When investigators arrived at the Blaine address of a woman receiving state medical assistance, they said they found a home on a prestigious golf course and an occupant who had $78,000 in unreported income over a two-year period.
In the case of Andrew Malinskiy, a father of eight receiving medical assistance, investigators said they found a recipient who listed his family's income at $2,500 a month but three months later mysteriously had $113,000 in his bank account.
In another case, involving a woman who received medical assistance for seven years, investigators said they found a family living in a $550,000 home, four Mercedes parked in the garage and learned that her child drove a Hummer to high school.
Anoka County investigators said these are examples of what they found when they began to aggressively investigate medical assistance cases in which there were suspicions over a recipient's assets.
In the politically charged debate over how to reshape state spending, the county's medical assistance fraud cases have caught the eye of Republicans in the Minnesota House, who have made welfare reform a focus of what they say is a need to look for big and small ways to save money in the face of a $4.8 billion budget deficit.
Anoka County officials and GOP legislators argue that the state -- particularly the Department of Human Services -- needs to take up the charge and press all counties to crack down harder on this type of fraud.
DFLers, as part of a debate on human-service costs that is already dominating this year's legislative session, say that welfare benefits amount to a small fraction of the state's budget and that dwelling on abuses is "short-term thinking."
State human services officials said that they are aware of Anoka County's claims but that there is so far no evidence of a large-scale, statewide problem. Of 1,800 criminal investigations into statewide welfare assistance in 2007, only 89 involved "problems with assets," state officials said. Even Anoka County's efforts, after five years, have produced only 15 high-profile prosecutions.
"Do I know how many of these cases are out there [statewide]?" said Thomas Rachel, a longtime investigator with the Anoka County attorney's office. "I have absolutely no idea. But you know what else? Neither do the people administering this program."
Seifert expresses support
House Minority Leader Marty Seifert, R-Marshall, cited Anoka County's efforts recently and credited the county with "being more aggressive in prosecutions than some other counties."
"We support what Anoka County's doing," said Brian Osberg, assistant commissioner for health care at the Department of Human Services. While not every county has the same resources, he said, Anoka County has "just decided that they're going to make it a priority."
More importantly, Osberg said, state health officials are considering legislation that would attempt to close any loopholes regarding the assets of a person who is self-employed. "It's not easy to track down all of the assets a person has," he said.
In the complex world of welfare rules and regulations, there are often no easy answers. For children getting state medical assistance, there are no asset limits -- and a parent's assets, even a recreational vehicle, are not considered, provided that income limits are not exceeded. For parents wanting medical assistance for themselves, the asset limit is $10,000 for each parent. Homesteads cannot be counted as assets.
McLeod County Attorney Michael Junge said detecting that a welfare recipient is hiding income is particularly difficult. "People are working for cash on the side, they're self-employed," he said. "You aren't able to figure out what their income sources are. I mean, we have the same problems the [Internal Revenue Service] has."
In St. Louis County, where welfare fraud investigators review more than 800 cases yearly, fraud prevention supervisor Doreen Michals said three cases were referred for prosecution last year. "Most of those don't rise to the level, or we don't have the evidence," she said.
But Anoka County officials said part of the problem is attitude, including a willingness to dig deeper.
Last spring, according to the county, state officials steered the county away from seeking legislation to try to prevent self-employed recipients from masking personal income by blending it with their business finances. "They kind of suggested we work with them and try and resolve it, and it just didn't happen," said Jerry Soma, Anoka County's human services manager.
Once investigators began to look aggressively at possible fraud cases it was not difficult to find abuse, Rachel said.
In one case, he said, he was accompanied on a search of a home by female deputies who stood in amazement upon finding a small pile of designer purses, some worth $600. In others, they found stacks of $100 bills. And although homesteads are by state law exempt from calculating assets, Rachel said one case was prosecuted when investigators determined a couple were somehow paying a $2,255 monthly mortgage but telling human services workers they earned no more than $2,040 a month.
To avoid prosecution, some recipients simply showed up with large amounts of cash to pay restitution, Rachel said. "[They'd say], 'Hey, how about we just come in and give you a lot of cash?'" he said.
One of the cases involved the use of personal care assistants, an area where public expenditures grew by 164 percent in the five years ending in 2007 and which remains "unacceptably vulnerable to fraud and abuse," according to a recent legislative auditor's report. Investigators said they found that the state was paying personal-care-assistant money for the care that a teenager provided for her disabled mother, even though time slips claimed the daughter was helping when she was in class at high school. As part of a guilty plea, the mother and her husband were ordered to pay $74,000 in restitution, according to court documents.
Malinskiy, a Ukrainian immigrant who was self-employed, declined to talk about his case, in which he pleaded guilty and has paid restitution. "I don't trust people in America," he told a reporter last week. His lawyer, Bob Oleisky, said his client admittedly did not disclose "all of the pertinent information" regarding his assets, but said Malinskiy "took responsibility from the get go" once investigators arrived.
'A crime is a crime'
In some cases, a county's aggressiveness can be tied to whether sheriff's deputies -- who are more inclined to seek criminal charges than administrative resolutions -- are in charge of investigations as opposed to county human service workers. In Chisago County, sheriff's deputy Karl Schreck in October replaced a county human services worker as the lead fraud investigator. Of the 45 cases he is now looking at, Schreck said, he will push to prosecute as many as eight of them. "I'm a cop," he said. "A crime is a crime."
Even in Anoka County, Sally Cleveland said the difference in attitude between police and human service workers can be seen. Somebody whose job involves prosecuting criminals has a different perspective, said Cleveland, who supervises the county's welfare fraud investigations. "I happen to believe most of the people who are receiving the benefits are not lying."
Mike Kaszuba • 612-673-4388