Hello, my name is Ronald Anderson; I’m an Auditor with the OIG here in Baltimore, Maryland. Recently, my office performed an audit of individuals receiving Disability Insurance benefits that may have worked, earned wages and concealed those wages by using a relative’s Social Security Number.
This audit was interesting because we attempted to detect a problem, DI beneficiaries hiding wages, by reviewing anomalies or drastic increases in the earnings of a beneficiary’s spouse or child. What made this audit interesting is that this type of problem is usually detected by an anonymous tip to SSA. However, we reviewed systematic increases in the earnings spouses and children after the injury date of the DI beneficiary and analyzed the employer/employee relationships of DI beneficiaries, their spouse’s and children.
The impetus of this review began in 2005, with the Office of Investigations. Special Agent Kevin Rogers will you explain to us how this idea was started?
Hello, my name is Kevin Rogers. I’m a special agent in the Office of the Inspector General, Office of Investigations, “OI” as it is known within the OIG. I’m currently assigned to the Hartford, CT office of the Boston Field Division.
The audit originated from OI’s work in Arkansas where a very high percentage of men were found to receive disability insurance benefits related to back and mental problems. Upon review of the wages reported for the men’s family members, it was determined that many of the men’s wives allegedly operated saw mills and drove logging trucks. Due to these suspected fraudulent instances, Investigations suggested that Audit initiate a review to identify additional instances where disabled beneficiaries may be using a relative’s SSN while engaged in substantial gainful activity.
To meet our objective, we obtained a data extract of disability beneficiaries from one segment of SSA’s Master Beneficiary Record (commonly known as the MBR) and analyzed the earning activity of the beneficiaries, their spouse and children as stated on the Master Earnings File.
Our review resulted in the submission of 36 referrals to the Office of Investigations which resulted in the identification of:
- Two DI beneficiaries who earned wages and concealed those wages by using a relative’s Social Security Number (SSN).
- One DI beneficiary who fraudulently received DI benefits by not reporting wages earned to SSA.
For the 2 cases where the beneficiary concealed wages under the SSN of a relative,
- one pled guilty in U.S. District Court to the charge of failing to disclose an event with intent to fraudulently secure disability benefits and making false statements to the SSA.
- The other was sentenced to three years probation, three months home confinement and ordered to pay restitution.
Kevin, will you speak to us about this case?
Today, I will be speaking to you about the “ William J. Norris Case,” which was a case reported by the OIG-Criminal Investigations Division, in conjunction with an Office of Audit (OA) project. This audit project identified individuals receiving disability insurance benefits and who may have worked and concealed wages by using a relative’s Social Security number.
Audit identified William J. Norris and Valerie Norris of Connecticut as one of these possible cases. Audit advised that Mr. Norris may have fraudulently received over $140,000 in disability benefits during calendar years 1997 to 2005. Audit determined the disability beneficiary allegedly earned $831,695 while working and using his spouse’s Social Security number during that period. The SSA beneficiary is the president of W.J. Norris Inc, a freight transportation company in Windsor Locks, CT. His date of disability onset was March 13, 1996. At that time, his wife was earning between $3000 and $18,000 per year as a waitress and in a medical office, while the beneficiary was earning between $52,000 and $68,000 per year. The beneficiary reported no earnings after his onset to disability, while his wife’s earnings from his company (W. J. Norris) soared to between $61,000 to $119,000 per year.
This office began the investigation by conducting queries with the Connecticut Department of Motor Vehicles for vehicle registrations and driver license photographs, criminal record checks, and the Connecticut Secretary of the State’s Office as to his company registry.
Once these queries were complete, this office began a surveillance of the beneficiary’s travel to and from his business. The beneficiary seemed to have a routine pattern of arriving at his company at approximately 6:30 a.m. and departing anywhere from 2:30 p.m. to 3:30 p.m. At no time during this surveillance was the beneficiary’s wife seen at or near the business. Before interviewing the beneficiary, my office established the beneficiary’s routine. A date was then set to arrive at his business before 6:30 a.m. and wait until he opened up for business.
On the established date, agents of the Boston Field Division-Hartford Office set up around the beneficiary’s business. Once the beneficiary opened the front door and turned on the lights to the business, agents waited a few moments and then proceeded inside. Once inside we identified ourselves with our official credentials and advised the beneficiary why we were there. The beneficiary confessed to working under his wife’s SSN while collecting disability benefits. He claimed that he was overwhelmed with health issues and confessed to a gambling problem. Agents of the Boston Field Division-Hartford Office also interviewed the beneficiary’s wife. She admitted to receiving his pay under her SSN. Both the beneficiary and his wife gave voluntary sworn statements.
This case was presented to the U.S. Attorney’s Office in Hartford, CT and was accepted for prosecution. The beneficiary appeared before the Honorable Senior U.S. District Judge Ellen Burns and pled guilty to a one count Information charging him with violation of Social Security Fraud. A few months later, the beneficiary appeared again before the Honorable Senior U.S. District Judge Ellen Burns and was sentenced to three years’ probation, six months’ home confinement and was ordered to pay restitution of $141,666 to SSA.
This case illustrates that the Office of Investigations and Office of Audit routinely work in conjunction to detect and combat fraud, waste, and abuse within programs administered by the Social Security Administration.
Thanks, Kevin. For the 3 cases identified in our review, SSA established an overpayment in the amount of $367,000.
- Currently, 5 of the 36 referrals are under investigation and
- 28 have been closed due to unsubstantiated evidence of fraud.
We estimate that if we reviewed all 20 segments of the MBR it would yield approximately 8 million dollars in overpayments.
So, based on our results and the experience gained from our initial analysis of one segment of the MBR, we decided to extend our review to analyze all 20 segments of the MBR. In this “second phase” we added more criteria that would narrow our selection of cases to more effectively identify DI beneficiaries who may be hiding wages. As a result we identified 375 cases that on the surface appear that disability beneficiaries concealed wages under the SSN of their spouse or child.
Furthermore, for cases we identified, we reviewed the web-based analysis tool called LexisNexis to determine employment, ownership, positions held, and relationship information between the employer, disability beneficiaries, and their spouses and children. So far we have identified several cases which appear that disability beneficiaries might be hiding wages under the SSN of a spouse or child.
For example, we noted a husband drawing DI benefits for injuries. His earnings records showed that his wages ceased after the date of injury. However, his wife’s earnings increased from about $6,800 before her husband’s injury to about $104,000 after his injury. Before the husband’s injury, he and his wife were employee’s at a construction company which was owned by the husband.
The instances that we believed increased the likelihood that DI beneficiaries might be hiding wages we forwarded to Investigations and the Agency for further investigation.