Lee Zurik Investigation: Booze, bingo and strippers, paid for with public assistance

Fairgrounds, liquor stores, tattoo parlors, bingo centers, casinos -- when you're hurting for money, they're some of the last places you should be spending your cash.

But the cash being spent at these places belongs to you.

Each month, the state of Louisiana gives about 7,000 families a Louisiana Purchase card. It operates exactly like a debit card -- you can swipe it at an ATM, or make a cash purchase from a register. Each month, the state loads the cards up with money. It's what most people think of as the welfare system. And after reviewing six months' worth of records, we found many examples of potential welfare waste.

Take Wednesday, Sept. 7 of last year -- what were you doing just after midnight? At 12:04 in the morning, records show one person in the state's welfare system took $40 cash out of an ATM inside Little Darlings on Bourbon Street -- that's a strip club.

20 minutes later, the same person needed more cash and withdrew 20 additional dollars -- public dollars -- at a Bourbon Street strip club. It's not the only example of someone removing cash at an adult nightclub.

"It would be very difficult for someone to sit there and argue why they needed to be able to go to a strip club with a welfare card," says state Rep. Cameron Henry, representing parts of Orleans and Jefferson Parishes.

But there's more. December 1, 2010, someone used their Louisiana Purchase card at the Fair Grounds, in the early afternoon withdrawing $100 cash. A few hours later, the same person took out another $100 from their welfare card.

"It goes against the whole purpose of the welfare process," says Henry. "You're there because you have some serious financial needs, to be in that system, and yet you're going to the Fair Grounds. You shouldn't have it if you are going to the Fair Grounds, to be perfectly honest with you."

All six months we searched, we found many examples of different welfare recipients withdrawing money at the Fair Grounds.

"It's open up for abuse when you're just handing somebody, in essence, cash," notes U.S. Rep. Steve Scalise.

Days after this interview, Congressman Scalise co-sponsored a bill with another Louisiana representative, Charles Boustany. The bill would limit where welfare recipients can spend their cash. It passed the House 395-27 and now goes to the Senate. The bill would prevent welfare dollars from being spent at strip clubs, casinos, and bars.

We showed Scalise our findings, which include withdrawals from casinos like the Lucky Dollar Casino in Gramercy, liquor, daiquiri and cigarette stores, bingo centers, and even Tropical Isle on Bourbon.

"Ultimately the public is going to revolt and say, look we're not going to sit by work hard in tough economic times, and watch somebody take welfare money and go blow it at a at strip club or at a casino," Scalise says.

Congressman Cedric Richmond voted for the bill that would prevent people from spending money inside a strip club or casino.

"You just don't want public funds being used for that," Richmond says.

Richmond tells us the bill has his support as long as tougher laws don't affect people who properly use their benefits.

"Often times, a liquor store or something like that may be the only ATM in the neighborhood," Richmond says, "and that's the part that becomes a little dicey… you don't want any consequences of people not being able to access it."
On the state level, Representative Cameron Henry says he'll introduce a similar bill. But Henry plans to take his bill a step further. He wants to prevent welfare recipients from using their cards at strip clubs, casinos, bars, and also any ATM machines.