Three operators of SCOPE Payee Services, which was supposed to manage Social Security checks for the elderly and disabled, have been charged with 23 counts of fraud, theft and embezzlement. Federal prosecutors said the alleged fraud cost some of Tucson’s most vulnerable people $1.3 million in Social Security funds.
If convicted, Robert Lee Skaggs, 57, the owner of SCOPE, and Ray T. Skaggs, 41, and Jo An Skaggs,53, who coordinated payments, face up to 20 years in prison and a million dollar fine, as well as possible restitution, the U.S. Attorney’s office said in a press release Wednesday.
SCOPE, which was also known as Desert Dwellers, managed Social Security checks for the elderly and disabled between December 1994 and April 2008 before mysteriously shutting down. Clients learned of the closure from a cardboard sign hung outside SCOPE’s doors: "Scope is closed. We are Sorry!" the sign read. "Thank you for working with us!!"
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The sudden closure, first reported in the Arizona Daily Star, set off a mad scramble for about 750 people who trusted SCOPE to manage their checks. As a payee service provider, SCOPE would handle Social Security checks, paying bills and rent for people not capable of managing their own funds.
Meanwhile, the Social Security Administration was left scrambling to find SCOPE’s clients — many of them do not have set addresses — and cut them replacement checks.
A subsequent public records request — made by the Arizona Daily Star — revealed the Social Security Administration knew for years that SCOPE had major accounting discrepancies, but continued to let it operate. SCOPE’s bookkeeping was so lax an outside accounting firm couldn’t make sense of its books. The now-defunct company often worked in cash, at times storing more than $65,000 in an unlocked safe. SCOPE also regularly charged its clients excessive fees that were paid in cash without any supporting documents.
It took Social Security a year to partially comply with the records request.
The three defendants face charges of creating false records and supplying false reports to the Social Security Administration. They are also accused of making $5 million in withdrawals to hide the misuse of funds.
“Over 750 elderly and disabled people relied upon the business operated by the Defendants to act as their representative payee, to hold their money in trust,” United States Attorney Dennis K. Burke said in a news release. “The alleged misuse of these funds resulted in losses of over 1.3 million dollars from people who were among the most vulnerable in our society.”
The three defendants are scheduled to appear in U.S. District Court on Nov. 5 before Judge Raner C. Collins.
Contact Josh Brodesky at 573-4242 or jbrodesky@azstarnet.com.
