhaps, or sweeping a school. In addition, the state provided child care, health care, and transportation, the support services that workers needed.

Point Number Three: Casework Is the Key. There was no casework in the old system, just a stream of checks. W-2 promised every client an individualized employment plan and a caseworker to help see her through. Part sheriff, part shrink, the Feps were supposed to monitor progress and get to the bottom of things. "More of the success of Wisconsin Works will ride on the talents ... [of the] financial planners than on any other collective feature of the new design," the original W-2 proposal had said. Yet most of the front-line staff had been brought in from the old system. Jose thought too many acted like data-entry clerks, tidying their software screens but forgetting the client. He saw Michael as a no-bullshit guy, tough but empathetic. The kind the system needed.

As the kitchen course came to its inebriated close, Michael liked the theory. But as for his own role as an agent of reform, he had no enthusiasm at all. Office work dealt a blow to his muscular self-image. Office workers had soft hands. Still, the $28,000 salary was more than he had ever earned. Leaving for the first day of work, he kissed his baby goodbye. "Your daddy's going to make some money," he said.

The boss's mistress

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It started poorly and went downhill from there. Michael's first battles weren't with clients but with the computer system that tracked them, a befuddling Wisconsin institution called CARES. The central nervous system of W-2 (most states have an equivalent), CARES had more than 500 screens, each known by an opaque four-letter code. Need to change someone's work assignment? Go to WPAS. Issue her check? Type "Y" in AGEC, but change the date in SFED, otherwise the check may not go out, even when AGEC said it did. For all the talk of making Feps bold problem solvers, fluency in CARES was particularly prized since it was the sole repository of the data that would govern contract renewal. It didn't matter when Michael used his lunch hour to drive clients to job interviews; there was no CARES screen for that. (He pictured one: "SCKR," for "sucker.") What mattered was whether he had correctly coded their employability plans. Facing a parade of addled clients, Michael found himself thinking more about keystrokes than the substance of what they said.

In pitching welfare privatization, Maximus had promised to outdo government with "a professional work environment that is more conducive to employee productivity." Michael thought the place was coming unglued. At least two caseworkers were addicted to crack. Another was hospitalized for job-related stress. A Fep with whom he shared an office went off on gambling jags, staying out at a casino all night, then sleeping at her desk. "Baby, I gotta take a little nap," she'd say, locking the door. He wondered if he were just a magnet for misfits, but the memo traffic in the bosses' suite showed a broader turmoil. Leutermann, the office chief, warned one caseworker was "going off the deep end lately," causing "all kinds of problems about his behavior in the bathroom." Another Maximus worker chased his supervisor from his office when she told him to clean up his files. "I am a Marine combat veteran that deals with Post Traumatic Stress Disorder," he wrote. "I lost my head." A flirtatious caseworker, rebuffed by a colleague, walked into his cubicle and bit him.

Given the power that caseworkers exert, welfare offices need to use caution; predatory workers may pressure their clients for sex or drugs. Sometimes no pressure is needed. "If you give me the chance, I'll ride you like a horse," one of Michael's clients wrote. Not everyone summoned his self-restraint. A workshop teacher was quietly pushed out the door after a client complained that he was urging her and others to join a drug-peddling scheme. An internal report explained: "She said some of these women have told her that they have had sex with him because they are afraid he will cut off their benefits." A caseworker resigned when his client announced she was carrying his baby. "Dumb ass ... should have paid for the abortion like I asked him too!" she announced in the Maximus office, angry after she heard another client boast that she was sleeping with him, too.

Maximus encouraged the hiring of family and friends, calling it an effective way to lure and keep talent. As head of the office, Leutermann certainly practiced what he preached. He put his wife, his son, and his niece on the payroll, along with his mistress and his mistress's mother. The gossip about the boss's affair reached the point that Leutermann urged subordinates not to mention it in front of his wife. In a memo labeled "Rumors and Soap Operas," Leutermann wrote: "Our office continues to suffer through a problem of useless, superfluous, and often insidious rumor mongering... MAXIMUS does not have time to fixate on this type of drivel." Leutermann's girlfriend, a senior Maximus manager, was pregnant with his child when he hired her; at the time he circulated the memo complaining about rumors, they had an eight-month-old son. The woman who rose to the number-two job in the Maximus office, Paula Lampley, had her son on the payroll, too, until he drew thirty years for reckless homicide. "In all of our projects, we never had personnel problems like we had up there," David Mastran, the Maximus CEO, later told me.

Perhaps he was thinking of Corey Daniels, the caseworker assigned to train Michael. He wore a platinum Dennis Rodman do and watched soap operas at his desk. Playing his voice mail on the speakerphone, he deleted clients' messages as soon as he heard their names. Bo-rring! Heard that! "The guy's a flipping goof," Michael said. A background check would have shown that Daniels was also a convicted forger, with an arrest record that included kidnapping, battery, and impersonating a police officer. Maximus hired him while he was on parole. A few months after his tutelage of Michael, Daniels was back in court, charged with extorting nearly $4,000 from his clients. (In a trial that largely pitted his word against theirs, he was acquitted.) Michael wondered what he had gotten into: "Drug abuse, check kiting, knocking up people — what is it about this place?"

W-2 buys the crack

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Tracking a Maximus client named Opal Caples, I was developing my own concerns about the W-2 bureaucracy. We met in the summer of 1997 at another W-2 agency, a non-profit grassroots group called the Opportunities Industrialization Center (OIC). It, too, was a mess. I spent an hour in a room of corralled indigents, listening to a job counselor read from an almanac of occupations. It was social work as farce: "Mathematics: reading graphs and stuff like that — it gets real deep when it comes to mathematics...Agriculture: that thing with cows, gets real deep — giving them hormones?... Social studies: like socialization, only you studying it...Forestry: why don't we see any more wolves? Somebody eating them?"

I included Opal in an article about the challenges W-2 faced, and she wound up posed with Tommy Thompson on the cover of The New York Times Magazine. She was also, secretly, a cocaine addict in the process of relapsing. Six months later, her addiction was out of control. She auctioned off her furniture to drug dealers. She smoked up her food stamps. One day, she failed to pick up her three little girls from the day care center that kept them after school. "I didn't forget — I was just high," she said.

W-2 variously ignored and abetted her demise. Her original caseworker, Darlene Haines, left OIC for jobs at Goodwill and Maximus. Then she got convicted of check forgery and wound up on the other side of the desk, as a W-2 client herself. With Haines gone, Opal went months with no caseworker at all. Facing eviction, she finally showed up at OIC's door, wild-eyed and wasted, begging to be seen. Had the receptionist bothered to look in the file, she would have known that the thin disheveled woman seeking help was a mother on drugs. (A previous caseworker had documented it a year earlier.) Instead, she said the office didn't see walk-ins.

A cousin called Opal's mother, who came from Chicago and got the girls. Opal fled to a drug den. With her new address in Maximus's district, OIC transferred the case, and the monthly checks continued to flow. Opal, the W-2 poster child, was pregnant and living in a crack house. And Wisconsin's celebrated program was buying the crack.

Golf balls, Melba Moore, and clowns

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Whatever Maximus could blame for its problems, it couldn't blame a shortage of cash. As Opal was spending her money on drugs, Maximus went on a much grander binge, showering the town with more than $1 million of billboards, TV ads, and corporate tchotchkes, virtually all financed out of welfare funds. Like a mafia wiretap or the Watergate tapes, the bookkeeping has the lurid appeal of shabby sin exposed to daylight. The company spent $100,000 of program money on backpacks, coffee mugs, and other promotional fluff. It spent tens of thousands on employee entertainment. It spent $3,000 to take clients roller-skating and $2,600 for professional clowns. Though Maximus later agreed to repay $500,000 to the state and donate another $500,000 to community groups, the true extent of the waste will never be known because the records were in such disarray. For any welfare program to spend money like this defies comprehension. Why would a profit-seeking enterprise indulge in such chaos and waste?

The answer starts with the financial incentives of W-2. It was designed as a risk-management system, much like an HMO. Each agency got a fixed payment to serve its region; in return, the agency financed everything from benefits to telephone bills. Just as HMOs were supposed to profit by keeping people healthy, W-2 agencies were supposed to profit by keeping them employed. The more an agency cut its caseload, the more its profits would grow. Yet faced with the work rules, so many clients walked away — the state budgeted for 50,000 cases, but only 23,000 enrolled — the agencies were rolling in dough. The catch is that unrestricted profits were capped at 7 percent of the contract, or $4.2 million in Maximus's case. After that, the agencies kept only 10 percent of any leftover funds, so they had little incentive to cut costs. In other words, Maximus found itself with a big pot of someone else's money to spend. Spend it they did, in an attempt to burnish the company's image.

There were Maximus water bottles and Maximus visors. There were Maximus golf balls, towels, and tees, for all those golfers on the Maximus rolls. A succession of minority fairs and fetes wound up with a Maximus check. There was a Maximus jingle. Make that two Maximus jingles; the first, rendered in a minor key, was recommissioned after a consultant warned that in "keeping with the Maximus image, the music should not reflect sad or dark tones." In one of Leutermann's wilder schemes, Maximus spent more than $23,000 to bring in Melba Moore, the once-upon-a-time Broadway star for what flyers called an "exclusive inspirational concert for Maximus families." The sparse attendance translated into an average ticket cost of about $125.

Maximus wasn't the only agency taking a joy ride on welfare funds. OIC spent $67,000 to sponsor the Ray Rhodes Show, the weekly football rundown hosted by the coach of the Green Bay Packers. Another disturbing report at Goodwill, which ran two Milwaukee regions and therefore was the state's largest W-2 agency. Auditors found it spent more than $270,000 of program funds outside the state, mostly in an unsuccessful attempt to win a contract in Arizona. That contract went to Maximus instead.

The waste, though concealed for years, finally came to light. Not so with the deeper problem of W-2, its neglect of so many clients. What George Leutermann called "our dismal performance" on the state's first client activity report, didn't tell Maximus anything its managers hadn't known: Casework was weak to nonexistent, and most recipients were idle. Keith Garland, the Maximus manager of quality control, said that out of a caseload of nearly 1,500, "We had maybe 100 people doing something." As for the rest: "We didn't have a clue."

A few months after Maximus learned of its results on the client activity report, the state announced the criteria it would use for contract renewal. There were, among other standards, three major measures of casework. The Feps could each handle no more than 55 clients at a time. They had to keep their employability plans up-to-date. And they had to make sure 80 percent of their clients had a full slate of assignments. This was more bureaucratic bunk. The state didn't ask whether Opal got a job — it asked whether she had an employability plan. Plus, it was easy to manipulate the data: The state's sole source of information was CARES. The state had no way to know whether the assignments in the computer were real, much less whether clients were doing them. For months, Maximus tried to round up its clients and give them something to do. But if all else failed, state rules did permit another option: Just type something in the system and send the client a copy. The client might never even know.

Opal certainly didn't. Finding her stale file in his first stack of cases, Michael Steinborn quickly sent her an appointment letter. He needed to update her employability plan, since without one, her case would fail to meet state standards. When she didn't appear, he simply went into CARES, wrote a plan, and stuck it in the mail; it showed her aspiring to become a teacher's aide. He didn't know she was addicted to crack. He didn't know she was pregnant. He didn't know she was living in a drug house while her mother raised her kids. He had never met her. But with that, Opal's case was now passing W-2's standards. "CARES is a fantasyland," he said. Maximus got its contract renewed. And the following year, W-2 won a prestigious Innovations in American Government award from the Ford Foundation and Harvard, which dispatched a researcher on a whirlwind Wisconsin tour. One of the qualities the award officials praised was W-2's financial efficiency. The other was its casework.

However, the broader bureaucracy remained troubled. As the evidence of its financial mismanagement surfaced, Goodwill withdrew from W-2. Bleeding red ink, the YWCA did, too. United Migrant Opportunity Services ran up big casework fines. Then OIC, where I first met Opal, wound up in the news, after $270,000 of program funds were discovered in the bank account of a corrupt state senator. The politician, Gary George, pleaded guilty to federal conspiracy charges, after acknowledging he took the money while serving in a position to influence the awarding of state contracts. In the case of OIC, those contracts totaled $140 million. The OIC president, Carl Gee, has been indicted for his alleged role in the kickback scheme. Maximus, meanwhile, has expanded its turf; running two of Milwaukee's six districts. Far from offering an anomalous look at the troubled bureaucracy, OIC and Maximus now combined account for nearly three quarters of the state's caseload.

About the author

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Jason DeParle, a former Washington Monthly editor, is a reporter for The New York Times. This article is adapted from his forthcoming book, American Dream: Three Women, Ten Kids, and a Nations Drive to End Welfare, to be published this month by Viking, a member of Penguin Group (USA) Inc. Copyright Jason DeParle, 2004. For more, see www.jasondeparle.com.


 

Maximus worker pleads guilty to welfare fraud in Hawaii

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U.S. Department of Justice

United States Attorney

District of Hawaii

 

PJKK Federal Building (808) 541-2850

300 Ala Moana Blvd., Room 6-100 FAX (808) 541-2958

Honolulu, Hawaii 96850

 

For Immediate Release

P R E S S R E L E A S E

 

October 19, 2004 — TRACY RODRIGUES, age 33, yesterday pleaded guilty to three welfare fraud charges involving bank fraud, wire fraud, and theft from the State of Hawaii before United States Magistrate Judge Kevin S.C. Chang. Rodrigues admitted in court that between April 2001 and April 2003, while an employee of Maximus, Inc., a private company contracted by the State of Hawaii Department of Human Services to provide a variety of social welfare services, she embezzled approximately $93,000 in "First to Work" program funds intended for monthly child care benefit payments.

United States Attorney Edward H. Kubo, Jr. said that according to information produced in connection with the case, Maximus' primary function was to assist unemployed individuals to obtain job training and employment through the "First to Work" program. To assist efforts to obtain job training and employment, Maximus would administer and disburse federal and state grant funds to provide parents sufficient funds to pay for child care. Typically, payments were $250 per child per month for child care expenses such as baby sitting or pre-school care.

As a former case manager for Maximus, Rodrigues' primary responsibility was to assist unemployed clients to obtain job training and employment. Rodrigues was also responsible for the issuance and management of monthly child care benefit payments. Rodrigues admitted between April 2001 and July 2002, she obtained checks payable to Maximus' clients, forged clients' endorsements, and deposited them into a bank account for her own personal benefit.

Rodrigues also admitted that between June 2002 and April 2003, she caused "First to Work" funds in excess of the allowable child care benefits to be deposited into her clients' Electronic Benefits Transfer (EBT) accounts. After deposit of this money, and through a variety of fraudulent methods, Rodrigues then obtained the excess benefit amounts for her own personal benefit.

United States Attorney Kubo said that anyone with information about past or on-going federal or state welfare fraud should notify the United States Department of Health and Human Services, Office of Inspector General via their toll free fraud hotline (1-800-HHS-TIPS (447-8477)) and the Investigations Office of the State of Hawaii Department of Human Services at their fraud hotline (587-8444).

Rodrigues is scheduled to be sentenced by Chief United States District Judge David A. Ezra on August 1, 2005. The maximum sentence that Rodrigues could receive is thirty (30) years imprisonment for each of the bank fraud and wire fraud counts and ten (10) years for the theft from a state program receiving federal funds count. The actual sentences will be further determined by federal Sentencing Guidelines. There is no parole under current federal law.

The Investigations Office of the State of Hawaii Department of Human Services conducted the investigation leading to the criminal charges, assisted by the United States Department of Health and Human Services, Office of the Inspector General, and the Federal Bureau of Investigation. The prosecution is being handled by Assistant United States Attorney Tracy Hino.


 

California child support worker embezzles quarter-of-a-million dollars

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Los Angeles Times

February 7, 2007 — Carey Renee Aceves worked for the California Dept. of Child Support Services. Her salary was $62,064 a year. She was a "procurement analyst," which means she knew how to use the state's credit card. Now the California Highway Patrol has busted her, the Sacramento Bee reports, for going on a spending spree with taxpayer dollars to purchase a flat-screen TV, iPods, and other household items.

She also had questionable taste:

"She led officers on a tour of the five-bedroom home, pointing out items she bought with the state card, including an electric cat blanket, rattan cat carriers and self-cleaning cat litter boxes. She bought satin and tulle formal gowns in pink, aqua and white. There were whips, handcuffs, chains and pornography videos.

The shiny blue Lexus, an SC 430 model with a suggested base price of $65,455, was in the garage with 389 miles on the odometer, Richard said. In the backyard, a gazebo sat near the hot tub and lawn furniture with a fire pit."

A neighbor said there was so much Styrofoam popcorn scattered around Aceves' garbage can that her husband had to get his Shop Vac out to clean up her mess. Ms. Aceves, the Bee reports, has been put on leave from her new job at the State Board of Equalization.


 

Fort Bend, Texas, woman guilty in child support fraud ring

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Nick Georgandis, Managing Editor, Katy Times

Title IV-D employee embezzles child support money

June 1, 2007 — A Fort Bend County jury has found 42-year-old Debra Hodge guilty of engaging in organized criminal activity for her part in bilking over $40,000 in fraudulent child support from the Texas Attorney General's Office. According to Michael Elliott, Chief of the Economic Crimes Division, Hodge and 11 co-defendants participated in an illegal scheme to defraud the Texas Attorney General's Office out of thousands of dollars from September 2005 through March 2006. Hodge opened at least one personal bank account and gave blank checks to another co-defendant who would then forge signatures as persons owing child support. These checks were fraudulently written for the benefit of other co-defendants and submitted to the Attorney General's Office, who would then forward the payments to those co-defendants — who were all actually owed child support. When they received the payments, those co-defendants would surrender a percentage back to the individuals who supplied the checks.

Hodge testified in her trial that the checks were stolen and forged without her knowledge. However, further testimony revealed that she had never reported the checks as stolen. During a heated cross-examination by Elliott, Hodge admitted that even she would not believe the story she was telling if she was on the jury. "The citizens of Fort Bend County were clear that they would not tolerate criminals stealing money which is designated to support our children," said Elliott, "and even minor involvement in a scheme of this nature will not go unpunished."

Hodge was tried in the 268 th District Court before visiting judge Neil Caldwell. The charge of Organized Criminal Activity in this case is a second-degree felony. Assistant District Attorneys Michael Elliott and Kristen Moore prosecuted the case. Eric Ashford represented the defendant.


 

Tennessee child support worker nabbed for selling stolen personal info

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Nashville City Paper

April 3, 2009 —A former child support worker was arrested after attempting to sell the personal information — including names, Social Security numbers and bank account numbers — of 1,600 people.

Steven K. Gilmore of Nashville, 27, was arrested late Wednesday and made his first appearance in federal court on Thursday. The federal criminal complaint alleges that he possessed, with intent to defraud, the stolen information.

"Public trust and confidence is severely undermined when attempts are made to steal and profit from the sale of private identifying information entrusted to our public service agencies," said Ed Yarbrough, U.S. attorney for the Middle District of Tennessee, in a press release.

Gilmore was employed until Jan. 8 of this year by [Denver, Colorado based] Policy Studies, Inc., a private company that contracts with the Tennessee Department of Human Services to provide child support services for Davidson County. He had access while he worked there to personal identification information, the criminal complaint claims.

He sold a total of 35 names, dates of birth and Social Security numbers between October 2008 and last month, all to an undercover operative of the Tennessee Bureau of Investigation.

He claimed to the operative that he had similar information that he was willing to sell for an additional 1,500 people, and was arrested while meeting with the operative to deliver the information.

Authorities said the price he was charging for the data was $2,800.

Law enforcement authorities currently believe Gilmore has sold information only to government operatives, and that all information Gilmore has stolen has been recovered.

Gilmore is still being investigated by the TBI, as well as by the U.S. Secret Service.


 

El Paso County, Colorado, child support collector charged with identity theft and fraud

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Abstracted from story by Lauri Martin, KKTV.com

Investigators say Shenequa Brown used money for her utilities and other bills

May 14, 2009 — Her job was to collect child support money, now she stands accused of stealing her clients' identities and their money.

Shenequa Brown, 27, was a contract worker for Family Support Registry, an agency that deals with child support. She is charged with identity theft and criminal impersonation.

Investigators say there are a few victims in this case. One victim, Dale Hixon, said:

"I fell behind in child support and my license was suspended, so my brother generously offered to pay. Shenequa Brown told me to make a one time payment over the phone. She needed my check number, routing number and my bank number."

Hixon says a few weeks later, his brother noticed nearly $700 had been stolen from his account. A day later, another $183 was gone.

"My brother is 57-years-old. He is a walking quad, although he can't walk anymore. We loaded him in the car and took him to the bank. They (bank workers) came out and said Shenequa Brown had the money. I said, 'Oh my gosh, that's my case worker.'"

According to court documents obtained by 11 News, detectives say Ms. Brown used Hixon's $183 to pay off a Comcast bill. "I don't know what she is thinking... paying her bills with other people's money. She was leaving a paper trail back to her," said Hixon.

Investigators say when they searched Brown's home, they found numerous credit cards and credit applications with other people's names on them.

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Added August 22, 2007

Last modified 4/11/15