Colorado Welfare Debit Cards Used at Casinos, Strip Clubs

February 28, 2012

ANCHOR: Taxpayer money, set aside for those who need it the most, is being spent in ways it is not intended. 9 Wants to Know is following the money trail to liquor stores, casinos, even strip clubs. A new federal law, just signed by the president, bans these types of transactions, but as 9 Wants to Know investigator Jeremy Jojola found, previously passed Colorado law has not been enough to stop the abuse in this state.

JEREMY JOJOLA: There are people out there that really do need help. Some people families get cash assistance through debit cards called Colorado Quest Cards. But some people are abusing these cards at ATMs and places where it’s illegal to use them—and each time the card is swiped, the banks make bank.

You expect welfare money to cover basics like food and housing, but the system allows abuse. After looking through 220,000 welfare transactions in six months, 9 Wants to Know found your tax money coming out of cash machines inside liquor stores, casinos, bingo halls, bowling alleys, bars, amusement parks like [BLANK], and strip clubs. We also found transactions out of state, in Disneyland, Universal Studios, and even along the Vegas Strip.

Josh’s Liquor on Colfax in Denver is busy. People using welfare cards took out nearly $6,000 in six months from the shop’s cash machine. They ignored the other ATMs in the same strip mall. This man works nearby:

STEVE ZIPORLIN: I think it’s wrong, because the money is supposed to be used for groceries and sundries and stuff to help you survive.

JOJOLA: Other transactions at other liquor store ATMs total around $40,000. At the Wild Card Casino in Blackhawk, we found 208 transactions at its ATM totaling more than $15,000. At the Bull Durham Casino next door, 56 transactions.

WOMAN: Takes out of our pocket, so they can come up here and play.

MAN: Well if you’re gambling away, on our taxpayer money, they shouldn’t be able to do that.

MAN: They should go to the grocery store for food. Not beer and cigarettes, none of that stuff, food.

Inside Shotgun Willie’s, we found 14 transactions totaling more than $1500. Every time the card was swiped, taxpayers covered the $6.50 ATM fee, too.

RESIDENT 3: I think that pretty much sucks.

JOJOLA: This man relies on the Quest Card to survive and doesn’t like the abuse.

RESIDENT 3: Most people are getting it already should not be getting it, you know what I’m saying.

JOJOLA: We also noticed a load of money going to ATM fees. Who gets that? ATM owners and big banks. Here’s how: The Colorado welfare cards operate through Chase Bank.

We found 180,000 transactions at non-Chase ATMs during a six month period. That means each of those involved an ATM fee that was applied to the welfare account. Multiply 180,000 by the average ATM fee of $3, and you get more than half a million in fees going to the banks and ATM companies in half a year. In one year, that’s more than $1 million. Julie Kirksick oversees welfare programs for Colorado. She says the state can’t oversee what every single person on welfare is buying.

JULIE KIRKSICK: We already have rules in place that prohibit ATM machines being used in casinos, liquor stores.

JOJOLA: Letters were sent to liquor stores and casinos last year asking them to program ATMs to block welfare transactions.

KIRKSICK: We have gotten mixed results on that to be truthful.

JOJOLA: What is the point of having a rule then, if the vendors are not going to follow it?

KIRKSICK: We have fewer than 1 percent of all transactions that are, in fact, out of compliance.

JOJOLA: Are they thumbing the nose at the state?

KIRKSICK: I would ask them.

JOJOLA: I’m wondering if you recall receiving this letter?

CASINO MANAGER: Not that I remember.

JOJOLA: This casino manager did not know about the letter or the law.

JOJOLA: And the welfare dollars coming out of this machine. We are wondering if this is something that your casino would consider doing?

CASINO MANAGER: We can definitely consider it.

JOJOLA: As for those banking fees, the local banking industry says they’re the cost of doing business.

DON CHILDEARS: Annual maintenance on such a machine will be $12,000 to $15,000 a year. That’s a lot of money that you have to recover.

JOJOLA: Are they unfairly profiting with these ATM fees would you say?

KIRKSICK: I don’t like ATM fees, but do I think that it is right and that I want to see it continue? No.

JOJOLA: And with so much welfare money going to the big banks through these ATM fees, the state admits it needs to work harder to help people avoid these surcharges going to the cash machine. So, in the meantime, the state is sending out these flyers to encourage people to use Chase ATMs where they will not be hit with the extra surcharges. In the meantime, you also mentioned that law signed by the president banning transactions at casinos, liquor stores and strip clubs; they have two years to follow that law. If they don’t, they could lose federal funding.

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