Fraudsters rob pensions of the dead

Benefit fraudsters have stolen $1.6 million from taxpayers by claiming the pensions of dead family members.

Widows, children and grandchildren illegally claimed an average of $105,000 each by forging signatures on superannuation forms to show their dead relative was alive.

In some cases, the illegal pension payments went on for 15 years.

The long-running rorts were discovered last year after the Ministry of Social Development started a nationwide "data-mining" investigation into 250,000 deaths since 1984.

Fifteen people have since pleaded guilty to criminal charges.

But the fraud was not detected for five years after the ministry began data-matching with the Department of Internal Affairs, which manages death records, to ensure "dead" people were not claiming benefits.

Claiming false pension payments is impossible since data-matching was introduced in 2004 - but earlier deaths were not able to be checked.

The technology and skills to "data-mine" the records did not exist until 2007 when the ministry created an intelligence unit.

The head of the ministry's fraud team, Hilary Reynolds, said the unit last year identified a fraud risk with pensioners who died before 2004.

Investigators "data-mined" 250,000 beneficiary deaths and decided 33 needed further investigation.

Criminal charges were eventually laid against 16 people.

To receive the superannuation money, Ms Reynolds said, the fraudsters had to fill out and sign an annual review certificate as if they were the deceased family member.

"They've made false declarations year after year. These are family members who have taken advantage of a death of a relative."

Ms Reynolds said the average fraud was $105,000 over 10 years. The longest rort went on for 15 years. "That's a long time to be living a lie."

A few of the benefit scamsters were relieved when they were caught, Ms Reynolds said. "They knew they had been doing wrong."

Some of the convicted fraudsters were superannuitants, such as widows claiming their husband's pension.

The rest were children or grandchildren of the deceased.

Because of the sensitive nature of the investigation - "We're talking about dead people and their relatives" - the inquiry had been carried out in a painstaking fashion, Ms Reynolds said.

All but one of the 16 people charged have since pleaded guilty, and eight have been sentenced.

John Rae Taylor received a 14-month jail term for stealing $117,000. Others received sentences of home detention, supervision or community work.

As 30,000 beneficiaries die each year, 15 cases of fraud was a small number, Ms Reynolds said. All those convicted were repaying the money.

The probe into 250,000 deaths came after a 2008 Auditor-General's report which said the ministry should improve the way it prevented, detected and investigated benefit fraud.

"We considered that the ministry could make better use of its intelligence and data-matching functions to identify areas of emerging risk and potential instances of fraud," the report said.

The Government watchdog said the ministry should "regularly and formally" evaluate the effectiveness of data-matching for detecting benefit fraud, and recommended it use risk assessments of emerging benefit fraud to better use the data-matching technology - which is how the pension scam was detected.

Benefit fraudsters posing as pensioners have swindled the social welfare system before.

Career conman Wayne Thomas Patterson used 123 fake identities to steal $3.4 million over 2 years - or $56,000 a fortnight. He was jailed in October 2007 for eight years.

Superannuation is one of the few benefits that do not require regular interviews. Sickness beneficiaries must make regular visits to a doctor, and unemployment beneficiaries have regular job interviews.