Secretary of State Dennis Richardson released an advisory report detailing the work of the Oregon Audits Division in using data analytics to assist with fraud investigations in the Supplemental Nutrition Assistance Program (SNAP).
For several years, the Audits Division has been working with outside partners to assist in the successful prosecution of merchants and SNAP beneficiaries convicted of fraud. To date, their work has contributed to the criminal convictions of five merchants and the banning of 59 SNAP recipients.
“I am proud of the inroads the Audits Division has made in helping to identify and stop fraud in the SNAP program,” said Secretary of State Dennis Richardson. “With 1 in 4 Oregonians relying on this aid, we must ensure these benefits are protected for those who need them.”
While fraud in the SNAP program is relatively uncommon, the damage done still translates to a substantial amount of public funds. The United States Department of Agriculture (USDA), which administers the program, estimates fraud to consist only of 1% to 4% of total expenditures. In Oregon, this rate translates into anywhere from $10 million to $40 million in annual misused SNAP funds.
Auditors analyzed SNAP data using analytic and mapping software to identify red flags that could help state and federal fraud investigations. The auditors focused on a common fraud scheme where beneficiaries and merchants conspire to profit from the program. In this scheme, a merchant runs a benefits card as if the beneficiary is paying for food, but the merchant provides cash instead —typically 50 cents on the dollar. The beneficiary then pockets the cash and the merchant is reimbursed electronically through the EBT system for 100% of the charge.
As a result of the Audits Division’s work, five merchants have been prosecuted and convicted of SNAP fraud, and more than $525,000 in restitution to the state has been ordered. Fifty-nine SNAP recipients have been banned from the program for life and 40 for one year. Banning these individuals will save the state an estimated $1.7 million in future cost avoidance.
Additionally, a $300,000 grant from the USDA has been awarded to the Oregon Department of Human Services, to apply analytic methods in their SNAP investigation work. “We in the Secretary of State’s office are committed to identifying and reducing fraud in Oregon,” said Secretary Richardson. “We will continue to partner with the Department of Human Services, the USDA, and the Office of Inspector General to investigate SNAP fraud.”
Advisory reports are a new initiative created by the Secretary of State Audits Division. The reports are not audits, but rather limited reviews of time-critical assessments and evaluations designed to provide informational material in support of other agency investigations. Advisory reports are not required to adhere to the full set of government auditing standards, but they do follow the same rigorous quality assurance process used in every audit report.
Source: Oregon Secretary of State