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Welfare debit cards frequently used at liquor stores, strip clubs, casinos and amusement parks


An investigation by Colorado officials has found that welfare recipients are

using their assistance debit cards to withdraw funds at ATMs located in casinos,

strip clubs, bingo halls and amusement parks.

According to a 9News investigation, the details of which were published by The

DenverPost online, ATM owners and banks are some of the big winners, raking in

some $1 millionof taxpayer money in fees. As bad as that is, that figure doesn't include how much more

state and federal tax money was spent by welfare recipients at those establishments.

"When you see the type of obvious abuses that you've shown, it says there are people on welfare that should not be," Jon Caldara, with the Independence Institute a conservative watchdog group, said.

Millions in abuse

The investigation examined 222,000 transactions of state-issued welfare debit cards, called Colorado Quest, which recipients use to access cash at ATM machines. The investigation spanned a six-month period during 2011 and measured $8.1 million in transactions.

Though state law does not ban using the cards to withdraw cash at ATMs located in strip clubs, it does ban such transactions at casinos, bingo halls and liquor stores. Yet the 9News investigation discovered "numerous examples of cash withdrawals at businesses where transactions are banned -- and numerous examples of high ATM fees ultimately paid by the state even where transactions are allowed," the report said.

In one instance, the investigation team found $40,000 worth of transactions from metro-area liquor stores between May 1 and November 30.


Local residents aren't happy.

"I think it's wrong," Steve Ziporlin, an employee at a grocery store near one of the liquor stores identified in the investigation. "The money is supposed to be used for groceries and sundries."

"The state is giving them money, and to come up here and play with it, I think that's defeated them and their families," said the patron of one casino. "It comes out of our pocket."

The investigation found numerous Colorado Quest transactions at casinos in nearby Black Hawk. Also, 9News found similar transactions out of state as well, such as Elitch Gardens, Disneyland and Universal Studios in California. Transactions also took place at liquor stores in Los Angeles and on the strip in Las Vegas.

Some lawmakers are appalled as well.

"The primary beneficiaries of these benefits are kids," state Rep. Dan Pabon, D-Denver, told 9News. He recently saw a bill killed that would have added strip clubs to the current law banning use of the cards in certain businesses.

"If there's money being pulled out at liquor stores and casinos, it makes you wonder if those benefits are going to the people that they should," he said.

Making excuses

Not all Colorado lawmakers see it that way. In fact, one even resorted to circular logic in order to attack anyone who wants to be good stewards of the taxpayer's money.

"If you place some of the limits you talk about, you place recipients at a further disadvantage," state Sen. Betty Boyd, D-Lakewood argued. "Why is it that the 'haves' are always suspect of and stereotyping the 'have-nots'?" A better question is, why would anyone defend such abuses of the taxpayer's money then stereotype critics by accusing of them of stereotyping others?

Then, of course, there are the official apologists. Julie Kerksick of Colorado's Health and Human Services Department, which oversees the welfare card program, said it's just not feasible - in this computer age, mind you - to monitor all card transactions. She also tried to deflect responsibility by saying, essentially, that since a small minority of recipients was violating the rules, it's really not a big deal.

"We have fewer than 1 percent of all transactions that are out of compliance," she said. "That tells me businesses are cooperating, but it also tells me that most individuals who are receiving these benefits are using them appropriately."

The problem isn't just occurring in Colorado. In 2010, then-Gov. Arnold Schwarzenegger signed an executive order requiring welfare recipients to promise they would only use cash benefits to meet basic needs after state officials discovered some of them had withdrawn $1.8 million from casino ATMs.

In fact, the problem was so widespread that new federal rules were needed to stop the abuse. As part of the payroll tax cut bill that Congress passed last month, states will begin losing federal welfare assistance funds if people like Kerksick don't stop making excuses for abusers and end the transactions in the banned businesses.

Tuesday, March 06, 2012 by: J. D. Heyes (

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