Catch Me if You Can
Cracking down on fraud
Wayne Evans, 69, will never receive an Alaska Permanent Fund Dividend again. In 2000 he was sentenced to six months in jail, restitution of $5,449 for illegally received dividends and probation for 10 years. In addition, he has given up his rights to any future PFD payouts.
Between 1988 and 1993, Evans filed applications in his dead cousin's name. When investigators began to examine the case, Evans asserted that his cousin was his twin brother. A few years later investigators found Evans' dead cousin's death certificate from 1937, and in 1999 they filed charges.
When a state is handing out money in large amounts like Alaska's PFD, some people are going to use the system. "Human nature tells you that when you're giving away hundreds of thousands of dollars to hundreds of thousands of people, someone in there is lying," says Larry Persily, former deputy commissioner for the Alaska Department of Revenue and currently a reporter for "Petroleum News" in Juneau.
The Evans case is just one example of people trying to grab some extra money out of the permanent fund.
One of the most peculiar such incidents occurred a few years ago, recalls Nanci Jones, former director of the Department of Revenue's Dividend Divison. Someone was falsifying a document needed to apply for the dividend.
"Whatever document they needed, they didn't have it," she says. So they falsified it. They actually cut it and placed things on a piece of paper, and then they copied the document and sent us the copy. Well, the roommate informed on that person and sent us the little pieces they had used to make the document. The review supervisor recieved this envelope full of cut-out letters. That's the most unique one."
Thousands cheat
In April, the Department of Revenue started investigation unit, with its own investigator, to prevent fraud. Since then, as of early December 2003, it has opened up 832 cases. In most, the unit has gotten a fraud tip. Almost 330 of these applications have been denied because of fraud, says Dividend Director Sharon Barton. More than 100 applications are still under investigation, so the unit is likely to find more fraud cases.
It's impossible to say how many fraudsters are out there, though.
"We don't know the answer to that question because we only know about the fraud we find," Barton says. "I would just be plucking a number out of thin air."
Persily thinks the number is large. "There's got to be thousands of people every year who lie and don't get caught. I've nothing to base it on, but there's got to be thousands."
Since the dividend is split among the Alaskans, you'll get a bigger share if your neighbor doesn't qualify. An easy way out is then to call the fraud hot line, which was established a few years ago. Here people can call and report on suspected fraud. This is still the most effective way to track down fraudsters.
"The one thing for sure, people will tell on other people, Jones says. "We got a lot of hotline calls. "Cause you see, people are duplicitous at first. But then they fall out and become enemies, and then they tell."
The most common way to defraud, says Paul Dick, chief of operations, is if you file a dividend application although you have already moved out of the state. People also use fictitious addresses, fictitious names or lie in other ways on their applications.
Spotchecking needed
Just because you don't qualify doesn't mean you have committed fraud.
"The Dividend Division probably denies 15,000 applications every year give or take," says Persily. "But those are not all fraud cases. They are people who thought they'd give it a shot. They're on the edge and they figure: 'What the heck, maybe I'll slip on by,'"
This is why he thought that an audit system would help, and Dick, hopes that an audit will be established by spring 2004.
"The PFD program has never undertaken a comprehensive audit of dividend applications," he says "That's what you need to do. Every enforcement has got to be random. You can't stop every speeder, but as long as people are aware they could get stopped for speeding, it acts as a deterrent."
Dick agrees with Persily when it comes to audits. "It's something we would like to do; it's a new program so we're trying to feel our way around," he says.
It's a question of priorities though, Dick explains. Tips on criminal cases have the highest priority. The unit only has so many resources.
If Dick and his colleagues find a case where someone who doesn't qualify still applies for a dividend, the PFD Division has the authority to withhold or take back that person's dividend. You would also forfeit your next five dividends, Dick says.
But it doesn't end there. If the investigation program can prove that a person negligently has applied although he or she doesn't qualify, Dick says that this person can be excluded from the program forever. It's then considered a criminal activity.
In most cases there is no prosecution, because the dividend is not large enough, Jones explains, so it's not worth taking it to court. "It's pretty hard to prosecute criminal activity, but it has been done," Dick says.
Take the 1997 case of Carolyn Plum of Salcha, who was sentenced to three months in jail, restitiution of $3,780 and five years probabation for PFD fraud. Just as in the Evans case, Plum had been filing applications in a dead relative's name Ü her own daughter who died in 1993. Plum forfeited all her future dividends.
Once an Alaskan, always an Alaskan?
In order to qualify for the dividend, a person has to fill a number of criteria. For instance, the applicant must intend to remain an Alaska resident indefinitely. This is pretty hard to check, and people use that too, although one cannot say it's fraud.
"As you can imagine, the law is very patriotic and we send checks to several thousand military families stationed around the world who still claim Alaska residency and who swear they intend to return to Alaska when their tour of duty is over," Persily wrote Extreme Alaska in an e-mail. "Same thing for college students. They all swear they intend to return to Alaska after graduation, but how many really do?"
To deal with this problem the law would have to change.
"That's the only way, and it's so politically charged that no one is going to have enough nerves to do that, cause [the politicians] want those absentee votes," Jones says.
Currently, there is only one person working as investigator for the program, but Dick says that the department is looking into hiring more staff. The money for this would have to be appointed from legislature though, which may take time. In the meantime, the unit is working on making the program more effective in other ways, for instance by changing its computer system. One idea is to cooperate with the court system.
"If you have been selected for jury duty and you declined jury duty because you moved out of state, the court system would have that information perhaps on their computer, so we would have a matching process," Dick says.
Using the system is common, and the investigation unit will probably make people think twice before they try to grab money that they don't qualify for.
"Word will get out among the public, and as we look into it I think [fraud] will lessen. People will be more conscious about how they file," Dick says.