Hitting the Welfare Jackpot

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You’d think that welfare checks and food assistance would lose their luster after winning the lottery – but not according to the defendant in today’s Fraud of the Day from the Associated Press. A Michigan woman was recently charged with fraud for continuing to collect food stamps after winning a million dollars on a TV game show. Sound familiar? We first commented on this case a few months ago when the state cut off her food stamp benefits. But now prosecutors are taking her to court.

So, how much potential fraud are we talking about? According to the prosecution, she failed to inform the state of her winnings last September and instead continued to collect $5,475 in food stamp and public medical benefits. (If true, that means she STOLE over $5,000 in benefits from people who really needed it.? While that may seem a spit in the bucket to a millionaire, it adds up to a lot of food stamp benefits to those who need it most. The Michigan Attorney General agrees: ”It’s simply common sense that million-dollar lottery winners forfeit their right to public assistance,” the AP story quotes him as saying.

This isn’t the first time lottery winners have hit the welfare jackpot. Back in 2010, a Bay County, Michigan man won $850,000 but was still allowed to continue collecting benefits because the program didn’t count ”one-time windfalls” as regular income. Since then, that loophole has been filled; the state now suspends benefits to anyone with more than $5,000 in assets (excluding cars). But as this recent story suggests, the new limit hasn’t stemmed the tide. To more directly combat the issue, Michigan’s governor signed a bill into law this month requiring lottery operators to notify welfare services whenever someone wins $1,000 or more. This time, however, it will have to be sorted out by the courts. The woman, who has pleaded ‘not guilty,’ faces prison time, if convicted – in this case, up to four years. (Let’s see what she really gets. I bet four months of home confinement watching daytime TV.)

Source: Today’s ”Fraud of the Day” is based on an article entitled, ”Michigan Lottery Winner Charged with Welfare Fraud” by Ed White of The Associated Press, April 17, 2012.

A Michigan lottery winner was charged with fraud Tuesday for collecting food stamps and public health insurance despite pocketing a $735,000 jackpot.

Amanda Clayton, 25, was silent during a brief court hearing after spending a night in jail. A not-guilty plea was entered, and her lawyer vowed to fight the charges.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.