VA office targeted for further inquiries

The St. Petersburg regional office was part of a review that ended with the discovery of more than 130 cases of possible fraud.

By DAVID BALLINGRUD

© St. Petersburg Times, published August 1, 2000

ST. PETERSBURG -- Auditors have uncovered 136 cases of potential fraud or mishandling in the distribution of veterans benefit checks from offices in St. Petersburg and St. Louis, including the approval of $475,000 for a veteran who may have died 21 years ago.

A top federal auditor called the situation "untenable" and said 64 cases of improperly distributed benefits will be investigated for criminal wrongdoing. The remaining 72 will be subjected to administrative review at the St. Petersburg regional office.

"We just can't take this," said Mike Slachta, the Department of Veterans Affairs' assistant inspector general for auditing. "We have a lot of work to do.

"We need to find out how this happened," Slachta said.

The audit focusing on the St. Petersburg regional office, the nation's largest, began last August. It came after the discovery that three VA employees, two in Florida and one in New York, had embezzled nearly $1.3-million by "exploiting internal weaknesses" in the benefit program.

A team of five VA auditors worked in the St. Petersburg office during the yearlong review of more than 1,000 questionable files. Their review also took them to a VA records center in St. Louis. Among their findings:

Overpayments totaling $475,000 went to a veteran who auditors believe died in 1979. It was not clear from the record whether a veteran was dead or alive, they wrote.

An additional $92,000 went to four more veterans thought dead at the time of payment.

At the St. Petersburg Regional Office, 143 employees received benefits themselves, and sometimes had improper access to their own records, increasing the potential for fraud.

A review of 308 claim folders of regional office employees, former employees and relatives found that 41 percent contained claims that were decided by co-workers. Two decisions were "unsupported and unwarranted," six were "very liberal" and two were processed within five days, though it normally takes months. "In our opinion this represented preferential treatment," the auditors wrote.

Controls to prevent employees from gaining access to the records of relatives and friends were inadequate.

In three of every four cases where "third-person review" was required for approval of one-time payments, it was not obtained.

The audit was started after a high profile arrest in St. Petersburg.

In January 1999 St. Petersburg VA claims investigator Joy Cheri Brown was arrested for stealing $615,451 by creating a fraudulent award in the name of her fiance. That man, a Persian Gulf War veteran and St. Petersburg police officer, was not charged with wrongdoing.

Brown forfeited a Mazda Miata, a Mitsubishi 3000 GT and two engagement rings, a prosecutor said at the time of her conviction. Those seizures were to have been credited against the more than $600,000 she was ordered to repay the VA.

She also, the audit noted, conspired with another employee, Hack Carr, a 29-year employee, to increase her own disability compensation.

Carr, a senior claims examiner, was charged with conspiracy, theft, obstruction of agency proceedings and destruction of public records.

Both were convicted and sentenced to prison.

Through a spokeswoman, William Stinger, director of the regional office, said improper distribution of benefits was a problem throughout the VA.

The audit is dated July 18. Portions of the text have been blacked out, a procedure the VA's Office of Inspector General follows to protect the privacy rights of individuals and to preserve the integrity of ongoing investigations.

Asked if the St. Petersburg investigation might spread to other regional officers around the country, Slachta said: "This is an open review. We are continuing our work."

Asked if the problems at the St. Petersburg Regional Office might simply reflect the volume of claims, Slachta of the inspector general's office said: "We don't know. We're trying to get an answer to that right now."

The VA's compensation and pension program has come under sharp criticism for inefficiency and delay from veterans and members of Congress for years.

According to a General Accounting Office report released in May, the St. Petersburg office had more than 20,000 claims pending, the most in the nation, and it took an average of 213 days to complete claims.

Margaret Macklin, a VA spokeswoman in St. Petersburg, disputed the 213-day figure given for average length of time needed to complete a claim in Florida. She said that only the most complex claims take that long and that the average claim takes less than 100 days.

Senators discussed the GAO report at a hearing last month.

"We're trying everything in our power, using every resource at our disposal to get this job done," VA Undersecretary for Benefits Joseph Thompson told lawmakers. "I promise you this will not fail because people aren't committed to doing it. That will not happen."

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