North Oaks couple face fraud investigation

A North Oaks couple who moved here in the aftermath of Hurricane Katrina have wrongfully collected more than $430,000 in medical and disability benefits for their children since 2006, according to an affidavit filed in federal court.

James and Cynthia Hood have claimed those benefits -- meant for people with limited financial resources -- despite having a combined retirement portfolio of more than $1 million, more than a dozen bank accounts with a total of nearly $1 million in cash and two homes worth more than $1 million combined. Special Agent Jane Lewis, an investigator for the Social Security Administration, said in an affidavit that the Hoods' extensive assets would have made them ineligible for such aid.

The Hoods never told officials about their wealth, Lewis said. In fact, when Cynthia Hood applied for Medical Assistance and Social Security disability benefits in early 2006, she said she was the "sole legal guardian" of her three children and did not own any vehicles, stocks, bonds or property.

James Hood was recently contacted at his North Oaks home, which records show was bought with $865,000 cash in August 2006. When asked about the allegations contained in the affidavit, Hood said, "No comment," before closing the door.

The Hoods have not been charged with a crime and officials with Social Security's Office of the Inspector General - Office of Investigations would not comment on their case.

But digging into allegations of health care fraud and Social Security fraud is keeping federal investigators plenty busy, said James "Skip" Lacey, an investigator with SSA. "It's the bulk of what we do," he said, pointing to the more than 6,300 cases opened nationally in 2010.

In all, he said, investigators made nearly 600 arrests in the U.S. last year and recovered more than $36 million in fines and restitution. Those numbers have been fairly steady for the past decade, Lacey said.

Fleeing Katrina

When the Hoods brought their triplets to Minnesota from Louisiana in 2005, officials said, they claimed they were displaced by Hurricane Katrina and had difficulty finding adequate services for their children in the New Orleans area. One child has autism and another has cerebral palsy, according to the affidavit.

In early January 2006, the Hoods applied for Medical Assistance through Ramsey County Community Social Services. On their application, the Hoods said James Hood's pay as a history professor at Tulane University was their only income and that he would be joining the family in Minnesota in May 2006.

In February 2006, according to the affidavit, Cynthia Hood was interviewed for Social Security disability benefits on behalf of their two special needs children. James Hood was present during the interview.

That was when Cynthia Hood said she was raising the children alone, didn't own property and had a single bank account with a balance of $1,400, according to Lewis' affidavit.

Investigators later discovered, however, that at the time of the interview, Cynthia Hood had at least eight bank accounts containing a total of $680,000; she owned two vehicles, had more than $20,000 in a personal retirement portfolio and had a home in Louisiana. It also seems that the hurricane didn't force them to flee. Their Louisiana home was deemed habitable by FEMA after the hurricane and was listed for sale for $278,000.

Rather, it appears they came to Minnesota for the services available to their children. James Hood "reported to FEMA that they visited 21 other states before settling in Minnesota," according to the affidavit.

Deeper investigation

On Sept. 1, 2010, Lewis said, she learned from an investigator with the Ramsey County attorney's office that "James and Cynthia Hood provided false information in their 2006 application for Medical Assistance. Their application was false because James and Cynthia Hood did not report their income, including significant interest income, to the county."

Investigators began examining their retirement portfolios, bank records and property records. James Hood, who worked as a history professor at Tulane from September 1970 to January 2008, had more than $1 million in his retirement portfolio as of Sept. 3, 2010.

Property records detailed the Hoods' real estate holdings -- the cash purchase of the North Oaks house in August 2006, the Louisiana home and a farm in Iowa that provided the Hoods with regular subsidies from the U.S. Department of Agriculture.

Yet, when she was interviewed by a Social Security claims representative in November 2010, Cynthia Hood said she did not receive any help with household expenses and she paid the utilities. According to the affidavit, she said she bought the North Oaks home with a loan from her husband's relatives. But she didn't know the names of the relatives who provided the loan, nor how much she paid them per month. She guessed about $300.

Tough to know

Medical Assistance fraud is rare, said Mary Nelson, director of the Financial Services Division of Ramsey County Community Social Services. Most allegations of fraud at the county level involve cash benefits, such as food stamps, she said.

Fraud can also be difficult to detect. Officials often rely on the documentation that clients provide at intake to determine if families are eligible for assistance, she said.

"If people aren't telling us the truth, there really has to be something that gives us pause" to investigate, she said.

While Nelson said she could not comment on the Hoods' case specifically, she said: "It's extremely irritating when people who have other resources take money out of a pot intended for people who don't."

James Walsh • 612-673-7428