Nearly 200 deceased city employees received pension checks between 2007 and 2009, potentially costing the city almost $2.3 million, city comptroller John Liu announced at a news conference today. Liu said that he has handed over the 14 most obviously criminal cases, totaling almost a half a million dollars in pension fraud, to the Department of Investigation (DOI) Comissioner Rose Gill Hearn for further review.
“Anyone found to have stolen city pension funds through deliberate criminal schemes will be arrested and referred for prosecution and we will seek forfeiture of assets attained through criminal acts,” said Gill Hearn.
The discovery comes after a long pension survey that began shortly after Liu took office in February. By cross-checking pension payroll with the social security death index, the comptroller’s office located 185 cases in which checks were cashed after the pensioner was deceased.
In the 14 cases under immediate investigation, checks continued to be cashed or deposited for over a year. Most involved automatic, electronic deposits. In one instance, a person or persons used the dead city employee’s driver’s license to cash checks, and even had the license renewed in 2010 in order to continue.
The 171 remaining cases will be reviewed by the office of Deputy Comptroller for Audit Tina Kim for evidence of criminal activity.
Liu said the fraud wasted public funds and undermined city employees’ security. “Moreover, it fuels cynicism and distrust about pension plans and therefore unfairly stigmatizes city workers and retirees who really have put in many years of service, putting their life into the city,” he said.
Perhaps the cynicism is warranted. When asked what the current system is for keeping tabs on deceased pensioners, Liu seemed perplexed. “If something happens to me and checks are made out to me or direct deposits are directed to my bank account, at some point there’s certainly a death notice or a death certificate that’s been noticed, and then the bank accounts catch up and there should no longer be a way to make those direct deposits, and there certainly should be no way for me to endorse my check for it to be deposited,” he said.
His office later said that the onus was on the beneficiaries to stop the pension payments.
Tomorrow, Liu and DOI will co-host a joint fraud prevention conference tomorrow for 350 auditors and investigators from 42 city agencies.
Liu’s investigation covers part of the time that his predecessor, Bill Thompson, was in office. Both men are expected to run for mayor in 2013, and political analysts say that Liu can be expected to call out some of the failures of Thompson’s tenure over the next several years in order to highlight his own record.