90. Being taken to court on a fraud claim
The food stamp office can take a person to court, instead of holding a fraud hearing. The food stamp office has the choice whether to prosecute criminally or try to disqualify a person in an administrative disqualification hearing. There is a good argument, however, that it cannot do both. The Food Stamp Act of 1977 expressly allowed a state to hold a disqualification hearing or prosecute or both. The language allowing states to do both was dropped in 1981. [7 U.S.C. § 2015(b)(2).] The clear implication of the change in the statute is to prohibit states from both holding a disqualification hearing and prosecuting for fraud.
The Food and Nutrition Service (FNS) defended this interpretation of the statute when it wrote the current regulation: “We continue to believe that Congress intended to prevent the State agency from pursuing the same case of alleged program abuse by way of both an administrative hearing and a referral for prosecution when the language of the statute changed. Therefore, the final rule prohibits the State agency from initiating an administrative disqualification hearing against an accused individual whose case is currently being referred for prosecution or subsequent to any action taken against the accused individual by the prosecutor or a court of appropriate jurisdiction. This prohibition would not apply, however, in those instances where the factual issues of a case do not involve circumstances which are the same or related to those of the case against an individual previously referred for prosecution.” [48 Fed.Reg 6836, 6840 (Feb. 15, 1983).]
The current regulation provides: “The State agency shall not initiate an administrative disqualification hearing against an accused individual whose case is currently being referred for prosecution or subsequent to any action taken against the accused individual by the prosecutor or a court of appropriate jurisdiction, if the factual issues of the case arise out of the same, or related, circumstances.” [7 C.F.R. § 273.16(a)(1).] The rule does set forth exceptions, instances in which cases that have previously been referred for prosecution may and should be pursued by way of an administrative hearing. These include referred cases that prosecutors have declined to pursue or on which the prosecutor has taken no action within “a reasonable period of time.” In the second instance the state agency must formally withdraw the referral before proceeding with the disqualification hearing.
A separate regulation requires state agencies to include on their administrative disqualification hearings scheduling notices a “statement that the hearing does not preclude the State or Federal Government from prosecuting the individual for the intentional program violation in a civil or criminal court action, or from collecting any overissuance(s).” [7 C.F.R. § 273.16(e)(3)(iii)(H).] This language may be construed to be consistent with the statutory ban on pursuing both a disqualification hearing and prosecution if it refers to a situation where additional facts come to light after the initial decision not to prosecute was initially made.
Many counties in California will do this, since it may be easier to convict a person or get a plea in criminal court rather than having to prove an intentional program violation (IPV) at an administrative hearing. When charges are filed or threatened, always refer the person to a criminal lawyer. Never advise clients to talk to the special investigations unit (SIU) or other welfare investigators without a lawyer present.
The food stamp office must have reason to suspect fraud before it can turn files over to a prosecutor. [See, e.g., Roberts v. Austin, 632 F.2d 1202 (5th Cir. 1980), cert. denied, 454 U.S. 975 (1981); see MPP § 20-300.21 ("clear and convincing evidence").] The state can prosecute a household member even though they are paying back the overissuance unless the prosecutors made a clear promise not to do so. [See People v. Durrett, 210 Cal. Rptr. 874 (Ct. App. 1985).] The state can take a person to court in a “civil” action to get back the food stamps they should not have received to and stop the person’s food stamps. The state also can file criminal fraud charges against the person. Demand of restitution prior to bringing a criminal action is no longer necessary to pursue welfare fraud. [People v. Preston, 43 Cal. App. 4th 450 (1996).]
If a court finds a person guilty of fraud in a criminal case, the judge can assess a fine, sentence them to jail or both. The person also will be disqualified from food stamps if the court finds fraud occurred or they admit it. [7 C.F.R. § 273.16(g)(2)(i); MPP § 20-300.4.] A person should not be disqualified if the court’s order says that they should not be disqualified or that the other penalties ordered by the court are the only ones that the court orders. [7 C.F.R. § 273.16(g)(2)(i), and (h)(2)(i); MPP § 20-300.4.] Recipients and advocates should make sure that public defenders and other criminal defense lawyers know to ask the court to consider whether or not a disqualification is appropriate in each case. The court also can order a disqualification shorter than the one called for in the rules. [Id.] Silence on disqualification in a sentencing order does not preclude disqualification. [Montigney v. Department of Pub. Welfare, 557 A.2d 67 (Pa. Commw. Ct. 1989).]
The judge also can order the person to pay back the food stamps that they should not have received. If the judge orders the person to pay back the stamps and they do not pay, they may be put in jail. Although legal services programs cannot represent defendants in criminal proceedings, it is a good idea for them to work closely with the public defenders’ offices that do represent individuals accused of criminal fraud. [See McGregor Smyth, Bridging the Gap: A Practical Guide to Civil-Defender Collaboration, Clearinghouse Review, May/June 2003, at 56.]
For a fraud conviction, the evidence should show that the defendant knew of misrepresentation. See United States v. Pollard, 724 F.2d 1438 (6th Cir. 1984); State v. Thompson, 413 N.W.2d 889 (Minn. Ct. App. 1987) (in a welfare fraud case, state must prove the recipient knew she was not entitled to the assistance she was receiving and she made false representations in order to obtain the assistance). Application, redetermination, and welfare reporting forms signed by the recipient may be used to establish false representations. Id. The court cannot presume that any facts that were withheld were withheld on purpose. People v. Sellers, 492 N.Y.S.2d 127 (App. Div. 1985); Easterling v. Blum, 440 N.Y.S.2d 44 (App.Div. 1981), 440 N.Y.S.2d 44 (App.Div. 1981); Seggern v. Washington Sate Dept’ of Soc. And Health Servs., 622 P.2d 1307, amended 625 P.2d 170 (Wash. Ct. App. 1981) (recipient did not have intent to deceive when she thought she had complied with all reporting requirements; agency had denied her assistance in filling out forms, and she was not good at mathematics or bookkeeping); Corville v. Blum, 482 N.Y.S.2d 642, 643 (App. Div. 1984) (not a willful withholding of information when recipient was not notified that she had an obligation to report receipt of income tax refunds); Constatine v. Blum, 432 N.Y.S.2d 254 (App. Div. 1980); Sanzoverino v. D’Elia, 420 N.Y.S.2d 402 (App.Div. 1979) (good faith); Ayala v. Toia, 398 N.Y.S.2d 567 (App. Div. 1977); Roach v. Toia, 396 N.Y.S.2d 70 (App. Div. 1977); State v. Wallace, 651 P.2d 201 (Wash. 1982); Acosta v. Blum, 436 N.Y.S.2d 50 (App. Div. 1977); Santiago v. D’Elia, 435 N.Y.S.2d 333 (App. Div. 1981) (Spanish-speaking household failed to understand notice provided in English); Scott v. Blum, 422 N.Y.S.2d 92 (App. Div. 1979); Castregon v. Huerta, 580 P.2d 1197 (Ariz Ct. App. 1978), vacated on other grounds, (Ariz. 1978); Burke v. Berger, 395 N.Y.S.2d 43 (App. Div. 1977); Haynes v. Blum, 436 N.Y.S.2d 765 (App. Div. 1981) (citing Cabrera v. Toia, 394 N.Y.S.2d 55 (App.Div. 1977) and asserting that proof of notification of a recipient’s obligation to report any changes in income is a condition precedent to recoupment of prior overpayments form current assistance grants); Badame v. Berger, 390 N.Y.S.2d 642, 650 (App. Div.(1976) (no proof of failure to report); Rivera v. Dumpson, 387 N.Y.S.2d 632 (App. Div. 1976).
The evidence of willful misrepresentation must be adequate. Smith v. Dep’t of Health and Rehab. Servs. 522 So. 2d 956 (Fla. Dist. Ct. App. 1988) (must have clear and convincing evidence); Juste v. Dep’t of Health and Rehab Servs., 520 So. 2d 69 (Fla. Dist. Ct. App. 1988) (computer wage match records does not establish fraud); Garber v. Dep’t of Soc. Welfare, 431 A.2d 469 (Vt. 1981). The prosecution must prove that the recipient knew that it was illegal to have had or obtained food stamps. Liparota v. United States, 471 U.S. 419 (1985); State v. LaRue, 875 P.2d 701 (Wash. Ct. App. 1994) (husband of a recipient not an accomplice to welfare fraud when there was no evidence that he knew of his spouse’s criminal enterprise). But see People v. Crow, 6 Cal. Rptr. 2d 574 (Ct. App. 1992), aff’d, 864 P.2d 80al. 1993) (need only prove recipient was ineligible under statute on which aid was sought and obtained; eligibility on some other ground is no defense); Davis v. Rubin, 828 P.2d 1284 (Haw Ct. App. 1991) (failure to report automobile that would not have disqualified recipient).
The state should prove the specific offense that it charged. Hourie v. State, 452 A.2d 440 (Md. Ct. Spec. App. 1982), aff’d 467 A.2d 1016 (Md. 1983). But see People v. Crow, 6 Cal. Rptr. 2d 574 (Ct. App. 1992), afff’d 864 P.2d 80 (Cal. 1993) (AFDC case holding that the state need only prove ineligibility under statute on which aid was sought and obtained; eligibility on other grounds is not defense). The state cannot relitigate in a criminal case any issues decided against it in the administrative hearing process. People v. Sims, 32 Cal3d 468, 651 P.2d 321 (Cal. 1982); but see People v. Garcia, 39 Cal.4th 1070 (2006) (even under People v. Sims, estoppel only applies if administrative decision necessarily decided an issue that bars criminal prosecution). See also, People v. Watt, 320 N.W.2d 333 (Mich. App. 1982); but see, State v. Williams, 132 Wash.2d 248, 937 P.2d 1052 (1997) (persecutions for welfare fraud not barred by prior administrative determination if the purposes of both proceedings are distinct); State v. Anderson, No. 21345-1-II, 1998 WL 125566 (Wash.App 1998) (unpublished); State v. Varney, 663 N.E. 2d 967 (Ohio Ct. App. 1995) (Ohio code disqualification provision is a remedial civil sanction not so unreasonable or excessive as to constitute a second criminal punishment in violation of Fifth Amendment double jeopardy when the individual is also subject to criminal prosecution for theft resulting from a failure to report income earned while he was receiving food stamps).
A recipient should not be subjected to separate penalties for a single act of non-reporting just because you were getting assistance under several programs. United States v. Barrington, 662 F.2d 1046 (4th Cir. 1981). Where the state prosecutes a person for improperly receiving an overissuance of food stamps, the state should present sufficient evidence to prove the amount of the overissuance. People v. Pryor, 458 N.Y.S.2d 112 (App. Div. 1982). If the prosecution alleges an unreported resource, it must prove that the amount was enough to make it a crime. State v. Roberts, 673 P.2d 974 (Ariz. Ct. App. 1983); People v. Evans, 340 N.W.2d 291 (Mich. Ct. App. 1983). Successive acts of misrepresentation can be combined to reach the felony level as they are essentially a continuing act to achieve the desired result. State v. Williams, 399 S.E.2d 348 (N.C.Ct. App. 1991).