Welfare Recipients Spending At Strip Clubs, Liquor Stores, Luxury Destinations

- By Brian Maass and Mark Ackerman

DENVER (CBS4) - As state lawmakers vow to crack down on prohibited welfare transactions in Colorado, a CBS4 investigation has found Colorado welfare recipients spending their payments at luxury destinations across the country.

Welfare recipients get a Colorado Quest Card with benefits loaded on it, which can be used at an ATM or swiped like a debit card at a store. The benefits are supposed to be used for necessities, but a CBS4 analysis of welfare transactions shows that doesn't always appear to be the case.

In the surf town of Paia, on the north shore of Maui, Hawaii, CBS4 found Colorado welfare recipients spending Colorado welfare dollars at a pricey Whole Foods market. It was just one of almost 60 transactions last year in Hawaii totaling nearly $7,000. CBS4 also found $80,000 of Colorado tax money tapped in Las Vegas, in addition to transactions at the Miami Zoo, Orlando, Florida, and in touristy Times Square, New York.

"These are not for junkets to Las Vegas or Orlando," said Rep. Dan Nordberg, R-Colorado Springs, who is suspicious of where and how Colorado welfare dollars are being spent. "It's a waste of taxpayer money. These benefits are supposed to go for essential items, not junkets to Las Vegas or Orlando or any other out-of-state location."

Spending welfare benefits out of state is not currently prohibited. But welfare recipients are prohibited from withdrawing funds from ATMs in liquor stores, casinos and gun shops. (Nordberg helped land Senate Bill 15-065, on the governor's desk, which would add marijuana establishments and adult entertainment to the list of prohibited locations.)

But after combing through 500,000 welfare transactions from last year, CBS4 found transactions at prohibited locations were still occurring. In 2014, there were more than 1,800 illegal ATM transactions at Colorado liquor stores. At just one Black Hawk casino welfare recipients accessed the ATM 328 times, withdrawing $19,000. Not to mention withdrawals at marijuana shops and strip clubs.

Now Democrat Rep. Dan Pabon is pushing a second bill, House Bill 1255, to give the state more ways to crack down on apparent abuse.

"We want to make sure people are using these benefits for food and diapers like they are intended for," said Pabon. "Not going to a strip club or liquor store or a pot shop withdrawing those benefits and not necessarily knowing what they are going to do with it next."

Katie Griego, Employment and Benefits Director with the Colorado Department of Human Services says, "More than 99 percent of all welfare withdrawals are legitimate," and only a fraction of the millions of transactions a year are questionable.

When program administrators notice two questionable transactions they investigate and in almost every case welfare recipients then follow the rules. However, not a single welfare recipient had their benefits revoked in 2014 for rule violations.

When asked about out-of-state locations like Hawaii, Las Vegas, Hollywood and New York City, Griego says welfare withdrawals in exotic locations may look suspect but could be a recipient traveling to a funeral or family emergency or perhaps working out of state.

"I can't make the assumption they are not using their benefits in an appropriate way," she said.

CBS4 Investigator Brian Maass has been with the station more than 30 years uncovering waste, fraud and corruption. Follow him on Twitter @Briancbs4.

Mark Ackerman is a Special Projects Producer at CBS4. Follow him on Twitter @ackermanmark