During a grand-jury investigation into employee theft at Philadelphia's Low Income Home Energy Assistance Program (LIHEAP), one employee was asked if the agency had any honest workers.

The employee, Joanne Baker, said that she could only be sure of one person - and, according to the subsequent indictment, it wasn't her.

Yesterday, District Attorney Lynne Abraham released a seething investigation charging 18 people - 16 of them LIHEAP employees - with stealing more than $500,000 from the agency.

It was money that was designated to help poor and low-income families keep warm in the winter. Instead, the employees kept themselves warm by defrauding the system to procure new heaters and stealing money to pay for everything from clothing to a wedding in Costa Rica, Abraham said.

"Their scheme was so clever and was so easy to perpetrate because nobody really cared, and that's what gets all of us," she said.

According to investigators, the scheme worked like this: While LIHEAP grants are typically sent directly to heating vendors like Peco or PGW, there are a few exceptions.

If tenants can prove that they have wood or kerosene heat or that their heat is included in their rent, a grant can be sent directly to them.

Energy-assistance workers at the agency figured out that they could generate fake applications for such grants, Abraham said.

They then approached clerical workers, who entered the data into the system, and offered them kickbacks for entering in fake applications, court documents said.

The applications were under false names and workers' friends' and relatives' names - even, in one case, a barber, according to the grand jury report.

Those individuals would then cash the checks and remand the money to the workers, often receiving kickbacks, the D.A. said.

"Then something very interesting happened," Abraham said. "The clerical workers figured they didn't need a middle person, they didn't need an energy-assistance worker to manufacture fake applications.

"The clerks figured out that you don't even have to have an application at all. All you need is a name and a fake Social Security number."

Supervisors were either unaware of the thefts or looked the other way, Abraham said.

"The workers were hurried to do work quickly and do shortcuts, and the supervisors were willfully blind," she said.

Even when applications, which typically take 30 to 45 days to process, were done in one day, nobody said anything, according to prosecutors. Even when as many as 30 grants were sent to the same house, when only one payment is allowed during a season, nobody said anything.

The theft was discovered when a supervisor found two false applications with her signature stamp on them and confronted an employee and another supervisor, according to the grand jury.

Those two falsely approved applications turned into hundreds, once detectives began their 15-month investigation, Abraham said.

In its report, the grand jury said that many more workers and much more theft was likely involved.

"We do not think it coincidental that LIHEAP distributed cash benefits totaling $936,608 in Philadelphia in 2004-2005 - the last full season before the investigation began," the report said, "but less than half that much, $454,956, in 2006-2007, after the workers were warned about the investigation."

The grand jury's conclusion: Workers stole at a rate of almost $500,000 each heating season.

Abraham concurred, saying that yesterday's indictments were "but the tip of the iceberg."

Stacey Witaleck, spokeswoman for the state Department of Public Welfare, which administers LIHEAP, said that the department supports the prosecution of those involved "to the fullest extent of the law."

"This is really going to be an area we can learn from and find a way to add more checks and balances," she said. "Unfortunately, sometimes there are people that are intent on committing fraud."

Of the 18 indicted, five remain employed with the department - though not for long, Witaleck said.

"Those individuals who are still current employees of the department we are taking action with the intent to dismiss," she said.

Charged were: Antonio Olivencia, 59; Glenda Lawson, 46; Cassandra Shamberger, 40; Norma Ortolaza, 31; Lindsay Rice, 40; Stacey Graddick, 33; Joyce Mills, 36; Tiffany Pendleton, 39; Charlotte Ikard, 36; Kevin McLeod, 41; Sheryl Allen, 31; Tylenma Holmes, 48; Barbara Reels, 56; Roslyn Lemay, 39; Clarence Malone, 32; Yolanda Keith, 57; Joanne Baker, 48; and Jacqueline Jackson, 58.

Not affiliated with LIHEAP but included in the indictment were Malone, who allegedly helped out a friend who worked at LIHEAP by forging fake applications and cashing checks, and Ortolaza, an employee of J & R Check Cashing, on Kensington Avenue, who cashed the issued state checks without requiring proof of identification, the report said.

Agencies assisting in the investigation included the state and city Inspector General's Office, the Philadelphia Police, the Social Security Administration and the state Auditor General.

All of those charged in the indictment at one time lived or worked in Philadelphia, although some have since moved out of the area, prosecutors said.

The charges, all of which are felonies, include welfare fraud, criminal conspiracy, theft, forgery, identity theft, bribery, tampering with public records and unlawful use of a computer.