NEWS RELEASE
For Immediate Release
Contact: Steve Halvonik 717 787-1381
Audit Text

Auditor General Jack Wagner Urges DPW to Implement Recommendations to Eliminate Potential LIHEAP Fraud

Renews call after 18 charged with stealing $500,000 in LIHEAP funds

HARRISBURG, June 10, 2009 – Auditor General Jack Wagner today urged the Department of Public Welfare to immediately implement all of the recommendations he made two years ago to eliminate the potential for fraud and abuse in the Low Income Home Energy Assistance Program.

Wagner renewed his call one day after the Philadelphia district attorney, relying in part on information uncovered by the Department of the Auditor General, charged 18 people – including 16 state and city employees – with stealing more than $500,000 of LIHEAP funds and related crimes.

The Department of Public Welfare, which administers the LIHEAP program, has refused to provide Wagner’s auditors with documentation to prove that it had implemented the Department of the Auditor General’s recommendations.

“LIHEAP is a vital safety net that helps keep thousands of Pennsylvania families warm during the winter,” Wagner said. “I commend District Attorney Lynne Abraham and her office for acting on information developed by our agency and others.

“With the nation mired in its greatest recession in a generation, LIHEAP is more valuable than ever. DPW must prove that it has taken necessary action to fix LIHEAP, to assure needy families that funds will be available this winter, and to assure taxpayers that their hard-earned dollars are not being wasted or stolen.”

LIHEAP provides financial grants and cash assistance to low-income families to help pay their winter heating bills. The federal government and Pennsylvania provided $280 million in LIHEAP funding for the 2008-09 winter heating season.

Wagner’s special performance audit, released in June 2007, made 25 recommendations after auditors found systemic weaknesses in LIHEAP programs in six counties -- Allegheny, Lancaster, Perry, Lehigh, Philadelphia and York.

Auditors determined DPW’s inadequate policies and procedures, insufficient supervision and inadequate oversight resulted in potential applicant and employee fraud and abuse. More than 1,000 cases of potential fraud and abuse were identified in the six counties, including more than 300 in Philadelphia County, 23 of which were cited specifically in the audit.

Auditors found applications containing invalid Social Security numbers or Social Security numbers of deceased people, as well as applicants filing multiple applications using different Social Security numbers or different addresses and applicants receiving excessive benefits.

Wagner referred over 900 LIHEAP applications to the Office of Inspector General for criminal investigation; OIG referred some of these cases to the Philadelphia district attorney.

At a press conference announcing the results of her investigation, Abraham said that the way LIHEAP was administered “practically assured that both fraud and theft would flourish. There was a total failure of supervision and oversight.”

“District Attorney Abraham’s comments validate the major findings of our LIHEAP audit,” Wagner said.

The Department of the Auditor General contacted DPW in July 2008 to conduct a follow-up of the LIHEAP audit. Wagner said his auditors requested a written, detailed summary explaining the status of DPW's efforts in implementing each of the recommendations. DPW sent a letter responding to the request, but has failed to provide specific information on how it has addressed each of the 25 recommendations.

“Every dollar wasted is a dollar that will not be available to families who need assistance,” Wagner said. “There are serious deficiencies in the administration of LIHEAP and the Department of Public Welfare must provide evidence that they are addressing the problems as soon as possible.”

The LIHEAP special performance audit is available to the public at www.auditorgen.state.pa.us.

Auditor General Jack Wagner is responsible for ensuring that all state money is spent legally and properly. He is the Commonwealth’s elected independent fiscal watchdog, conducting financial audits, performance audits and special investigations. The Department of the Auditor General conducts more than 5,000 audits per year. To learn more about the Department of the Auditor General, taxpayers are encouraged to visit the department’s Web site at www.auditorgen.state.pa.us.

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