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State to block access to welfare cards from casinos and cruise ships

In response to a report in The Times, the Schwarzenegger administration instructs the vendor running its aid-disbursement program to block spending and ATM withdrawals at popular out-of-state vacation spots.

October 05, 2010|By Jack Dolan, Los Angeles Times

Reporting from Sacramento — The Schwarzenegger administration is cutting off use of state-issued welfare debit cards at casinos across the country and on cruise ships, following a Times report that the aid cards have been used to spend or withdraw millions of dollars in benefits at popular vacation spots.

More than $69 million meant to help the needy pay their rent and clothe their children was accessed in 49 other states, the U.S. Virgin Islands and Guam between January 2007 and May 2010, according to data from the California Department of Social Services.

Department Director John Wagner instructed the vendor that administers the debit card program to make the changes Monday afternoon, in response to a story that ran in The Times' Monday edition. The move is part of the Schwarzenegger administration's commitment to "rooting out waste, fraud and abuse in these programs" and to ensuring "these resources are going to the people they are intended for," Wagner said.

More than $11 million was spent or withdrawn in Las Vegas, about $1 million of that at shops and casino hotels on or within a block or two of the famous strip. The data show $8,968 accessed at the Tropicana and $7,995 at the Venetian and its Grand Canal Shoppes.

The database also shows $16,010 withdrawn from ATMs on 14 cruise ships sailing from locations such as Long Beach, Rio de Janeiro and Beijing. Eight of the ships sail primarily from Miami.

In June, Schwarzenegger ordered Wagner to block access to benefits in California gambling centers after The Times reported that more than half of the state's licensed casinos and poker rooms were included in the ATM network that accepts the Electronic Benefits Transfer cards that the state issues to welfare recipients.

The out-of-state transactions include more than $1.5 million spent or withdrawn in Florida and $387,908 accessed in Hawaii. Wagner said he will not cut off access to the cards in those places.

"If someone has an elderly parent in Hawaii, and the parent brings them over, and they're caring for their kids, that's a legitimate use of funds," Wagner said.

There are no rules prohibiting welfare recipients from using their benefits outside of California as long as they get clearance from their county case worker to be absent from the program's 32-hour-a-week job training requirement.

County investigators, who state authorities say are responsible for detecting fraud, typically don't question where the money is spent until transactions on a welfare card show that the recipient has been outside of California for more than 30 days.

A weekend in South Beach, or two weeks in Maui, is typically not enough to spark an investigation into whether the recipient legitimately qualifies for state aid, according to investigators.

California welfare benefits are intended to pay for basic necessities. A single parent with two children generally must earn less than $14,436 a year to qualify for the cash assistance and becomes ineligible once his or her income exceeds about $20,000, said Lizelda Lopez, spokeswoman for the Department of Social Services.

jack.dolan@latimes.com

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