Fraud-Prone Poverty Programs Are Ripping Off Taxpayers
Shad White
Three years ago, my office, the Mississippi Office of the State Auditor, learned through a whistleblower tip thatTemporary Assistance for Needy Families (TANF) fundsmay have been misspent by the Mississippi agency handling that money. Several months later and after an investigation by my team, we revealedthe startling truth:Tens of millions of welfare dollars had been embezzled.
TANF funds were used in Mississippi to pay fordrug treatment at a luxury Malibu resortfor the friend of the head of the agency dispersing the funds. It paid for an investment in anexperimental concussion drug company. It financedreligious concertswith no proof they were attended by the needy,nice cars for the headsof an influential local nonprofit — along withpaying off a speeding ticketfor one of them — andexcessive rentfor property owned by the people handing out the money.
And of course, national outlets from ESPN to the late-night comics picked up on our discovery that Hall of Fame quarterbackBrett Favre was paid $1.1 millionon a contract requiring him to givespeeches he never gave. He also successfully lobbied for$5 million in welfare fundsto be spent on avolleyball court at his alma materwhere his daughter played.
All told, this was the largest public fraud in state history. Local and federal prosecutors took our findings and indicted six of the culprits. We arrested them, and five have pleaded guilty. The FBI continues to investigate the case, working with our entire case file and my team to get to the bottom of everything.
Nationwide Problem
Sadly,large fraud schemesin poverty alleviation programs have streamed across the headlines of newspapers around the country lately. In the last couple of months, federal prosecutors indictedtwo nonprofit executivesin Minnesota forstealing $250 millionfrom a program to feed hungry kids. In June of 2022, the New York Post reported the head of aNew York nonprofitwaspaid millions= in taxpayer funds to house the poor while =living in an expensive high-riseand funneling taxpayer money tohis for-profitbusinesses. The list goes on.
Now that Republicans have taken the majority in the U.S. House, they have a fresh opportunity to explore why thebillions taxpayersspend on the poor are so prone to this sort of abuse. In November, House Republicans sent a letter to Department of Health and Human Services Secretary Xavier Becerra arguing, “The Mississippi case is emblematic of a systemic problem:TANF lacks necessary guardrailsmaking it susceptible to fraud.” They asked HHS to describe what they were doing to prevent the problem in the future.
This was a great start, and Republicans should double down on efforts to extirpate fraud from these kinds of programs. Connectedpowerbrokerswho happen to run anonprofitshould not be theprimary beneficiariesof our government’s spending for the poor. The House Ways and Means Committee should hold hearings to identify the best policy changes for these programs.
Proposals for Improvement
Here are a few ideas to get them started: Federal monitors should ensure state agencies are policing the nonprofits that take funds,tighter restrictions should be placed on how TANF can be spent (poverty programs should be focused on getting people into the workforce — period), and state agency heads should sign documentsunder penalty of perjuryattesting to the number of poor people who were helped by their spending.
Finally, HHS should regularly report improper TANF spending to Congress. As House Republicans have noted, “Nearlyevery government assistanceprogram isrequired to reportimproper payments on an annual basis,TANF is not.”
Voters expect government to act quickly to stop fraud in these programs. The belief that influence peddlers have rigged government spending for their benefit is bipartisan. Putting a stop to these sorts of schemes in poverty programs would appeal to a broad cross-section of Americans. Billions of dollars are spent across hundreds of these programs, so the savings could be massive if Congress gets this right. And most importantly, hard-earned taxpayer dollars might actually benefit the poor in our country.
Shad White is the 42nd State Auditor of Mississippi.
https://thefederalist.com/2023/04/13/fraud-prone-poverty-programs-are-ripping-off-taxpayers-nationwide/