[Senate Report 114-95]
[From the U.S. Government Publishing Office]
Calendar No. 167
114th Congress } { Report
SENATE
1st Session } { 114-95
_______________________________________________________________________
REPRESENTATIVE PAYEE FRAUD PREVENTION ACT OF 2015
__________
R E P O R T
of the
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
to accompany
S. 1576
TO AMEND TITLE 5, UNITED STATES CODE, TO PREVENT FRAUD BY
REPRESENTATIVE PAYEES.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
July 27, 2015.--Ordered to be printed
______
U.S. GOVERNMENT PUBLISHING OFFICE
49-010 PDF WASHINGTON : 2015
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
RON JOHNSON, Wisconsin Chairman
JOHN McCAIN, Arizona THOMAS R. CARPER, Delaware
ROB PORTMAN, Ohio CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky JON TESTER, Montana
JAMES LANKFORD, Oklahoma TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming HEIDI HEITKAMP, North Dakota
KELLY AYOTTE, New Hampshire CORY A. BOOKER, New Jersey
JONI ERNST, Iowa GARY C. PETERS, Michigan
BEN SASSE, Nebraska
Keith B. Ashdown, Staff Director
Christopher R. Hixon, Chief Counsel
Patrick J. Bailey, Chief Counsel for Governmental Affairs
Gabrielle D'Adamo Singer, Deputy Chief Counsel for Governmental Affairs
Gabrielle A. Batkin, Minority Staff Director
John P. Kilvington, Minority Deputy Staff Director
Mary Beth Schultz, Minority Chief Counsel
Peter P. Tyler, Minority Senior Professional Staff Member
Laura W. Kilbride, Chief Clerk
Calendar No. 167
114th Congress } { Report
SENATE
1st Session } { 114-95
======================================================================
REPRESENTATIVE PAYEE FRAUD PREVENTION ACT OF 2015
_______
July 27, 2015.--Ordered to be printed
_______
Mr. Johnson, from the Committee on Homeland Security and Governmental
Affairs, submitted the following
R E P O R T
[To accompany S. 1576]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 1576) to amend
title 5, United States Code, to prevent fraud by representative
payees having considered the same, reports favorably thereon
with amendments and recommends that the bill as amended do
pass.
CONTENTS
Page
I. Purpose and Summary..............................................1
II. Background and Need for the Legislation..........................2
III. Legislative History..............................................3
IV. Section-by-Section Analysis......................................3
V. Evaluation of Regulatory Impact..................................4
VI. Congressional Budget Office Cost Estimate........................5
VII. Changes in Existing Law Made by the Bill, as Reported............5
I. Purpose and Summary
The purpose of S. 1576, the Representative Payee Fraud
Prevention Act of 2015, is to protect recipients of government
federal retiree benefits from unscrupulous caretakers who take
the retiree's payments and use them not for the retiree's
benefit, but for their own. S. 1576 closes a loophole that
currently exists in statute whereby the embezzlement or
conversion of federal Social Security and Veterans' benefits by
representative payees is a federal felony, but the same
embezzlement or conversion of benefits provided to federal
retirees through the federal retirement system is not.
II. Background and the Need for Legislation
In addition to other federal benefits, federal employees
may be eligible for federal retiree benefits processed through
the Office of Personnel and Management (OPM): Federal Employees
Retirement System (FERS) benefits,\1\ and Civil Service
Retirement System (CSRS) benefits.\2\ Under federal statute,
individuals who are minors, mentally incompetent, or under some
other qualifying legal disability can have their benefits paid
on their behalf through a court-appointed or agency-approved
representative.\3\ Such individuals authorized to receive the
payments under these circumstances are frequently referred to
as ``representative payees.''
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\1\5 U.S.C. Sec. 8401, et seq.
\2\5 U.S.C. Sec. 8331, et seq.
\3\5 U.S.C. Sec. 8466(c); 5 U.S.C. Sec. 8345(e).
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The OPM Office of Inspector General (OIG) has reported to
Congress an increase during recent years in the number of
representative payees who take advantage of their position and
use the money they receive for purposes other than to benefit
the federal retiree.\4\ The OPM OIG has further reported that
OPM has an extremely antequated paper system for tracking
representative payees, and does very little, if any, oversight
work to ensure representative payees are using federal monies
for the benefit of the retiree.\5\
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\4\Meetings and written communication between OPM IG staff and
Committee staff in May, June, and July, 2015.
\5\Meetings between OPM IG staff and Committee staff in May, June,
and July, 2015.
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From 2004 to 2005, Congress created penalties for anyone
who takes the funds from Social Security Disability Insurance
Benefits,\6\ Social Security Supplemental Income,\7\ or
Veterans' Benefits\8\ and fraudulently uses them for their own
purposes, rather than on behalf of the intended recipient.
These statutes criminalize such misuse of government benefits
as a felony, punishable by a fine of up to $250,000,\9\ up to
five years in prison, or both.
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\6\42 U.S.C. Sec. 408 (characterizing the conversion of another's
Social Security benefit payments as a felony, punishable by fine
pursuant to title 18 and/or up to five years in prison).
\7\42 U.S.C. Sec. 1383a.
\8\38 U.S.C. Sec. 6101 (criminalizing fiduciary misuse of money or
property intended for the veteran's use).
\9\18 U.S.C. Sec. 3571(b)(3).
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No similar penalty was created for those representatives
who misuse or embezzle CSRS or FERS benefits distributed by
OPM. The absence of federal statutory authority often dissuades
U.S. Attorneys from bringing to justice those appointed to take
care of government retirees' benefits when they use these funds
for any purpose other than for the benefit of the retiree that
they represent.\10\
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\10\Meetings between OPM IG staff and Committee staff in May, June,
and July, 2015.
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In one example provided by the OPM OIG, Sakina Park
represented that she was running a personal care facility out
of her home in Philadelphia, housing at least seven people with
mental-health problems.\11\ However, Ms. Park did not have a
license to do so.\12\ At least one of the individuals alleged
to be under her care was a federal annuitant entitled to OPM
benefits, but mentally incompetent and unable to accept federal
payments for herself.\13\ Ms. Park was listed as that
individual's representative payee, authorized to collect OPM
benefits on the annuitant's behalf.\14\ In 2009, investigators
arrived with police at the home and removed the occupants of
the home.\15\ At that time, it was discovered that the
annuitant was not present--Ms. Park stated that the retiree was
``always running away'' and investigators found she had been
admitted to another facility after being found on a street
unconscious.\16\ The OPM OIG determined that Ms. Park had
received just under $8,000 from OPM on the annuitant's behalf
and did not use any of those funds to care for the
annuitant.\17\
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\11\Information provided to Committee staff by the OPM IG; see also
Court shuts down West Philly mental health facility, Philly.com (Jan.
18, 2008).
\12\See Court shuts down West Philly mental health facility,
Philly.com (Jan. 18, 2008).
\13\Information provided to Committee staff by the OPM IG; see also
Court shuts down West Philly mental health facility, Philly.com (Jan.
18, 2008).
\14\Information provided to Committee staff by the OPM IG.
\15\Information provided to Committee staff by the OPM IG; see also
Court shuts down West Philly mental health facility, Philly.com (Jan.
18, 2008).
\16\Information provided to Committee staff by the OPM IG.
\17\ Id.
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The local district attorney prosecuted Ms. Park in 2013
because she also embezzled Social Security benefits from other
individuals that were supposed to be in her care. Federal
prosecutors may be reluctant to prosecute the misuse of OPM
benefit payments alone because while such conduct may violate
state embezzlement or conversion laws, it is not a specific
federal crime.\18\
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\18\Meetings between OPM IG staff and Committee staff in May, June,
and July, 2015.
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The Committee believes this lack of federal penalty leaves
some of its most vulnerable civil servants, including those who
may be mentally incompetent, with less legal recourse when they
are taken advantage of and their retirement funds are misused.
This legislation criminalizes the misuse of CSRS and FERS funds
in the same manner as already exists for Social Security and
Veterans' benefits. In addition to prosecuting those who
abscond with benefits intended for government retirees, S. 1576
prevents those who have committed this crime before (whether
for CSRS, FERS, Social Security, or Veterans' benefits) from
future services as a representative payee.
III. Legislative History
Senators James Lankford and Heidi Heitkamp introduced S.
1576 on June 15, 2015. The bill was referred to the Committee
on Homeland Security and Governmental Affairs. Senator Ron
Johnson joined as a cosponsor on June 24, 2015.
The Committee considered S. 1576 at a business meeting on
June 24, 2015. The Committee ordered the bill reported
favorably by voice vote. Senators present for the vote on the
bill were Senators Johnson, McCain, Lankford, Ayotte, Ernst,
Sasse, Carper, Tester, Baldwin, and Heitkamp.
IV. Section-by-Section Analysis of the Bill, as Reported
Section 1. Short title
This section provides the bill's short title, the
``Representative Payee Fraud Prevention Act of 2015.''
Section 2. Representative payee fraud
Paragraphs (a)(1) and (a)(2) of this section amend Title 5,
chapter 83, subchapter III of the United States Code to add a
new section 8345a following section 8345, and Title 5, chapter
84, subchapter VI of the United States Code to add a new
section 8466a following section 8466, respectively.
New section 8345a makes it unlawful for any person
authorized by the Office of Personnel Management to receive
CSRS payments on behalf of a minor or other qualifying
individual (a representative payee) to embezzle or in any
manner convert any portion of the amount received from such
payments to a use other than for the use and benefit of such
individual. Such conduct is punishable by a fine under title 18
of the United States Code or imprisonment for not more than 5
years, or both. A representative payee's willful neglect or
refusal to make and file proper accountings concerning use of
the received payments as required by law shall be considered
prima facie evidence of embezzlement or conversion of such
amounts.
New section 8466a makes it unlawful for any person
authorized by the Office of Personnel Management to receive
FERS payments on behalf of a minor or other qualifying
individual (a representative payee) to embezzle or in any
manner convert any portion of the amount received from such
payments to a use other than for the use and benefit of such
individual. Such conduct is punishable by a fine under title 18
of the United States Code or imprisonment for not more than 5
years, or both. A representative payee's willful neglect or
refusal to make and file proper accountings concerning use of
the received payments as required by law shall be considered
prima facie evidence of embezzlement or conversion of such
amounts.
Paragraph (a)(3) makes technical and conforming amendments
to the table of sections of chapters 83 and 84 of Title 5,
United States Code, to reflect the new sections added in
paragraphs (1) and (2).
Paragraph (b) prohibits an individual from being appointed
as a representative payee to receive CSRS or FERS payments on
behalf of a minor or individual with a legal disability if he
or she has been convicted of violating the new sections 8345a
or 8466a created by this bill), 42 U.S.C. 408 or 1383a (similar
prohibitions on embezzlement of Social Security benefits), or
38 U.S.C. 6101 (similar prohibitions on embezzlement of
Veterans' benefits).
V. Evaluation of Regulatory Impact
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee has
considered the regulatory impact of this bill and determined
that the bill will have no regulatory impact within the meaning
of the rules. The Committee agrees with the Congressional
Budget Office's statement that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act (UMRA) and would impose no costs
on state, local, or tribal governments.
VI. Congressional Budget Office Cost Estimate
July 10, 2015.
Hon. Ron Johnson, Chairman,
Committee on Homeland Security and Governmental Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1576, the
Representative Payee Fraud Prevention Act of 2015.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Keith Hall.
Enclosure.
S. 1576--Representative Payee Fraud Prevention Act of 2015
CBO estimates that implementing S. 1576 would have no
significant cost to the federal government. Enacting the bill
could affect direct spending and revenues; therefore, pay-as-
you-go procedures apply. However, CBO estimates that any
effects on direct spending or revenues would be insignificant.
S. 1576 would establish new federal crimes relating to
federal retiree representatives who misuse funds from the
Federal Employees Retirement System and the Civil Service
Retirement System. A federal retiree representative is a person
or an organization that manages federal retirement benefits for
recipients who are unable to do so themselves under the
Representative Payee Program. As a result of enacting S. 1576,
the government would be able to pursue cases that it otherwise
would not be able to prosecute. CBO expects that S. 1576 would
apply to a relatively small number of offenders, however, so
any increase in costs for law enforcement, court proceedings,
or prison operations would not be significant. Any such costs
would be subject to the availability of appropriated funds.
Because those prosecuted and convicted under S. 1576 could
be subject to civil and criminal fines, the federal government
might collect additional fines if the legislation is enacted.
Civil fines are recorded in the budget as revenues and
deposited into the general fund of the Treasury. Criminal fines
are recorded as revenues, deposited in the Crime Victims Fund,
and are available to spend without future appropriation action.
CBO expects that any net effects associated with collecting and
spending such penalties would not be significant in any year
because of the relatively small number of cases likely to be
affected.
S. 1576 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
The CBO staff contact for this estimate is Matthew
Pickford. The estimate was approved by H. Samuel Papenfuss,
Deputy Assistant Director for Budget Analysis.
VII. Changes in Existing Law Made by the Bill, as Reported
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
S. 1576 as reported are shown as follows (existing law proposed
to be omitted is enclosed in brackets, new matter is printed in
italic, and existing law in which no change is proposed is
shown in roman):
TITLE 5
* * * * * * *
PART III--EMPLOYEES
* * * * * * *
SUBPART G--INSURANCE AND ANNUITIES
* * * * * * *
CHAPTER 83--RETIREMENT
* * * * * * *
SUBCHAPTER III--CIVIL SERVICE RETIREMENT
* * * * * * *
SEC. 8345. PAYMENTS OF BENEFITS; COMMENCEMENT, TERMINATION, AND WAIVER
OF ANNUITY.
(a) * * *
* * * * * * *
(f) The Office may not authorize a person to receive
payments on behalf of a minor or individual of legal disability
under subsection (e) if that person has been convicted of a
violation of--
(1) section 8345a or 8466a;
(2) section 208 or 1632 of the Social Security Act
(42 U.S.C. 408 and 1383a); or
(3) section 6101 of title 38, United States Code.
* * * * * * *
SEC. 8345A. EMBEZZLEMENT OR CONVERSION OF PAYMENTS.
(a) In General.--It shall be unlawful for any person that
is authorized by the Office under section 8345(e) to receive
payments on behalf of a minor or an individual mentally
incompetent or under other legal disability to embezzle or in
any manner convert all or any part of the amounts received from
such payments to a use other than for the use and benefit of
such minor or individual.
(b) Penalty.--Any person who violates subsection (a) shall
be fined under title 18, imprisoned for not more than 5 years,
or both.
(c) Prima Facie Evidence.--Any willful neglect or refusal
to make and file proper accountings or reports concerning the
amounts received from payments authorized under section 8345(e)
as required by law shall be taken to be sufficient evidence
prima facie of the embezzlement or conversion of such amounts.
* * * * * * *
TITLE 5
* * * * * * *
PART III--EMPLOYEES
* * * * * * *
SUBPART G--INSURANCE AND ANNUITIES
* * * * * * *
CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM
* * * * * * *
SUBCHAPTER VI--GENERAL AND ADMINISTRATIVE PROVISIONS
* * * * * * *
SEC. 8466. APPLICATION FOR BENEFITS.
(a) * * *
* * * * * * *
(d) The Office may not authorize a person to receive
payments on behalf of a minor or individual of legal disability
under subsection (c) if that person has been convicted of a
violation of--
(1) section 8345a or 8466a;
(2) section 208 or 1632 of the Social Security Act
(42 U.S.C. 408 and 1383a); or
(3) section 6101 of title 38, United States Code.
SEC. 8466A. EMBEZZLEMENT OR CONVERSION OF PAYMENTS.
(a) In General.--It shall be unlawful for any person that
is authorized by the Office under section 8466(c) to receive
payments on behalf of a minor or an individual mentally
incompetent or under other legal disability to embezzle or in
any manner convert all or any part of the amounts received from
such payments to a use other than for the use and benefit of
such minor or individual.
(b) Penalty.--Any person who violates subsection (a) shall
be fined under title 18, imprisoned for not more than 5 years,
or both.
(c) Prima Facie Evidence.--Any willful neglect or refusal
to make and file proper accountings or reports concerning the
amounts received from payments authorized under section 8466(c)
as required by law shall be taken to be sufficient evidence
prima facie of the embezzlement or conversion of such amounts.
* * * * * * *
[all]