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Audit: Assistance checks cashed at Walmart, paycheck advance stores, keno parlor

By   /   April 1, 2013  /   News  /   20 Comments

By Deena Winter | Nebraska Watchdog

LINCOLN — Nebraska sent $7.7 million in federal energy assistance to residents who weren’t eligible to get the money directly, and some of those $250 and $500 checks were cashed at Walmart, grocery stores, restaurants, paycheck advance stories and a keno parlor.

AP Photo/Bill Wolf

State Auditor Mike Foley questioned $17.6 million in payments made to help low-income Nebraskans with their utility bills.

State auditors had “serious concerns” that the majority of the 19,000 payments “were never used to pay utility bills,” as intended.

Auditors also found 261 payments totaling nearly $112,000 were sent to dead people — some who had been dead for well over a year and many whose deaths were known to the state before they issued the payments. State officials said those payments were allowable, since they were meant for the household.

“It’s not a pretty picture,” State Auditor Mike Foley said Monday.

The problems began in late August 2011, when the Department of Health and Human Services unexpectedly received $20 million in federal funds for the Low Income Home Energy Assistance Program, which helps low-income people pay utility bills. HHS employees dithered rather than make decisions, and then rushed to spend the money five weeks before the close of the fiscal year.

Auditors questioned $17.6 million in payments, particularly $7.7 million that went to households that had received prior “crisis assistance” with their bills. HHS rules required that any further payments to be made directly to the utility companies, but since there wasn’t time to identify the utilities serving each eligible household, the department sent 19,000 payments of $250 or $500 directly to individuals.

HHS CEO Kerry Winterer acknowledged “errors were made” with regard to the $7.7 million being sent directly to people rather than utility companies. Winterer said the department had been told in October 2010 that it would receive $20 million in LIHEAP assistance for the winter season, but then got word in January 2011 that it would be receiving another $20 million in unspent federal dollars.

The department erred by delaying decisions on how to distribute the money until late 2011, putting the squeeze on the department to spend the money before Oct. 1 or return it to the feds. Since the winter season had passed, and the department didn’t have enough time to identify the utilities serving each household and make the payments by Oct. 1, so it made the payments directly to consumers.

Winterer said federal officials have said other states commonly use the same practice to distribute LIHEAP money before they expire, as long as they go to eligible households.

Auditors reviewed some of the participants’ utility bills and found the LIHEAP money could be traced to the payment of their utility bills “in only a small handful of instances.”

Often the participants spent less than $100 of the money on their utility bills, according to the state auditor. In some cases, the participants weren’t behind on their utility bills and had credit balances, but still got the LIHEAP payments and spent them, even though state regulations require the money only go to those who need help paying their energy bills.

“It wasn’t spent for utility bills and that’s the purpose of the fund,” Foley said. “You can’t just take it to Walmart and go shopping.”

When 135 payments were randomly tested, auditors found one was cashed at Ralston Keno, 19 at Walmart, 24 at grocery stores, restaurants and paycheck loan stores. Winterer noted that just because a check was cashed at a particular store doesn’t mean it was spent there, especially since some people don’t have checking accounts and normally cash checks at businesses.

And Winterer said since the winter season had already passed, the payments were meant as reimbursement for payments the people had already made on energy bills.

One recipient who died in May 2011 had his August 2011 payment cashed at an Omaha liquor store months after his death. Another who died in March 2011 had his payment cashed at Walmart six months after his death. Other payments to dead people were cashed at a grocery store, a paycheck advance company and funeral homes.

Dozens of those payments were “signed” by the deceased person, raising the prospect of forgery.

“We think law enforcement should look into some of these cases,” Foley said.

Winterer said LIHEAP payments are made to households, and when a member of the household dies that doesn’t necessarily mean the household is no longer eligible for the program.

Foley said the “systemic breakdown at DHHS did not end there,” because in June 2012 the department issued another $9.5 million in supplemental LIHEAP payments to more than 38,000 recipients, including dozens who were dead.

In addition, HHS retained nearly $1 million in unspent LIHEAP funds, more than is allowed to be carried over into the next fiscal year. Auditors also found nearly 1,300 payments totaling more than $500,000 that were never cashed, but rather than cancel the payments and recycle them back into the LIHEAP program or return the money to the feds, the state converted them into state general funds, “the legality of which is suspect,” according to the audit.

Winterer said steps already have been taken to ensure the problem doesn’t happen again, with new leadership in the division that delayed decisions, plans to amend the state rules to clarify how to spend such supplemental payments and LIHEAP on a new computer program that gives more information about households.

“We have new leadership in the Children and Family Services Division who understand the importance of making timely decisions,” Winterer said.

In an unusual move, Foley and  Winterer appeared together at a news conference where Foley released his audit findings and Winterer responded. Foley said the two met around Christmas and although they’ve had their differences over past audits, agreed to work together.

It was Foley’s idea to appear together at a news conference, which he began by saying being head of HHS is an “extremely difficult job” and “inevitably, things will go wrong” but he has “great confidence in his abilities.”

“Kerry Winterer is a no-nonsense guy and he will take care of these problems,” Foley said.

Winterer thanked Foley for allowing him to participate in the news conference and said he hopes “this is the beginning of a more cooperative attitude” between the two offices.

“We are essentially on the same side,” Winterer said.

Contact Deena Winter at deena@nebraskawatchdog.org.

Editor’s note: to subscribe to News Updates from Nebraska Watchdog at no cost, click here


Deena formerly served as staff reporter for Watchdog.org.

  • omahaboy

    Boy! The Democrat liberals of Nebraska are going to be mad as all get out! They always are looking for the “disadvantaged” to help out.

  • Kevin

    How many of these check cashing citizens vote more than once in any election as well?

  • The point of the payments is to bribe the 47%. Why are we worrying about petty legalisms like whether the recipients were alive or whether they spent the loot in the liquor store? They got cash from Uncle Sugar, and in return turned out to vote for the guy who promised them more cash.

    It’s not really bribing people with their own money. It’s bribing non-taxpayers with taxpayers’ money.

  • Jazzee

    oh amen amen

  • I hope the Governor realizes that this 8 MILLION DOLLAR missuse of state funds is his fault! I believe I’ve heard him say in speeches that “the buck stopps here”. This kind of incompetience should result in the immediate firing of the head of HHS, AND THE GOVERNOR SHOULD SUBMIT HIS RESIGNATION IMMEDIATELY!!!!

    If he doesn’t resign immediately, the legislature should impeach him!!!

  • heidihoneighbor

    While the working class slave and worry, our government takes our money and mismanages it as it gives it out to freeloaders.

    This country sucks for the first time in history.

  • heidihoneighbor

    No doubt.
    Who is to say Obama legally won the election.

    I dont think he has done too much that isnt illegal

  • Franseenit

    Instead of painting every recipient bad – it is time to look at the folks working in the area of approving the checks. In Wisconsin the checks go directly to the utility provider – that certainly is a no-brainer. Why would the Nebraska government send the check to the individual??? It is too bad that the individuals aren’t honest enough to pay off their energy bills.
    However,don’t continue this hateful witch-hunt while the 1% steal your retirement money, and scam government/taxpayer money for their pet projects and their private investment projects that they never reimburse the taxpayer for.

    And then the rest of you commenters go off on every little thing that annoys you. Meanwhile you have no gumption to work toward real SOLUTIONS while continuing to rail about the cost of everything that doesn’t line your own pocket.

  • The Old Man

    Another example of government officials that can do no wrong and will never admit that their program allowed for the activity that occurred.

  • Jazzee

    excellent point

  • Jazzee

    and another example of how NOTHING happens to gov employees ..protected by their UNIONS no matter what they do. what do these employees do at work??? facebook??? phones??? HOW can you send money to individuals and not directly to utility companies?????? WOW any of us would be fired for sure

  • 68102 guy

    How can there be a need for “crisis assistance”, when the money is sent to people who have a positive credit balance in their utility account? I pay mine every month, and zero it out. I don’t get reimbursed when I pay my obligations. This is about the 20th example I have seen since the first of the year where our big, cumbersome government has wasted the taxpayer’s resources. And, believe me, I don’t go looking for them, it makes me sick to my stomach. Conservative Nebraska values in our state government, what a joke…..

  • It is easy to complain about extortion perpitrated upon the government and the needy. Do you have any suggestions that doesn’t include the complete distruction of good programs?

  • You really have voter fraud on your mind, and will never accept the results of investigations that have shown that voter fraud is virturally non-existant by voters. More often perpetrated by state legislatures and “election commissioners”, usually in states run by the Rs.

  • You should have said “freeloading lobbiests and businesses”.

  • Blah, blah, blay. Come up with something new will ya? How about something that is based in reality?

  • Your absolutely right! You should be calling for the firing of the HHS director, and demanding the resignation of our Governor!

  • Demand the resignation or impeachment of Heinne!

  • Especially those appointed by the current administration, (R), it happened in Katrina also!

  • mary

    How wonder how many of those who got money & cashed the money where they weren’t suppose to live in Omaha? And the the state is billing families with special needs children who don’t qualify for SS benefits. Some of these families pay real/school/city/taxes.