IT was the case of the fraudulent gypsies, all 58 of them assuming some 70 false identities in plundering Massachusetts two years ago for illegal welfare payments. ``One of the largest welfare conspiracies ever in the state,'' says Glen Fealy, director of the Massachusetts Bureau of Special Investigations, ``but we caught them.''
Stopping such welfare fraud across the nation is on the Clinton administration's agenda as it moves resolutely toward a sea change in federal welfare reform.
But the Clinton approach, say some state and local officials, may place more emphasis on increasing mandatory opportunities and less on policing behavior. More carrot than stick, they say.
Despite well-publicized cases of fraud in states, and assertions by many officials and politicians that fraud is widespread, no federal agency or social-policy organization has tried to research the extent of welfare fraud across the United States. Nor is there a reliable estimate of the national cost of fraud each year.
Yet indications of increased fraud have surfaced recently at the state level.
* State officials in Orange County, Calif., reported fraud in 27 percent of 500 welfare cases investigated. Previously the state had estimated that 4 percent of welfare cases were fraudulent.
* A pilot program in Bridgeport, Conn., revealed that about 15 percent of welfare applications contained false information, instead of the 3 percent estimated by the federal government based on errors in the way the applications were filled out.
* In Arizona, a state auditor's report concluded that nearly 28 percent of welfare applications are fraudulent. The figure was challenged by the Arizona Department of Economic Security as inaccurate.
``There is a lot of fraud,'' says Phyllis Mahin, a supervisor in the Wake County Department of Social Services in North Carolina, ``and a lot of counties try to cover it up. Welfare fraud needs to have a higher priority [because] a lot of money is going to people who are ineligible.''
``The only way you know about welfare fraud is when you catch it,'' says Bob Bliss, spokesman for the Massachusetts Department of Public Welfare. ``But we think there is enough out there for it to be a major concern. Because Governor [William] Weld is willing to stand up and say publicly that the state won't stand for fraud, then the welfare department responds too.''
In the last two years Massachusetts has shifted fraud detection to the ``front end,'' that is, investigating many applications before benefits are approved rather than after recipients are placed on welfare. ``We have had 84 investigators,'' Mr. Fealy says, ``and last week we added 12 more. Governor Weld has approved supplemental funding to give us 26 more investigators.''
Since Massachusetts started the program, Fealy says between 15,000 and 20,000 investigations have been done each year, and 6,500 of those cases have been prosecuted.
A number of other states, including California, New York, Texas, North Carolina, and Connecticut, now do some form of front-end detection. In Connecticut an estimated $1,040,923 was kept from fraudulent applicants over a 10-month period. Investigators made unannounced visits to the homes of applicants to verify information on the applications.
Some welfare-rights advocates say the states become excessively punitive when investigating applicants. ``States will often engage in demands for verification of eligibility which are unreasonable,'' says Deborah Harris of the Massachusetts Law Reform Institute. ``If a homeless person has not kept track of the birth certificates of her children, or every piece of paper in her life, and the state says she has to have the right pieces of paper, our concern is that she is being denied benefits she is legitimately entitled to, solely for paper reasons.''
Welfare advocates insist that because welfare payments fall well below the poverty line, recession and inflation continue to add severely to the ability of the recipient to survive. Often recipients earn extra money and don't report it, or they find a job and wait a month or more to remove themselves from welfare.
``I'm aware that some people get benefits, and then work off the books so they have a slightly higher income to pay the rent or to buy food,'' says Kathy Patterson of the American Public Welfare Association in Washington, D.C. ``The low benefits often push people into fraud, but they do it to survive.''
In North Carolina, according to Ray Riddle, president of the United Council on Welfare Fraud in Phoenix, Ariz., the welfare department has automatic computer access to several agencies to check applicant backgrounds.
A social security number is obtained from the employment commission to check job history and a record of an applicant's unemployment benefits. Through on-line access to the Department of Motor Vehicles, it can be determined if the applicant owns a car, and by access to state prison records, missing husbands can sometimes be found in prison.
``I think front-end detection serves as a deterrent factor,'' Mr. Riddle says, ``because it gets the word out that you better not lie on your application or you'll get in trouble. If we can stop fraud before it happens, or gain restitution after it happens, then we'll have more to give to the truly needy.''
Most welfare officials say many women on welfare fail to inform the welfare department that the father of her children lives in the home or apartment.
``That's fairly easy to find out in front-end detection,'' says Fealy, ``or they'll give us the address of a vacant lot.''
Other examples of fraud include recipients who don't send a child to day care, but receive money for day care. Depending on the state, the charge can be larceny if the fraud is over $250, plus full restitution to the state, and probation.