Posted on 08/02/2002 7:54:59 AM PDT by Temple Owl
Aug. 02, 2002
Beneficiaries of $2 million? The dead
By Cynthia Burton
Inquirer Staff Writer
At least $2 million in city pension funds went to 96 people who are definitely dead and 23 others most likely dead, according to an audit released by City Controller Jonathan Saidel yesterday.
"I see dead people, and they're collecting city pension checks," he quipped, referring to the movie The Sixth Sense about a boy who communicated with dead Philadelphians.
The controller secured death certificates for the 96. His auditors concluded the other 23 were most likely dead because their deaths had been reported to the Social Security Administration.
The controller said checks intended for 20 dead people who were either retirees or their designated beneficiaries were cashed. The average payment was $16,500 a year. Saidel called this sampling of checks, which was done from last September until February, "the tip of the iceberg."
Many other payments made to dead people are stuck in a cyber limbo: They were issued by the Board of Pensions and directly deposited into dead people's accounts. Saidel said the money may then have been improperly withdrawn.
District Attorney Lynne M. Abraham said her office wanted to track down the people who cashed the checks of the dead since last December. At the time, she asked the Board of Pensions to turn over checks that were wrongly cashed, but she said she was still waiting for the information.
"We are committed to recouping any funds that have been illegally obtained from the city, and we've asked the pension board for the checks, but to date we haven't received them," she said.
City Finance Director Janice Davis, who also serves as Mayor Street's secretary of financial oversight, declined to answer specific questions and instead issued a statement through the Mayor's Office. She downplayed Saidel's audit by saying that the city's Law Department was trying to retrieve the money and that the city had hired a consulting firm to fix the pension system's internal controls.
Auditors also found:
The city failed to acknowledge the repeated attempts of an honest person who wanted to return pension checks. The individual wrote on several pension check envelopes "Dead" and "Died over a year ago" and "We don't want your money" and returned them to the city. It took 11 attempts over 13 months by the person before the checks were stopped. The controller declined to name the person.
As an example of the city's failure to track its money, Saidel said some of the checks even went to a dead bank. Many pensioners have their pension checks deposited directly into their bank accounts, but the city doesn't know if the money gets there. The controller found that the board sent payments to Continental Bank, even though it merged with another bank in 1994.
One dead beneficiary received checks for 20 years after death amounting to $123,100.
The Board of Pensions would have trouble finding out if it was paying the wrong people because it is months behind in reconciling its accounts. Even if city officials were more vigilant, Saidel said, they rely on the beneficiary's next of kin to tell them that the person is dead rather than performing an independent investigation, such as getting regular reports of death certificates or deaths reported to the Social Security Administration.
The board issues checks to 60,000 retirees or their designated beneficiaries.
Saidel is a member of the pension board but said he had assumed the city was conducting regular reviews until December 1999, when the Berwyn Group of Cleveland pitched him on performing a "death audit" for $1,600.
At first, Saidel urged the pension board to conduct the audit using Berwyn's basic research showing the board issued checks to dead people, but after waiting for months, his office began its analysis of the information last September.
When the pension board suspects the checks are going to the wrong person, it issues an affidavit asking the intended beneficiary to sign it to prove he or she is still alive. Saidel said this is ineffective, however, because if someone is forging a signature on pension checks, it would not take much of a moral leap to forge a signature on an affidavit.
Saidel said that his audit did not cover every check sent to every retiree or retiree's beneficiary but that this sampling indicates "it has to be much worse."
Saidel's involvement in the pension board also has caused him some personal trouble.
An Inquirer article last year reported that city officials said that Saidel had asked them to give pension board work to a law firm with which he was associated.
State and federal law-enforcement officials then began investigating Saidel's conduct. Saidel has vigorously denied any wrongdoing and noted that he was not prohibited from doing any outside work.
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