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Niagara County welfare fraud investigators save taxpayers more than $1M over 21 months

LOCKPORT - Niagara County has saved more than $1 million since the beginning of 2015 by forcing individuals to pay back illegally received welfare benefits and by preventing payments to those who tried to rip off the system.

And although it's unusual for violators to end of in jail, a few have landed behind bars, according to the county's welfare fraud enforcement team.

That group includes six specially trained caseworkers on the Social Services Department's Program Integrity Unit, overseen by Roberta L. Mitravich and Melinda S. O'Shea; two full-time criminal investigators at the Sheriff's Office, Scott A. Gebhardt and Michael A. Licinio; and two assistant district attorneys, Elizabeth R. Donatello and her supervisor Heather A. Sloma, chief of the DA's Financial Crimes Bureau.

James Leenhouts

James Leenhouts

In 2015, their efforts resulted in the county's taxpayers saving $621,785 on 142 cases, and through the first nine months of this year, the returns had totaled $455,819 on 108 cases, leaving the team on pace to come close to last year's record. So far this year, 62 Niagara County residents have been arrested on welfare fraud charges, although not all cases have been settled yet.

"Not a lot of people get sentenced to jail," Donatello said. "If somebody is employed and has no prior criminal history, we don't want to put them in jail. We want them to be able to remain employable. We want them to be able to pay us back. We want them off services, but we're willing to give them a chance - with certain exceptions, obviously."

Among the exceptions was James Leenhouts, 45, of Niagara Falls. He and his wife Karen Leenhouts, 37, pleaded guilty to two misdemeanors, fifth-degree welfare fraud and fifth-degree criminal tax fraud, in the recent case with the highest recovery of benefits. They claimed two children as dependents on their welfare and income tax forms when the kids had actually moved away. Donatello said this had been going on for more than four years.

Karen Leenhouts

Karen Leenhouts

Both Leenhouts were placed on three years' probation in February, but Niagara Falls City Judge Robert P. Merino added 60 days in jail for James Leenhouts. The couple had to repay the county $16,687 in welfare benefits and the state $9,969 for income tax evasion.

"It came in as a citizen complaint," Donatello said. "Investigator Licinio did a phenomenal job investigating this case. He covered every imaginable base to make sure the information we got was accurate and that we had a case we could prove."

Anyone can report suspected welfare fraud using the county's telephone hotline at 439-7788.

Lying about the real number of household members is the most common means of trying to defraud the system, Donatello said. Another one is concealing employment or otherwise lying about income.

Vanh Phouapadith

Vanh Phouapadith

"There is this false belief that if they don't tell us, we can't possibly find out," Donatello said.

Vanh Phouapadith, 37, of Niagara Falls, also was caught. She was arrested in January and ended up pleading guilty to a misdemeanor filing a false instrument charge, required to repay $15,975 in restitution and banned for one year from the food stamp program.

"She didn't properly report her household income," Gebhardt said. He said Phouapadith didn't report the presence of a son and the father of her children in her household, and both of them were working.

Among the more unusual cases is that of Brian M. Schmiege, 29, of Niagara Falls, who is charged with selling home heating oil in the Town of Niagara obtained under the HEAP program. He has pleaded not guilty. Schmiege also has a case pending in State Supreme Court in which he is accused of stealing tires off vehicles in the lot of Ki-Po Chevrolet in Ransomville. Earlier this month, he rejected a plea offer.

The number of cases prosecuted this year is less than one-half of 1 percent of the 23,000 open benefit cases for temporary assistance, family assistance, Safety Net and food stamps reported in August, the last month for which caseload figures are available for Niagara County.

"There's people who desperately need the system. It's their only safety net, and they get hurt by welfare fraud just as much as the taxpayer does. We have a lot of good people on welfare that are following the rules," Donatello said.

 "And then there are others who know the rules and regulations better than some of the people that work there, and they know how to get around following the law," Sloma commented.

It's ironic that Donatello has set a record for successful welfare fraud prosecutions, because her transfer to that assignment led her to file a federal lawsuit against the county, contending the transfer was a punishment for complaining about her salary, her schedule and alleged sexual harassment from former DA Michael J. Violante. That lawsuit remains open in U.S. District Court in Buffalo.

"I love my job. I love what I do. It is an honor to be able to have a job where you do what's right. Even though I was isolated and punished, I will always do the job I love to the best of my ability, and I hope what I've done in welfare fraud shows that," Donatello said.

"The community should appreciate someone who takes on any task asked of them as a public servant and completes it in a manner that makes our office proud," Sloma said.

But as of Jan. 1, Donatello is to return to the sex crime unit and Sloma will be the hands-on welfare fraud prosecutor.

When Donatello and Sloma went on the fraud beat Nov. 1, 2014, they found the Sheriff's Office had added a second full-time welfare fraud investigator.

"These two investigators, Scott and Mike, do nothing but welfare fraud. They do not get any other cases whatsoever," said their supervisor, Capt. Bruce A. Elliott.

They and the lawyers went to work clearing a heavy backlog of cases referred by Social Services but not followed up because of lack of manpower. The attorneys also objected to a standing policy not to bother prosecuting violations worth less than $1,000. That policy soon was dropped.

"Now, if you file a false instrument, if you lie to Social Services, we'll arrest and prosecute," Donatello said. "If it's a zero dollar amount, there's a thing called a disqualification consent agreement. We'll give people the opportunity to resolve the case without an arrest if it's a first offense."

The state gives the county a formula to use in tallying the value of such preventive enforcement, to be added to the restitution made by convicted fraudsters.

"This is an incredibly complicated world in terms of regulations," Sloma said. "Nothing in this system would work without the Department of Social Services workers interpreting a language that is essentially a foreign language, even to us attorneys ... I have to give the Social Services workers a ton of credit for not only taking down information and interviewing people, but also understanding the rules and regulations and parlaying that knowledge not only to the District Attorney but to the investigators."

Besides restitution, a typical punishment for a violator is a ban from certain types of benefits for a year or two. However, the state doesn't allow anyone to be cut off from Medicaid or from the Home Energy Assistance Program, which pays for winter heat.

For food stamps, a first offense means a one-year ban from the program; a second offense is a two-year ban; and a third offense is a permanent ban. Someone caught trading food stamps for drugs is barred from the program for two years for the first offense, with a permanent ban for a repeat offense. Trading food stamps for weapons produces an immediate permanent ban.

Such penalties "can add up to a lot of savings for the county," Donatello said.

"You have to overcome an opinion in society that this isn't a big deal, it doesn't harm anybody, there's no victim, there's nobody that's shot or robbed," Sloma said. "People need to shift their thinking and realize that everything this unit does every single day trickles down to your tax bills."

email: tprohaska@buffnews.com

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