A Prince George's County grand jury charged with investigating the county's Department of Social Services for the past five months yesterday issued a report charging that Social Services overpaid welfare recipients $611,813 over the past two years.

The grand jury report says that the overpayments resulted because the department does not make adequate checks to insure that only those eligible for welfare receive payments.

In addition, the grand jury said it had "received evidence" that Social Services issues about $25,000 a month to its welfare recipients for the purchase of furniture without verifying whether the furniture is really needed.

The 23-member grand jury recommended that either the Department of Health Education and Welfare or the General Accounting Office "conduct a thorough Office "conduct a thorough and comprehensive management audit" of Social Services "to identify the conditions . . . that are encouraging the growth of welfare fraud in Prince George's County."

Williams Davidson. Social Service director, said he took issue with the "portrait" of his agency painted by the report.

Williams said that "99 per cent of the (welfare fraud) cases get to a grand jury because a member of my department thought there was reason to suspect fraud . . . I think the public will get a false idea that my staff just sits around the hands out welfare payments."

Social Services handles about 6,500 welfare cases a year and receives a yearly budget of about $18 million, according to Davidson.

The grand jury report said that many of the welfare fraud cases involved persons who were employed, yet still received payments. According to the report, Social Services can verify a recipient's employment status by checking social security tax record with the state.

The grand jury noted that this method cannot be used for checking on recipients who may be working for the federal government, since federal employees are not covered by Social Security.

Special Services was also cited in the report for failing to "properly process" welfare applications. According to the report, the grand jury was "shown birth certificates used by individuals to apply for welfare that were obviously altered and yet were accepted as valid by the department."

Social Services was also criticized in the report for having hired individuals with criminal records. On Wednesday, who admitted on her job application to having been convicted once of grand larceny, was indicted on 25 counts of welfare fraud and 26 counts of false pretenses for allegedly embezzling $33,000 in public funds.

According to the report, another Social Services employee, with a prior record of false pretenses, was recently sentenced to four years in prison for stealing welfare checks that were returned to the department in the department in the mail.

Davidson said he opposes running a police check on job applicants at his department, but added that "I find it absolutely valid to check with the police as a matter of prudence when there is reason to be suspicious of a person's prior record."

Although over $611,000 in illegal welfare payments have been dispersed since 1975, the state has been able to reclaim less than 5 per cent of that amount through criminal prosecution, the report says. State's Attorney Arthur M. Marshall Jr., said his office will recommend that the new grand jury to be impaneled on Monday continue the investigation of Social Services.