House panel bill makes dividend fraud a felony

Posted: Wednesday, April 06, 2005

Investigators from the Alaska Department of Revenue told lawmakers Tuesday that former Alaska residents are still applying for permanent fund dividends.

That means a misdemeanor charge is not enough to penalize and deter people from committing fraud, said Dan Boone, chief investigator of the Alaska Department of Revenue Permanent Fund Division.

"There's a general attitude that says once I'm outside of Alaska, nobody is going to do anything to me," Boone said.

The bill sponsored by Sen. Ralph Seekins, R-Fairbanks, aims to give offenders a Class C felony, or a jail sentence of up to five years. Currently the crime is a misdemeanor carrying only civil penalties such as paying a fine, being ordered to pay back the amount taken or a five-year ban from applying for a dividend.

The bill passed through the House State Affairs Committee on Tuesday and will be heard in the Judiciary Committee next before a final vote.

Since 1976, oil royalties have been invested in an account and shares of the earned income are given annually to some 600,000 residents in Alaska. The account is now worth $30 billion and last year's payout amounted to $920.

Alaska law says applicants must be an in-state resident for at least 12 months to receive the check. About 64 percent of fraud cases are from people living out of state who still apply for the dividend, Boone said.

Investigators are working on a case of a mother who has lived out of state since 1999 but has collected $30,000 for her family of three children, including a dividend for her 18-year-old adult son, who also applies for a separate check but doesn't live in Alaska, the investigator said.

Boone reported that other offenders cheat the system by using multiple aliases, applying for dividends for deceased children, and illegal aliens using stolen Social Security numbers.

Last year, the department checked out 1,600 tips and 1,700 applications suspected of being fraudulent were audited. The investigation resulted in denied applications, three federal indictments and one conviction of fraud.

Seekins believes the crime is more prevalent than those statistics.

"I introduced this bill because, as Alaskans, we all know someone who is trying to tap into the permanent fund revenue system who doesn't deserve a dividend or are not qualified to have them," he said.

The bill also creates a task force that will be permitted to look at national crime computer systems and cooperate with federal authorities to find hidden offenders with multiple aliases outside of the state.

"It's hard to root them out unless we get a fraud tip," Boone said. Investigators now may check federal records if they go through the Alaska Department of Law.

Now the department is encouraging the public to fill out applications online and use "electronic" signatures. Boone said the department can catch crooks easier if they are using an out of state IP (Internet protocol) address.

The representatives asked if the innocent might be caught in the pursuit of fraudulent applications.

"The bill is not intended to capture husbands and wives who sign for each other," Seekins said. Offenses are forged signatures or giving falsified information with the intent to steal from another person or the state.

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