How San Diego fought fraud — with leniency

In June 2000, Rocio Sanchez, a young mother in San Diego County, separated from her husband and applied for public assistance. Just as she was settling into her new place, a fraud investigator turned up at the back door. He wanted to ask her about a new neighbor, he said, a woman named Rocio Sanchez. She corrected him, and the investigator, looking slightly alarmed, asked to see her identification. She went to retrieve it and returned to find him standing in her kitchen. He pressed for details about her husband. Where did he live? When was the last time she spoke to him? Why did they separate? The investigator searched the house, taking note of a man's shirt and shoes in the closet that Sanchez said belonged to her brother, and left.

The investigator was one of dozens of foot soldiers implementing Project 100%, the San Diego County district attorney's initiative that makes home inspections a final requirement for welfare. Investigators for the program pay over two thousand unannounced visits a month, taking note if they find a man's name on prescription bottles in the medicine cabinet or boxer shorts in a sock drawer. After the program was unveiled in 1997, welfare fraud prosecutions skyrocketed.

A few days after that initial visit, Sanchez was at her previous apartment, doing a final cleanup to recover the security deposit, when the same investigator showed up. He said he was looking for her husband and wondered why she was there. Something didn’t add up, he insisted — he had her translate a note on the counter written in Spanish, then other pieces of paper taken from the trash. On the way out, he said he could not process her application without speaking to her husband. Two months later, Sanchez was approved.

Shortly after, she became the lead plaintiff in a class action suit challenging the constitutionality of Project 100%. In a 2-to-1 opinion, the California Appeals court ruled the searches were lawful. Applicants had the option to refuse a search, the majority reasoned.

In his dissenting opinion, Judge Raymond Fisher described Project 100% as "nothing less than an attack on the poor." Of recipients of federal subsidies, he continued, "This is the group we require to sacrifice their dignity and their right to privacy. This situation is shameful."

The Sanchez case was still crawling through the courts in 2004 when Joni Halpern, the director of a San Diego nonprofit that works on behalf of low-income families, met Juliana Humphrey, a supervising attorney at the San Diego Public Defenders Office. In light of the ongoing lawsuit, they began swapping stories of single mothers convicted of welfare fraud. "They can’t pay for enough food, they can’t keep their water on, they can’t keep their electricity on, they can’t pay their rent," Halpern says. "They get farther and farther behind until a crisis causes them to do something that we call welfare fraud," Humphrey says.

Humphrey, the public defender, mentioned a "diversion" program that allowed first-time drug offenders to avoid a criminal record, and offered that a similar program might work for defendants charged with welfare fraud. Halpern was inspired: "I made a one-page action plan, and this was the plan that we were going to follow to get welfare fraud diversion instituted."

To figure out who was being arrested, Halpern recruited a team of sociologists from California State University at San Marcos to analyze about 400 randomly selected cases of welfare fraud. They found that a typical case involved a woman of color, about 35 years old, with two children; she received little to no child support and had an average annual take-home, including welfare payments, of $13,356. Here was the welfare queen, quantified.

"Women were being saddled with felony fraud convictions that kept them in poverty for the rest of their lives,” says Bill Oswald the current chairman of San Diego’s Caring Council, an advocacy organization that backed Halpern’s plan. Oswald and other council leaders brought the idea of a welfare fraud diversion program to District Attorney Bonnie Dumanis and summoned a grassroots movement to force the issue. "We inundated her with phone calls and letters," says Oswald. After a year of cajoling, Dumanis called the council’s then chair, Don Davis, and told him, "Call your dogs off. I’m ready to do this."

In 2008, San Diego unveiled the nation’s largest welfare fraud diversion program. Defendants enter a guilty plea, and are given three years to repay whatever they owe. Fraud involving less than $10,000 is automatically charged as a misdemeanor, whereas all cases were previously counted as felonies. All charges are dropped after defendants pay their restitution, which means that individuals without a previous criminal record won’t be barred from a job. Though San Diego advocates are still fighting to overturn Project 100%, Halpern commends Dumanis for taking a step in the right direction. “It’s very hard for an elected official to champion some change like this when public awareness is still in the dark ages,” she says. "It took a very big bite out of the wholly adverse outcomes that follow from these prosecutions."