Victorian policies fail to protect taxpayers from disability fund embezzlement

When the mother of a vulnerable woman with a disability revealed that she regularly diverted her daughter's state disability payments to buy herself $400-a-month beauty treatments, clothes, alcohol and real estate, I thought she was making it up.  She wasn't.  She diverted more than $50,000 in a single year.

The disability payments were part of a taxpayer-funded program provided for her adopted daughter's disability care by the State of Victoria –under the Individual Support Package (ISP) program.  The program is intended to assist 30-year-old disabled Karen (not her real name) by providing $200,000-a-year in direct cash payments to fund her staffing and therapy needs. 

Every month, the Department of Human Services (DHS) deposits $16,000 of taxpayer funds into a private bank account in Karen's mother's name.  The funds are strictly earmarked to pay for $25-an-hour assistants and other disability services so that Karen can live independent of her family and attend university, toward becoming a productive member of society.

Although Karen's mother is not her Guardian (she doesn't require one), DHS gave the mother control over both the bank accounts and arranging for services.  No registered service providers or state employees are involved in hiring, supervising or paying for carers.  Karen is at the mercy of her adoptive family's personal spending habits, which often take priority over her disability needs. 

When Karen learned that her family was using the money for their own personal expenses, she reported the embezzlement.  Within two weeks, her family used their financial power over her paid staff to impose punishments and lifestyle restrictions on Karen.  They have continued for more than four years, as has the family's embezzlement from her disability fund.

Uncovering embezzlement from a DHS ISP fund is a simple process that should take only a few hours to conduct.  Each year, the family is required to submit invoices that match the dollar amounts of the disability services listed in line-item form in Karen's ISP plan.  The services are allocated to the penny.  There should be an exact match between the amount of each invoice and a transfer payment made out of the bank account into which the $200,000 in state funds are deposited.  It's a simple exercise to identify whether the invoices were paid, and to whom.  But DHS policy does not allow consideration of the actual bank transactions in their annual review because they are made from a private family bank account.

In Karen's case, I know the invoices and bank withdrawals won't match because her mother speaks regularly about her skill in using this policy oversight to divert Karen's funding.  Fabricated invoices won't have corresponding bank transfers to legitimate payees for legitimately provided disability services.  Cash withdrawals used for personal expenses won't be supported with authentic invoices for disability services.  Both transactions are simple to confirm as fraudulent; and these embezzlement activities are among the easiest to detect.

But DHS says they can only consider the invoices as submitted by the family in good faith and have no authority to authenticate them or reconcile them with the bank withdrawals.  Without both invoices and bank withdrawals to compare, or an authentication procedure, embezzlement is difficult to uncover. 

Karen was contacted twice by Victoria Police regarding an investigation into possible fraud.  They said they required a formal, detailed statement from her to proceed with an audit.  They had Karen's ISP contract in hand listing her funded services, the invoices submitted to DHS, and the actual bank statements in their possession.  They could have proceeded with an audit based on fraud against the State of Victoria, particularly considering Karen's vulnerable position.  Instead, they viewed it as a personal theft case.  Karen required confidentiality to protect herself from further punishment.  Victoria Police were unable to provide this protection –allowing her mother and other associates to sit in on the interview –so Karen declined to proceed with the statement.  They used her reluctance to suspend the investigation.     

Karen is only one victim of this form of financial disability abuse.  Who protects the taxpayers who provided the $200,000-a-year funding for her care?  And why aren't policies in place to detect the simplest forms of disability fraud against the State of Victoria? 

I have written about Karen's case a number of times, particularly about her present circumstances and punishing restrictions at the hands of her family, limiting her right to free communication, self-advocacy and self-determination.  On Line Opinion discussions have been valuable in understanding why there isn't an urgent outcry for investigations into this form of disability fraud. 

Some readers were of the opinion that the family deserved to dip into the fund because they probably had responsibilities that were 'non-paid.'  Others felt families of persons with disabilities should not be criticized at all –that a separation between the rights of the family and the rights of the disabled family member doesn't exist.  And that 'dobbing them in' was somehow un-Australian.    

Let me be clear.  The Victorian Individual Support Package disability program is a tightly-constructed, taxpayer-funded benefit entrusted to the care and responsibility of DHS.  And they are failing to do their job because DHS says their policies don't allow them to view private bank accounts, even though they are the source of the $16,000-a-month deposits made into the account.  Victoria Police can't proceed to audit the documents that would prove embezzlement without Karen's statement, which would put her in harm's way.  It's a double Catch-22 that fails to protect both Karen and the taxpayers that provide the $200,000-a-year in funding.    

I saw Karen a few days after she declined to make a formal police statement under the restrictions imposed on her.  Karen has weighed in on these communication restrictions before.  She contends that if she is not allowed to speak her mind in a confidential, free and non-coercive environment, then it is her right to refuse to participate in a process she considers flawed and discriminatory.  And even though this may produce unwanted consequences for her, I understand the ethics of her decision.  She wants the rights she is entitled to by law.  And she wants to be protected from harm.   

In our last conversation, I told Karen not to lose hope –hope that the rorting and punishment will stop; that her human rights will be restored; that she can attend university, start a career, and live the life that the State of Victoria DHS fund is provided to help her to achieve. 

If DHS policies prevent them from stopping the embezzlement, and Victoria Police are unable to pursue the case without Karen's formal statement, then perhaps someone in government who has a higher responsibility to taxpayers –a mandate to protect taxpayer dollars from rorting by non-disabled family members –will come forward to address this issue.  Karen certainly deserves better.  And so do taxpayers.