18 charged with fraud in heat-aid plan

There's little question that the federally funded home heating-assistance program known as LIHEAP has helped a lot of poor people get through some very cold winters.

But 16 of the biggest beneficiaries, Philadelphia prosecutors alleged yesterday, were not poor. They were state and city workers charged with processing applications for program aid.

The 16 - 12 from the state Department of Public Welfare and four from the city's Department of Licenses and Inspections - and two alleged civilian accomplices were charged with defrauding the heating-aid program of about $500,000 from September 2003 to May 2007.

LIHEAP - the Low-Income Home Energy Assistance Program - is a $2 billion federal effort administered by the states. For many poor families, it makes the difference between living in modest comfort and shivering through the winter months.

Pennsylvania's share of the money this year is $135 million. About two-thirds of the money goes to help needy households pay for the cost of energy needed for heating through direct payments to utilities. About 10 percent in cash "crisis grants" goes to poor households out of fuel or threatened with utility shutoff, and the remainder helps low-income households conserve energy through home-weatherization improvements.

District Attorney Lynne M. Abraham said a small group of virtually unsupervised state and city workers allegedly used computer access and bogus identifications to give themselves cash for their own uses.

"The way this program was administered practically assured that both fraud and theft would flourish," Abraham said in announcing the report of a 15-month investigation by a county grand jury. "There was a total failure of supervision, oversight, [and] insistence on checks and balances."

Among the most egregious examples cited by Abraham was that ascribed to Stacey Graddick, 33, a state LIHEAP energy-assistance worker at the district office set up by the state Department of Public Welfare at 4601 Market St.

"I want you to know that you taxpayers paid for her wedding in Costa Rica with your federal tax dollars that were supposed to go to deserving LIHEAP recipients," Abraham alleged. "Stacey gets an extra star near her name because she had a wedding at poor people's expense."

In Philadelphia, the state assigned management of the crisis-grant program to L&I. Abraham alleged that two L&I employees - Jacqueline Jackson, 58, and Tiffaney Pendleton, 39 - used the money to buy themselves new $3,500 home heaters. Pendleton also allegedly bought one for a friend in exchange for a $600 bribe, Abraham said.

Graddick and Pendleton were arrested yesterday morning before the 85-page grand-jury presentment was unsealed, and Abraham said Jackson was set to surrender later yesterday.

Seven others were also arrested yesterday: Glenda Lawson, 59, and Cassandra Shamberger, 40, both of whom worked for L&I; Lindsay Rice, 40; Joyce Mills, 36; Charlotte Ikard, 36; Sheryl Allen, 31; and Tylenma Holmes, 48, all state workers at the LIHEAP West Philadelphia site.

Antonio Olivencia, 59, a state energy-assistance worker, surrendered to authorities yesterday morning, Abraham said, and four others had made arrangements to surrender. Yolanda Keith, 57, supervised the state workers at the West Philadelphia office, and Joanne Baker, 48, and Jacqueline Jackson worked under her. A civilian, Clarence Malone, 32, who allegedly helped Graddick in the fraud scheme, also was to surrender.

Abraham said authorities had arrest warrants and were seeking state employees Kevin McLeod, 41; Barbara "Bobby" Reels, 56, and Roslyn LeMay, 39. Also wanted was Norma Ortolaza, 31, who worked for a Kensington check-cashing service and allegedly agreed to cash the state assistance checks without demanding identification.

All 18 are charged with welfare fraud, conspiracy, theft, forgery, and related counts.

Abraham was flanked by other state and city officials involved in the investigation, including Pennsylvania Inspector General Don Patterson, Philadelphia Inspector General Amy Kurland, and representatives of the city Police Department, the state Auditor General's Office, and the Social Security Administration.

Keith, the one LIHEAP supervisor charged, allegedly was an active participant in the scheme, Abraham said. But Abraham said others, including former district administrator Marietta Moody, simply turned a blind eye to what should have been obvious.

Moody, who was not charged and who Abraham said did not personally benefit from the scheme, seemed more interested in "pushing money through the pipeline" to improve the chances of even more grant money the following year.

"Nobody was watching and nobody cared," Abraham said.

One former supervisor who did, Abraham said, was Mary Nocella, who in February 2006 confronted McLeod for using her signature stamp without her approval.

Nocella reported the incident to the state Inspector General's Office, and the probe began.

Word got out. LIHEAP distributed cash benefits totaling $936,608 in Philadelphia in 2004-2005, the last full season before the investigation began. The next year, according to the grand-jury presentment, cash grants dropped to $454,956.

This is not the first time that LIHEAP management has been criticized, and Abraham said yesterday that she did not believe Pennsylvania or Philadelphia was unique.

Two years ago, Pennsylvania Auditor General Jack Wagner criticized six counties - Philadelphia, Allegheny, Lancaster, Lehigh, Perry, and York - for incidents of suspected fraud in the program.

Yesterday, state officials and advocates for the poor emphasized the importance of the LIHEAP program for those who truly need it.

Richard P. Weishaupt, senior attorney with Community Legal Services in Philadelphia, criticized the "greedy manipulations of a few bad apples. We are confident that the vast majority of LIHEAP funds are used to make sure that elderly, sick, and disabled individuals, as well as households with young children, stay warm in the winter."