- The Washington Times - Wednesday, June 15, 2011

It took about eight years after the death of a spouse of a federal employee in West Virginia before the U.S. Office of Personnel Management stopped sending her retirement checks. By then, the dead woman had received more than $200,000.

Federal investigators traced the missing funds to a pair of suspects, but nobody was charged with theft. The U.S. Attorney’s Office for the Southern District of West Virginia declined to prosecute the case less than two weeks before the five-year statute of limitations expired.

The case illustrates how retirement theft cases involving payouts to dead federal employees can go uncharged for varied reasons beyond just how much money was lost.

Records obtained through the Freedom of Information Act show that from April 1, 2010, to March 31, 2011, the Justice Department declined to file criminal charges in two dozen cases in which retirement benefits were paid out to dead beneficiaries then spent by someone else. During the same period, prosecutors filed criminal charges or won convictions in 40 such cases, not including two others in which charges were dropped.

In several of the cases turned down for prosecution, including six-figure thefts, subjects admitted spending the money but told investigators that they didn’t know they weren’t entitled to the funds. Prosecutors say filing charges is more complicated than just proving the money is missing. They also have to show that the person who spent the money knew they were committing a crime.

“The Justice Department evaluates tens of thousands of cases for prosecution annually, based on the evidence gathered,” spokeswoman Jessica Smith said. “The department takes very seriously fraud and the theft of government funds, as evidenced by the successful prosecution of cases where there was sufficient evidence and criminal intent.”

Bennett Gershman, a former federal prosecutor and law professor at Pace University, said a host of factors come into consideration when deciding whether to file charges in any case.

“The key factor is, ‘Do you have a provable case?’ ” he said. “Then the question might be in terms of resources: How much time and expense and manpower is it going to take?

“They don’t have the manpower to take every case. It’s about policy choices. You can’t prosecute every case. You can’t prosecute most cases. So you have to make choices to prosecute wisely,” Mr. Gershman said.

In the West Virginia retirement fraud case, investigators with the inspector general for the Office of Personnel Management (OPM) seemed convinced there was fraudulent activity.

“Though there is likely evidence that [the suspects] fraudulently converted these funds to their own personal use, based on the declinations to prosecute by the United States Attorney’s Office, this case is closed,” investigators wrote in a memo describing the case. The names of the suspects were redacted in memos obtained through an open records request.

R. Booth Goodwin II, U.S. attorney for the Southern District of West Virginia, whose office turned down the case, said prosecuting the theft of government benefits is a top priority for his office. He cited at least nine recent prosecutions that his office filed against people who stole benefits.

“Because these are important cases to us, we have prosecuted most every case where we believe we can prove each of the elements of the crime beyond a reasonable doubt,” he said.

“Often, the most difficult element to prove is criminal intent,” he said. “For instance, we could likely prove criminal intent where the individual made false statements to the agency involved to keep the benefits coming when such benefits should have ceased or an individual kept cashing checks made out to a deceased benefit recipient.”

The retirement fraud cases reviewed by The Washington Times were investigated by OPM’s office of inspector general, which in turn presented the findings to U.S. attorney offices across the country for possible criminal charges.

In another case in Miami, prosecutors declined to press charges for the theft of $188,171 in retirement benefits. Investigators had traced the missing money to a woman who told them she didn’t know she wasn’t entitled to the funds and offered to repay the money.

Investigators presented the case for prosecution to the U.S. attorney’s office in Miami. The case was “lost in the shuffle of paperwork” at the office before being transferred to a prosecutor who turned it down based on “a lack of provable intent,” records show.

Another prosecutor later expressed interest in the case but never formally accepted it. The case was transferred to yet another assistant U.S. attorney, but the investigator couldn’t reach that prosecutor despite several attempts, records show. The case eventually reached the statute of limitations and was closed. Officials declined to comment on the decision.

In a previous interview, Michelle Schmitz, assistant OPM inspector general for investigations, said officials try to prevent the statute of limitations from affecting cases. The statute provides five years to bring charges after discovery of the fraud.

“There are many reasons why the statute of limitations may run out on a case,” she said. “One must remember that multiple agencies and offices are involved in these retirement fraud cases.”

She said OPM administers the retirement program and refers suspicious cases to the inspector general for investigation, then both agencies coordinate with the Treasury Department to stop fraudulent payments and recoup money. The Justice Department ultimately decides whether to file criminal charges.

“A backlog or unexpected problem in any of these offices can affect a cases overall timeline,” she said.

In a recent case in Washington, authorities announced a guilty plea by Thomas F. Desanto, 58, of Herndon, who faces up to 18 months in prison under federal guidelines when he is sentenced next month.

Investigators in that case found several instances in which they say Desanto sought to convince the government that his father, a former federal employee, was still alive. Desanto’s father died in 1991, but Desanto collected a total of $134,639 in his father’s retirement benefits until April 2006.

Prosecutors say the payments continued so long, in part, because Desanto forged his father’s name on address verification forms and used a phony driver’s license to open a joint bank account.