The Low-Income Home Energy Assistance program provides $5 billion annually to the states, which distribute the funds to businesses, nonprofits, and homeowners. Unfortunately, the states do a poor job making sure the money isn’t lost to fraud and abuse.
- The applications of 9 percent of the households receiving LIHEAP benefits contained invalid identity information. For example, the identities of over 11,000 deceased individuals were used as applicants or household members for LIHEAP benefits. The GAO also found 725 instances where incarcerated individuals were used as applicants or household member.
- Even federal employees are gaming the program. The GAO identified 1,100 federal employees whose salary exceeded the maximum income threshold at the time of their application. One federal employee admitted that she saw the “long lines” of applicants and wanted the “free money.”
- The GAO identified several recipients living in million-plus dollar houses in Maryland and Illinois. But because these two states don’t consider the household’s assets in determining this “low-income” program’s eligibility, it’s technically not fraud! One LIHEAP recipient lived in a $2 million home and owned a late 2000s Mercedes.
- GAO investigators posed as applicants, created fake documentation, and set up a fake energy company to receive LIHEAP checks. In every instance the states paid out benefits.
[T]he selected states do not have an effective design for a comprehensive fraud prevention framework. In fact, the states are lacking key efforts in all three crucial elements of a well-designed fraud prevention system: preventive controls, detection and monitoring, and investigations and prosecutions.