Published: Jul 01, 2010 7:05 PM EDT
Updated: Jul 01, 2010 4:01 PM EDT

 MIAMI (AP) - A federal program designed to help impoverished
families heat and cool their homes wasted more than $100 million
paying the electric bills of thousands of applicants who were dead,
in prison or living in million-dollar mansions, according to a
government investigation.
      The U.S. Department of Health and Human Services spent $5
billion through the Low-Income Home Energy Assistance Program in
2009, doling out money to states with little oversight of the
program. Some states don't verify applicants' identifies or income.
For example, the program helped pay the electric bill of a woman
who lives in a $2 million home in a wealthy Chicago suburb and
drives a Mercedes, according to the yet-to-be released report
obtained by The Associated Press.
      The Government Accountability Office studied the program after a
2007 investigation by Pennsylvania's state auditor found 429
applicants received more than $162,000 using the Social Security
numbers of dead people.
      The GAO investigated Illinois, Maryland, Michigan, New Jersey,
New York, Ohio, and Virginia, which represented about one-third of
the program's funding in 2009. The agency found improper payments
in about 9 percent of households receiving benefits in those
states, totaling $116 million.
      The report comes after a dramatic increase in the size of the
assistance checks as fuel oil costs soared in 2008 and 2009.
      "LIHEAP is supposed to be for poor people, not for cheats who
pose as something or someone they're not and get their paperwork
rubber-stamped by gullible government officials," said U.S. Rep.
Joe Barton, R-Texas, the ranking GOP member of the House Energy and
Commerce Committee, which requested the investigation.
      The program gives low-income residents checks made out to "Your
Heating Supplier." The checks are marked with specific
instructions to the bank that they are only to be deposited by the
supplier.
      Although individual states are primarily responsible for
preventing the fraud, the study found lax oversight by HHS and
little guidance on how to do so. Illinois, New Jersey, New York,
Ohio, and West Virginia said they had trouble finding records to
validate Social Security numbers and verify income.
      Several state officials said they typically don't investigate or
prosecute fraud in the program because the amount of money paid to
each resident is so low.
      The investigation found HHS paid thousands of dollars to people
who were obviously ineligible for the program.
      - HHS paid $3.9 million to 11,000 applicants who used the
identities of dead people.
      - HHS paid $370,000 to 725 applicants who were in prison.
      - HHS paid $671,000 to about 1,100 people who made more than the
maximum income to qualify for the program.
      Illinois paid $840 toward energy bills for a U.S. Postal Service
employee who fraudulently reported zero income even though she
earned about $80,000 per year. "Times are tough and I needed the
money," she told investigators.
      New Jersey paid $3,200 to a nursing home on behalf of eight
patients after the home's director applied for assistance. The
patients' nursing home care was already paid by Medicaid.
      Virginia provided three payments totaling $2,400 to three
separate applicants at the same address, according to the report.
      GAO employees in a sting operation also applied for benefits in
Maryland and West Virginia, using counterfeit documents, fake
addresses and fictitious companies. "All fraudulent claims were
processed and the energy assistance payments were issued to our
bogus landlords and company," according to the report.
      HHS Secretary Kathleen Sebelius said she was "very disturbed"
by the investigation.
      "Public resources are limited, and a dollar spent on ineligible
families is one less dollar available for those who genuinely need
help," she said in a statement.
      HHS now encourages states to require applicants to provide
Social Security numbers to verify identities and check them against
state databases that would show whether someone is dead, in prison
or a nursing home. The agency also required all states to submit a
detailed fraud prevention plan along with their funding requests.
      A Pennsylvania woman who was an administrator for the program
pleaded guilty in February to falsifying documents so she and five
family members could receive about $24,000 in assistance, even
though they were not eligible.
      A New Jersey administrator was indicted in May for writing three
applications to the program and then keeping the checks for
himself.
      The owner of a New Jersey oil company was sentenced to four
years in prison last month after he admitted taking nearly $400,000
from the program by offering residents cash for their
government-issued checks.