Jack Dolan, Los Angeles Times, Oct. 4, 2010
California officials are cutting off use of state-issued welfare debit cards at casinos across the country and on cruise ships, in the wake of Times reports that the aid cards have been used to spend or withdraw millions of dollars in benefits at popular vacation spots including the Las Vegas strip and on ships sailing from ports around the world.
More than $69 million meant to help the needy pay their rent and clothe their children was accessed in all 49 other states, the U.S. Virgin Islands and Guam, according to data obtained by The Times from the California Department of Social Services.
Department of Social Services Director John Wagner said the move is part of the Schwarzenegger administration’s commitment to “rooting out waste, fraud and abuse in these programs” and “to ensure these resources are going to the people they are intended for.”
In June, the state cut off access to benefits in California casinos and strip clubs after The Times reported that the Electronic Benefits Transfer cards worked in those businesses too.
Nearly $69 million in welfare money meant to help California’s neediest families has been spent or withdrawn in places like Hawaii, Las Vegas casinos and cruise ships from Miami.
Data showed the biggest chunk of out-of-state money–$11.8 million–was spent at casinos or withdrawn from ATMs in Las Vegas.
The investigation showed out-of-state spending on state-issued aid cards was less than 1 percent of the $10.8 billion spent by welfare recipients during the three years.
State-issued aid cards were used at hotels, shops, restaurants, ATMs or other places in every state, the U.S. Virgin Islands and Guam, the data showed.
A single parent with two children must earn less than $14,436 to qualify for the cards, designed to help pay the rent and buy clothes for the kids, said Lizelda Lopez, a spokeswoman for the Department of Social Services.
In Hawaii, $387,908 was used or withdrawn at more than a thousand big-box stores, grocery stores, convenience shops and ATMs on all the major islands. At least $234,000 was accessed on Oahu, $70,626 on Maui, $39,883 on Hawaii and $22,170 on Kauai.
The list includes $12,433 spent at the upscale Ala Moana shopping center, $3,030 spent at a group of gift shops next to Jimmy Buffett’s Beachcomber restaurant on Waikiki Beach and $2,146 withdrawn from ATMs on the island of Lanai, home to a pair of Four Seasons resorts and little else, the Times said.
“If it’s on Lanai, that should trigger an investigation,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association. “California taxpayers, who are struggling to keep their own jobs, are subsidizing other people’s vacations. That’s absurd.”
Of the money accessed in Las Vegas, more than $1 million was spent or withdrawn at shops and casino hotels on or near the famous Strip. The list includes $8,968 at the Tropicana, $7,995 at the Venetian and its Grand Canal Shoppes, and $1,332 at Tix 4 Tonight, seller of discount admission for such acts as Cirque du Soleil, the data showed.
Many Las Vegas casinos block the use of welfare cards in ATMs located on gambling floors, but more than $34,700 was used to get ATM cash or goods at a 7-Eleven near the Encore and Circus Circus casinos.
The paper said $16,010 was withdrawn from 14 cruise ships sailing from ports around the world.
There are legitimate reasons to spend aid money outside of California, advocates said.
“I think when somebody hears it’s in a fancy hotel in Hawaii or Vegas, it’s too easy to assume the (welfare recipient) is visiting that place and it wasn’t somebody who stole their card,” said Jessica Bartholow, a legislative advocate for the Western Center on Law and Poverty.
“If it’s a one-time thing in Miami, we would never check that out,” said John Haley, commander of the financial crimes division of the San Diego County district attorney’s office, who said 24 percent of all new welfare applications in his jurisdiction contain some form of fraud. “We look for patterns of abuse.”