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VA GUARDIAN FRAUD CASE HAS VETERANS CONCERNED
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"The fiduciary program continues to be at
significant risk for abuse and fraud."
Background here...
http://www.vawatchdog.org/old%
20newsflashes%20JUL%2006/newsflash07-22-2006-7.htm
Story here...
http://www.wacotrib.com/news/
content/news/stories/2006/09/26/09262006wacvamoney.html
Story below:
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VA guardian fraud case has some local vets concerned
By Dan Genz
Tribune-Herald staff writer
After a Waco Veterans Affairs guardian stole money from 17 disabled
veterans, Joyce McDuffie said she feared someone could steal her son’s
money, too.
“How can I trust a stranger?” said McDuffie, 79, whose 50-year-old son,
Kerry, is a disabled Navy veteran.
“To think at my age I am having to fight for his (rights) and my rights
as a mother, God, what has become of the world?” she said in a letter to
the Waco VA Regional Office.
Waco veterans leaders said the recent fraud conviction of optometrist
David Fram raised alarms about the long-running program in which the VA
appoints guardians to manage disabled soldiers’ finances.
That Fram was able to hide his fraud in annual reports he filed with the
VA particularly scared veterans, said Bill Mahon, president of the
McLennan County Veterans Association.
“If this doctor was clever enough to get by for years, who’s to say
there aren’t others out there?” Mahon said. “I think (the guardians)
have standards they have to abide by, but apparently this yahoo got by
them.”
Auditors recently suggested the program is at “significant risk” for
fraud because VA staff are not following monitoring procedures in every
case.
A June 27 report by the Office of the Inspector General, the VA’s
auditing arm, estimated 2,126 veterans could be victims of about $80
million in undetected fraud nationwide.
“Enhanced fiduciary program oversight is needed to better protect the
benefits payments and estates of incompetent beneficiaries,” the report
concluded. “The fiduciary program continues to be at significant risk
for abuse and fraud.”
A separate Inspector General report in May said the Waco VA Regional
Office faced similar concerns because some guardians who failed to
submit complete paperwork were not contacted. When guardians do not
provide annual financial reports, VA staff must follow up.
Waco VA Regional Office spokesman Tom Morley said the office has taken
measures to address the problems the report identified. And Fram’s
felony conviction demonstrated that the VA has measures in place to
catch thieves, Morley said.
The VA has conducted 96 fraud investigations resulting in 74 arrests and
$2.5 million in restitution payments between 1998 and 2005, the report
stated.
“There are success stories, but the question is, ‘Are we catching every
fraud out there?’ ” said Renee Szybala, VA director of compensation and
pension service. “That is what we have to shoot for.
“We don’t feel like anything in the report was a surprise. The areas
where we knew we had to improve were the problem areas they identified,”
she said.
VA officials have implemented new training programs, reviewed staff
shortages and improved security by starting background checks for
prospective guardians, she said.
However, an inherent fraud risk exists any time someone is in charge of
someone else’s money, Szybala said.
Since 1924 the VA has used fiduciary guardians to control the finances
of veterans and widows who have no other options. The VA appoints
guardians, who can be relatives or larger-scale guardians who often
oversee more than a dozen veterans’ accounts in exchange for a small
percentage of the benefits.
About 100,000 veterans or their spouses qualify for the program
nationwide. The program is intended to protect disabled veterans from
bankruptcy and homelessness by always having someone to pay the rent and
mail the electric bill on time.
Reports of fraud have followed the program for years, triggering a
large-scale audit in 1987 that sparked new reform.
But nearly two decades later, the Fram case shows how such theft can
occur. Court documents do not show how much Fram took, but he was
sentenced to five years probation and ordered to pay $126,250
restitution and court costs.
Fram managed accounts for several veterans for many years before he
started taking money when his unrelated business, Austin Avenue Eye
Clinic, began to struggle, according to court documents.
He turned to veterans who had bank account balances of $60,000, $80,000
and more, Fram’s attorney Fred Bown said, adding that Fram intended to
pay back the money.
He would divert money from other veterans’ accounts to cover the
embezzling for the annual year-end reports he filed with the VA,
according to court records.
Because Fram was able to keep up with each veteran’s expenses and fudge
the reports, it took a field visit, scheduled once every one to four
years, to uncover the problem.
“If the system was flawed, he wouldn’t have gotten caught,” Brown said.
“Eventually, he got caught on a standard audit.”
But standard practices and enforcement may not be enough, the report
said.
In its national review of 246 disabled veterans’ files, investigators
uncovered suspected fraud in 10 and inadequate protections in another
32.
The Waco review was much smaller, 11 files, but auditors expressed
similar concerns. VA examiners did not follow up on three files.
As soon as auditors raised the issue, examiners began checking all 3,725
files and replacing guardians who had not kept up on paperwork.
One guardian who lost his job was Neil McDuffie, Kerry’s older brother
and Joyce’s son.
Neil McDuffie was in charge of paying his brother’s bills for years, but
he did not submit the required annual reports in four of the last five
years.
The VA appointed a new guardian. The family was shocked that someone
outside the family was given the job.
Joyce McDuffie moved to Waco more than 25 years ago and sees taking care
of Kerry as family duty, noting that two cousins and a sister could have
taken the job instead of a stranger.
McDuffie said she would not have been as alarmed about the new guardian
if she had not heard about Fram’s fraud.
“Could you believe people were doing that to veterans?” she asked.
dgenz@wacotrib.com
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Larry Scott
