Could You Be Criminally Charged With Benefit Fraud?

Posted on: 14 May 2015


Whether you're receiving Social Security Disability (SSD) income, unemployment insurance, food stamps, or another type of state- or federally-paid benefit, you're likely required to periodically submit financial statements or other documents confirming your eligibility to receive these benefits. 

What is benefit fraud?

Benefit fraud is a catch-all term used to refer to the purposeful and intentional defrauding of the government by individuals receiving benefits to which they are not entitled. Most benefit fraud involves either underreporting assets or understating income in order to falsely qualify for certain healthcare benefits (like Medicaid or an Affordable Care Act (ACA) subsidy) or other government payments, like SSD, food stamps, or temporary cash assistance.

Benefit fraud can be charged under one or more criminal statutes, including fraud, larceny, or making false statements to a public officer. If found guilty, you could face penalties ranging from a stiff fine to prison time. 

What activities could potentially subject you to criminal charges for benefit fraud?

As the monetary cost of this fraud continues to rise, state and federal governments have turned to "data mining" in an attempt to track down those who are reporting false financial information in order to receive benefits. These programs can compare tax records and bank-held assets to the information on an individual's benefits application to ensure that all pertinent information has been included.  

However, even in states not utilizing these data mining programs, there are a few activities that may quickly lead government workers to look harder at your benefits applications.

  • Failing to report "under the table" cash

Working part-time and failing to report this income on your taxes not only hurts you when it comes to the receipt of future benefits (like Social Security retirement) or the potential penalties levied by the IRS -- it may also render you ineligible for other federal and state benefits. 

If you happen to be audited and the IRS determines that you've been underreporting your household income, you'll be subject to back taxes, penalties, and other fees. The IRS may also coordinate with your state government to review your benefits applications to determine whether the extra funds discovered by the IRS are reported elsewhere.

  • Moving in with a significant other or relative without reporting household contributions

Another common fraudulent practice is the unreported cohabitation or commingling of assets with another adult. In some situations, and depending upon how the intake forms are phrased, this may not be fraud -- if a form asks for individual income, rather than household income, you're under no obligation to report extra funds at your disposal. 

However, if an application clearly seeks information on household funds and assets and you omit the financial information of another adult living with you, you may have a hard time explaining your reasoning -- particularly if this financial information would have exempted you from the receipt of benefits. 

What steps should you take if you've been charged with this crime?

If you've been charged with benefit fraud, there are a few things you can do to help clear your name and restore your benefits. 

First, consult a criminal defense attorney. You may want to seek the services of someone who also has past experience in litigating Social Security Disability or other claims that are relevant to the benefits you're alleged to have wrongfully collected.

Next, you'll want to gather up any documents you have relating to your claim -- like copies of your application, tax records, bank statements, and other financial information. Providing these to your attorney can help him or her formulate your best defense against the charges. In some cases, you may be able to plead guilty to a lesser charge and receive a reduced sentence -- in others, your attorney may feel it's worth chancing a trial to allow a jury to determine your guilt or innocence.