The Senate has passed S-1430, to add protections against fraud against federal retirees by “representative payees,” who are designated to act on a beneficiary’s behalf—most commonly when a retiree is physically or mentally unable to handle personal financial affairs but also in some cases for minors receiving survivor benefits for children.
Currently, the embezzlement or conversion of Social Security or veterans’ benefits by representative payees is a federal felony, but the same embezzlement or conversion of benefits provided to federal retirees through the federal retirement system is not.
The bill “closes a loophole in the law that allows bad actors to get off easy if they embezzle funds from federal retirees,” said sponsor Sen. Gary Peters, D-Mich., the ranking Democrat on the Homeland Security and Governmental Affairs Committee.
He cited reports by OPM’s inspector general showing an increase in such fraud. “Instead of properly managing benefit payments for retirees, some representative payees have been caught stealing funds for their own personal use. In many of the cases, the defrauded individuals were elderly or of diminished mental capacity,” he said.
The bill, which now moves to the House, classifies misusing federal retirement funds in that way as a felony punishable by up to five years in prison.