NCJ Number
69717
Date Published
1976
Length
51 pages
Annotation
Duplicate check frauds perpetrated by public assistance recipients in New York City were analyzed, and a new system was designed to prevent such frauds.
Abstract
New York City's Department of Social Services (DSS) has a long history involving fraudulent acquisition of public assistance funds by employees and clients alike. Duplicate check fraud occurs when a welfare recipient falsely reports to the income maintenance center that a check was not received, requests a replacement, and then cashes both checks. Between July 1970 and March 1976 the estimated net loss to the department for duplicate check fraud was over $72 million. From September 1975 through April 1976, the Corruption Analysis and Prevention Bureau (CPB) of the New York City Department of Investigation examined the causes and factors which facilitate check fraud by interviewing members of the DDS staff and the Public Funds Department of Manufacturers Hanover Trust Company, the repository bank for public assistance accounts. Relevant reports from State agencies, selected client case records, and DSS records and procedures were reviewed. The CPB study concluded that duplicate check fraud was flourishing and that DDS control efforts were concentrated on an ineffective recoupment program. The absence of a viable prevention effort had been fostered by lack of concern and support from management personnel who were unable or unwilling to provide staff with information necessary to locate the client's original check before a replacement was issued. The slowness and disorganization of recoupment and rerouting procedures constituted a potential fraud hazard and permitted recipients to engage in several check frauds before being discovered. Mismanagement of data processing programs resulted in information on fraud cases being lost and delays in key reports. The CPB proposed a new system to prevent fraud by providing staff at the income maintenance centers with enough timely information to decide whether to issue a replacement check immediately or withhold it temporarily while a fraud investigation is made. A descriptive outline of the procedure is provided, accompanied by supplementary recommendations on specific aspects of the new system. Footnotes and appendixes of related material are provided. (Author abstract modified)