- Events that may trigger a fraud investigation
- The need for a factual basis supporting the fraud investigation
- What happens once a fraud investigation begins
- When investigatory coercion occurs
Events that may trigger a fraud investigation
If the CalFresh office thinks a person has cheated or lied in order to get benefits, or sold the benefits, it may accuse that person of fraud. These acts are called “intentional program violations” (IPVs).
There are two main types of IPVs. The first happens when someone lies to the CalFresh office about his income, resources, or other household circumstances, or deliberately hides information that he is required to report. The CalFresh office often investigates these kinds of fraud by checking other government records which show wages, taxes, and unemployment records. [MPP § 20-006.] The county also matches their list of people against bank records. Using these computer matches, often the agency will find out about hidden wages or income.
The second main type of IPV is CalFresh “trafficking.”” Trafficking is selling or trading CalFresh benefits for cash or anything that is not food. [7 C.F.R. § 271.2; MPP § 20-300.12 (definition of trafficking).] FNS lhas updated the regulatory definition of trafficking to include: buying, selling, stealing, or otherwise exchanging SNAP benefits, for cash or consideration other than eligible food. [See 76 Fed. Reg. 35787 (June 20, 2011).
The CalFresh office sometimes checks Electronic Benefit Transfer (EBT) records to look for CalFresh transactions that it thinks are suspicious. Types of CalFresh transactions that might be considered suspicious include transactions that are out-of-state or for high-dollar amounts at small stores, transactions for even-dollar amounts (such as, exactly $50), and transactions that occur very soon after another transaction. Advocates should check to see if cultural or other factor may explain otherwise suspicious patterns.
The need for a factual basis supporting the fraud investigation
There must be some factual basis for a referral to the special investigations unit (SIU). [MPP § 20-004.1.] The CalFresh office must check into the facts before it accuses a person of fraud. [7 C.F.R. § 273.16(a)(1); MPP § 20-300.21.] The CalFresh office will send investigators out to a person’s home. When the home visit is combined with proper notice, the search is reasonable unless the CalFresh recipient did not voluntarily consent. [See, e.g., S.L. v. Whitburn, 67 F.3d 1299 (7th Cir. 1995) (Fourth Amendment’s prohibition against unreasonable searches and seizures did not prohibit county’s home visit and collateral contact verification procedures).]
These fraud investigators will talk to neighbors, children or anyone else that happens to be around. The office will also gather other computer records and compare them against what the household has reported. In addition, the county will bring people into the welfare office and interrogate them. (See the note, below, for a related discussion about how “interviews” by fraud investigators may implicate “Miranda” rights due to investigatory coercion).
Standards must be set so that applicants and recipients are not at the mercy of eligibility workers who may be hostile to them. Thus, there is a strong policy that counties cannot refer cases for criminal prosecution or administrative action without meeting the standard for referral, namely, “clear and convincing” evidence of fraud. [7 C.F.R. § 273.16(a)(1); MPP § 20-300.21.]
What happens once a fraud investigation begins
Once the investigation has begun the CalFresh office can:
- Refer the person directly to the local district attorney for criminal prosecution;
- Try to get the person to sign a disqualification consent agreement admitting they committed fraud; or
- Hold an administrative disqualification hearing.
If a person is found guilty of an intentional program violation in court or a fair hearing, or if they sign a disqualification agreement, that person will:
- Lose the right to get CalFresh benefits for a specified period of time; and
- Along with the other members of the household, have to pay back any overissuance.
(See related information in the section explaining what happens if the household gets too many CalFresh benefits.)
However, management of eligibility determination and program integrity investigation must be separate. County Special Investigative Unit (SIU) staff is responsible for preventing and discovering fraud by applicants and recipients. County eligibility workers are responsible for referring cases to the SIU. Counties must ensure separate and independent operation of eligibility and investigation activities. SIU staff cannot dictate CalWORKs or CalFresh eligibility determinations but can make recommendations. (All County Welfare Directors Letter May 1, 2019.)
When investigatory coercion occurs
Fraud interviews may be little more than attempts to trick recipients into self-incrimination. Generally, investigators do not read “Miranda” warnings at these interviews because the interviews are not considered custodial. Nevertheless, there may be circumstances in which Miranda warnings are not categorically required but in which an individual is in fact coerced by CalFresh Program officials to make incriminating statements.
The proper test for the admissibility of inculpatory statements made in a non-custodial setting is whether the statements were involuntary, thereby offending Fifth and Fourteenth Amendment notions of due process. See, e.g., Miller v. Fenton, 474 U.S. 104 (1985). One form of coercion that recipients have faced in the investigative process is the eliciting of statements through threat of loss of benefits or disqualification. See, e.g., Garrity v. New Jersey, 385 U.S. 493 (1967) (statements made were inadmissible, in the face of a “Hobsons’s choice,” i.e., a choice between making a statement and suffering a penalty).
To be sure, the CalFresh regulations place a burden on applicants and recipients to cooperate with the agency in the investigation process. Yet, it may be that coercive language in the notice itself renders “consent” to an investigative visit involuntary. Moreover, this “cooperation” requirement creates the possibility of disqualification of persons refusing to cooperate because of fear of self-incrimination. Thus, Garrity may apply to forbid both the use of incriminating information compelled and termination of benefits for failure to provide information under such circumstances.