The Justice Department is investigating a number of states for allegedly hiding mistakes in the food stamp program so their states could earn millions in bonuses.
As we told you last April, Julie Osnes ran the food stamp program in South Dakota for two decades.
She went on to consult two dozen other states on their programs and is accused of urging employees in at least three of those states to use dishonest practices in order to get bonuses from the federal government. She never did any consulting work for South Dakota’s DSS.
KELOLAND News reported last spring that Virginia and Wisconsin must pay the feds back $14 million for false food stamp claims.
Now another state that used Julie Osnes Consulting, Alaska, has agreed to pay the feds back $2.5 million for similar problems.
During recent testimony on Capitol Hill, investigators told the Senate Agricultural Committee they discovered the problems after someone turned Osnes in to the the feds.
“Our investigators received a whistle blower complaint related to the activities of a third party consultant working on one state,” USDA assistant inspector general Gil Harden said.
“There was definitely encouragement on the part of third party consultants to misrepresent facts to federal authorities when submitting information to lower their error rate–things like stretching income and expenses and altering documents, things of that nature,” USDA assistant inspector general Ann Coffey said.
The U.S. Department of Agriculture told the Senate Ag Committee that because of those practices, it hasn’t been able to put out an accurate error rate for states on SNAP, the food stamp program.
Brandon Lipps is Administrator of the Food and Nutrition Service at USDA.
“The OIG notes in its report that this consultant started working with states as early as 2004, when states individual error rates started dropping dramatically. So I think there’s been some sort of bias in the system for over a decade,” Lipps said.
“2004? So we have a problem here that could have started 13 years ago,” Sen. Pat Roberts (R-KS) asked.
“That’s correct,” Lipps said.
Federal investigators say 42 out of 50 states haven’t been turning in accurate numbers to the feds.
Osnes worked as a consultant for 24 of them. The Office of Inspector General won’t say how many states are still under scrutiny, But it does confirm several investigations are ongoing.
“Have you ever encountered a case like this were so many states were defrauding the federal government,” Sen. Roberts asked.
“Sir, I’ve been doing this job for a number of years and I can can tell you this is a unique situation. We have not encountered this type of investigation previously in my experience,” Coffey said.
“We have no idea how much taxpayer money was wasted. It could be $3 billion it could be $5 billion, it could be $10 billion,” Sen. Roberts asked.
The fewer errors states had in the SNAP program, the more they stood to bonus.
“We have a number of states that have defrauded the federal government and are being investigated. They’re gaming the system,” Sen. Roberts said.
The Department of Agriculture says it’s implemented corrective action plans with the states, hired more federal reviewers and requires approval of contracts with consultants like Osnes before states can enter into them.
Osnes Consulting earned millions of dollars getting states bonuses from the feds. Some of the states now paying the federal government back have indicated they may come after Osnes for some of the money.
Osnes issued us a statement for this story through her attorney:
“The bottom line is the facts are going to show that the SNAP program had extremely ambiguous and difficult to understand rules and regulations. There have been hearings recently in Washington with regards to that problem with officials who have come to the same conclusion. Julie has an expertise and long-standing experience in this field. She was helping states to navigate the mess created by this upside down regulatory scheme.
The facts will show that she brought some uniformity and fairness to the quality control reviews conducted by the states. It appears that some states have elected to pay the federal government rather than defend themselves.
Julie looks forward to defending herself and her company.”— Mike Sullivan, Osness Attorney. Sullivan is with Ellenoff, Grossman & Schole in New York.