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Fraud-Prone Poverty Programs Are Ripping Off Taxpayers Nationwide

If the new Republican House majority wants to focus on fraud, start by looking at poverty programs.

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Three years ago, my office, the Mississippi Office of the State Auditor, learned through a whistleblower tip that Temporary Assistance for Needy Families (TANF) funds may have been misspent by the Mississippi agency handling that money. Several months later and after an investigation by my team, we revealed the startling truth: Tens of millions of welfare dollars had been embezzled.

TANF funds were used in Mississippi to pay for drug treatment at a luxury Malibu resort for the friend of the head of the agency dispersing the funds. It paid for an investment in an experimental concussion drug company. It financed religious concerts with no proof they were attended by the needy, nice cars for the heads of an influential local nonprofit — along with paying off a speeding ticket for one of them — and excessive rent for property owned by the people handing out the money.

And of course, national outlets from ESPN to the late-night comics picked up on our discovery that Hall of Fame quarterback Brett Favre was paid $1.1 million on a contract requiring him to give speeches he never gave. He also successfully lobbied for $5 million in welfare funds to be spent on a volleyball court at his alma mater where his daughter played.

All told, this was the largest public fraud in state history. Local and federal prosecutors took our findings and indicted six of the culprits. We arrested them, and five have pleaded guilty. The FBI continues to investigate the case, working with our entire case file and my team to get to the bottom of everything.

Nationwide Problem

Sadly, large fraud schemes in poverty alleviation programs have streamed across the headlines of newspapers around the country lately. In the last couple of months, federal prosecutors indicted two nonprofit executives in Minnesota for stealing $250 million from a program to feed hungry kids. In June of 2022, the New York Post reported the head of a New York nonprofit was paid millions in taxpayer funds to house the poor while living in an expensive high-rise and funneling taxpayer money to his for-profit businesses. The list goes on.

Now that Republicans have taken the majority in the U.S. House, they have a fresh opportunity to explore why the billions taxpayers spend on the poor are so prone to this sort of abuse. In November, House Republicans sent a letter to Department of Health and Human Services Secretary Xavier Becerra arguing, “The Mississippi case is emblematic of a systemic problem: TANF lacks necessary guardrails making it susceptible to fraud.” They asked HHS to describe what they were doing to prevent the problem in the future.

This was a great start, and Republicans should double down on efforts to extirpate fraud from these kinds of programs. Connected powerbrokers who happen to run a nonprofit should not be the primary beneficiaries of our government’s spending for the poor. The House Ways and Means Committee should hold hearings to identify the best policy changes for these programs.

Proposals for Improvement

Here are a few ideas to get them started: Federal monitors should ensure state agencies are policing the nonprofits that take funds, tighter restrictions should be placed on how TANF can be spent (poverty programs should be focused on getting people into the workforce — period), and state agency heads should sign documents under penalty of perjury attesting to the number of poor people who were helped by their spending.

Finally, HHS should regularly report improper TANF spending to Congress. As House Republicans have noted, “Nearly every government assistance program is required to report improper payments on an annual basis, TANF is not.”

Voters expect government to act quickly to stop fraud in these programs. The belief that influence peddlers have rigged government spending for their benefit is bipartisan. Putting a stop to these sorts of schemes in poverty programs would appeal to a broad cross-section of Americans. Billions of dollars are spent across hundreds of these programs, so the savings could be massive if Congress gets this right. And most importantly, hard-earned taxpayer dollars might actually benefit the poor in our country.


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