Dividend eligibility verification project finds problems

Posted: Tuesday, October 10, 2000

ANCHORAGE (AP) -- The first random check of the eligibility of 700 Permanent Fund Dividend applicants has raised enough red flags that officials with the state Department of Revenue plan to continue the checks to protect the program from fraud.

''We're giving away more than a billion dollars a year. It's time we started pulling applications every year and looking at them,'' said Deputy Commissioner of Revenue Larry Persily. ''I believe this needs to be done and people want us to do it.''

The audit was completed last week. It was the first time in the 18-year history of the dividend program that the state conducted a random check of applicants.

The state denies dividends each year to 15,000 to 20,000 people who are ineligible because they fail to meet residency requirements. The random checks focused mainly on the 550,000 applicants who are routinely approved each year.

Two investigators were hired to cross-check applicants against drivers license and motor vehicle registration lists, voter registration records, vital statistics and employer records with the state Department of Labor.

Of the 700 applications checked, about 15 or 20 were sent on to the Permanent Fund Dividend Division for further review because the investigators could not verify the eligibility of the applicants, Persily said.

The number of questionable applications would appear to be relatively small in the sample. But with the state distributing $1.15 billion to 585,000 Alaskans this year, the numbers grow in significance.

''Even if it's only a half a percent that raise questions, that's 3,000 applications a year,'' Persily said.

Persily said the verification process is needed, especially for those who've been filing for dividends without any changes to their applications for many years. The state assumes that, because they were eligible in the past, they continue to remain eligible, he said. Longtime filers made up more than half of those included in the random checks.

The Dividend Division would not provide names of those with questionable applications due to privacy concerns but did provide examples of what investigators' found:

--One applicant, M.T., could not be reached by phone after several attempts, nor could the names of the verifiers on the application be reached. While the applicant and verifiers are not related, all provided the same phone number.

--Applicant, J.H., and one verifier listed the same home phone number. The number was for an Anchorage restaurant. Neither could be reached.

--A recording on applicant E.T.'s phone said the family was in Minnesota for the winter. The verifier on the application could not be reached by phone.

--The nine members of the C.H. family live in Rhode Island, due to military duty. The husband of one of the verifiers said he knows the family and believes they have no intention of returning to Alaska.

--Applicant V.S., who is out of state with his spouse on an allowable absence, provided non-working phone numbers for his verifiers. He told the investigator he could not think of anyone he still knew in Alaska.

Persily said it would be wrong to assume that all of the questioned applications are fraudulent, but it's likely that enough are fraudulent that the agency needs to confront the problem.

The Dividend Division will set up an internal audit program over the next few months to begin random checks with the start of the 2001 application period next January, said Nanci Jones, director of the dividend division.

''What it's going to amount to is a tightening up of the program'' Jones said. ''It's a matter of reorganizing our review and appeal functions.''

Officials said they realize random checks can't catch every cheater, but they hope the risk of getting caught will serve as a deterrent.

Among the penalties for cheating on a dividend application are the loss of dividends for up to 5 years; civil fines of up to $5,000; being charged with a criminal offense and losing the right to all future dividends; and being ordered to pay restitution.



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