Welfare Fraud California – What is it & can I go to jail?

California Welfare & Institutions Code 10980 WIC addresses two types of welfare fraud: recipient fraud and internal fraud.

Recipient fraud, the more common form, is when you provide false or incomplete information in order to obtain benefits, food stamps or Medi-Cal benefits to which you are not legitimately entitled.

Internal welfare fraud applies when you are a government employee who plays a role in assigning or distributing benefits to recipients whom you know are ineligible.

Most welfare fraud charges are wobblers, which means prosecutors have the discretion to file the cases as felonies or misdemeanors. A conviction can mean probation, fines, restitution, and possible time in jail or state prison.

Though if you can pay back all or a substantial part of the money, this can get you leniency – and sometimes a dismissal of the charges altogether.

In the article below, our California criminal defense attorneys¹ will explain the following:

• 1. What is welfare fraud?
• 2. Examples
• 3. Defenses
• 4. Penalties
• 5. Related Offenses
• Additional Reading

If, after reading this article, you would like more information, we invite you to contact us at Shouse Law Group.

1. What is welfare fraud?

Generally speaking, welfare refers to public assistance programs that are designed to help the unemployed and underemployed.

A Brief Overview of California’s Welfare Programs

California’s welfare benefits are available to eligible participants in the form of the following:

• CalWORKs (California Work Opportunities and Responsibility to Kids – formerly known as Aid to Families with Dependent Children “ADFC” – CalWORKs is the state’s primary benefits program that provides short-term cash aid for needy families who require assistance with housing, clothing, food, utilities and/or medical care),
• CalFresh (more commonly referred to as the food stamp program, CalFresh issues monthly electronic benefits that can be used to buy food),
• in-home services, addressing issues such as
  • domestic violence (counseling, medical and public health information, parenting skills training, financial planning and relocation services),
  • substance abuse (evaluation and treatment), and
  • mental health (assessment, case management, treatment and rehabilitation for those suffering from depression, anxiety, etc.),
• Greater Avenues for Independence “GAIN” (provides mandatory support to CalWORKs participants to help them find employment, remain employed and advance to higher-paying jobs),
• General Assistance or General Relief “GA/GR” (provides support to poverty-stricken adults who are not supported by other public assistance programs), and
• Medi-Cal (Medi-Cal is California’s Medicaid program that provides public health insurance coverage for low-income adults and children.  Despite the fact that Medi-Cal is a type of welfare benefit, Medi-Cal fraud is prosecuted under separate laws which are discussed in our article on California Medi-Cal Fraud.)

With respect to CalWORKs and CalFresh, most benefits are now distributed electronically. These types of cash aid are essentially wired into an account that is linked to an Electronic Benefits Transfer “EBT” card that the recipient uses much like a debit card. Paper checks and food stamps are becoming obsolete.

Elements of Welfare Fraud

Welfare fraud is when you make false statements or fail to report important information when applying for these public programs to receive benefits you are not entitled to.

Most instances of benefits fraud are prohibited under Welfare and Institutions Code 10980 WIC. You violate this law by:

1. deliberately misstating information or failing to provide relevant information in order to obtain, retain or increase undeserved welfare benefits,
2. applying for benefits under more than one name or by filing multiple applications to obtain multiple benefits, and/or
3. using, transferring, acquiring, purchasing, selling, possessing, altering or counterfeiting
   • (a) authorizations to receive food stamps, or
   • (b) actual food stamps.²

What do welfare investigators look for?

Prosecutors receive referrals from:

• the public “report welfare fraud” hotlines and websites that are provided by their offices,
• local “department of social services” agencies who oversee the disbursement of benefits,
• tips received on statewide public reporting hotlines, and
• any other agencies that suspect possible welfare fraud.

Welfare fraud investigators will begin their investigations by contacting the named recipients to question them about the benefits they are currently receiving and about the information they provided to obtain those benefits. Investigators may also contact friends, co-workers, family, and neighbors to obtain additional information that may be useful to prove or negate the fraud allegations.

Once an investigator compiles all the relevant information, they present it to a deputy district attorney who will review it to determine if a criminal filing is appropriate. Otherwise, they will:

1. refer the case back to the investigator to gather more information,
2. determine that there is insufficient evidence of wrongdoing and simply reject the case, or
3. place the case in a welfare fraud diversion program.

2. Examples

There are two common types of welfare fraud in California:  recipient fraud and internal fraud.

Recipient Welfare Fraud

Under 10980 WIC, recipient welfare fraud is fraud committed by those who receive – or unlawfully attempt to receive – welfare benefits to which they are not entitled.

The most common examples of California welfare fraud take place when you try to obtain unlawful benefits by:

• claiming that you are a single parent while the child’s other parent actually lives in the home (known as “absent parent living in the home”),
• failing to report additional income or other benefits,
• submitting a claim for a child who does not live in the home,
• submitting a claim for fictitious or ineligible children, and/or
• collecting benefits from another state in addition to those collected in California.

Real-World Examples

Los Angeles – A husband and wife applied for cash-aid based on their alleged low income. The couple failed to report that the wife owned a liquor store and recycling business. She also drove a $76,000 luxury car, shopped at high-end department stores, and had almost $150,000 hidden in her bedroom dresser.³

Stanislaus County – A Modesto man deliberately failed to disclose a felony conviction that disqualified him from receiving the food stamps for which he applied.⁴

Ventura County – A Simi Valley woman used fake Social Security numbers to obtain almost $2,000 in cash aid and food stamps.⁵

Arizona / California – In addition to misstating her income and the number of children she had on ten different welfare applications, an Arizona woman deliberately failed to inform the state that she was already receiving substantial adoption payments in California.⁶

Internal Welfare Fraud

Internal welfare fraud takes place when an employee of a government agency that distributes welfare benefits attempts to (or does) collect or distribute unlawful benefits from that agency.

Most of the time, this “inside job” occurs when the eligibility worker falsifies applications for ineligible friends or family and splits the proceeds. Examples include:

• creating fictitious children,
• making false claims about income, or
• failing to report facts which would disqualify these friends or family from receiving legitimate benefits.

If you are convicted of internal welfare fraud, you may also face charges of embezzlement (Penal Code 503 PC). Also known as employee theft, embezzlement is when you unlawfully take money or other property that has been entrusted to you.⁷

Embezzlement carries up to three years in the California state prison.⁸ Though if you embezzle more than $65,000, you face an additional one to four-year sentence.⁹

3. Defenses

There are many welfare fraud defenses that an experienced California fraud defense lawyer can present on your behalf.  The following are examples of some of the most common.

You Did Not Have Fraudulent Intent

If the prosecutor cannot prove that you acted with the specific intent to defraud, the judge will instruct the jury to find you “not guilty” of welfare fraud.

This means that, for example, your California criminal defense attorney could argue that you

• believed you submitted a legitimate claim for benefits (and any incorrect statements or omissions were inadvertent),
• did not realize that you needed to report lottery winnings, gifts, or an inheritance to the department, or
• simply forgot to update your status once one of your children become ineligible for benefits.

There Is Insufficient Evidence

Let’s say that you are accused of internal welfare fraud. Your employer reported you because they noticed that

• you had numerous duplicate files,
• documents were often missing from your case files, and
• you had suspicious contact with some of the applicants.

Even if the evidence strongly suggests that you were embezzling funds, without actual proof, you should be exonerated of the offense. Unless the prosecutor can prove that you are guilty beyond a reasonable doubt (that is, to a moral certainty), you should be acquitted.

You Are a Victim of False Accusations / Mistaken Identity

Even if there are legitimate claims of welfare fraud, it doesn’t necessarily mean that you are the guilty party.

Example: You work for the welfare agency, and you have a cousin who submits incorrect information on their application. Because you trusted your cousin, you did not take steps to verify it as you should have. This type of negligence could justify you losing your job. However, your cousin is the one who broke the law, not you.

Or let’s say you are accused of welfare fraud based on the fact that there is a fictitious child listed on your application. Perhaps your live-in boyfriend altered your application before he submitted it on your behalf.

Or maybe someone else submitted a benefits application using your name and Social Security number. It may be that you are the victim of identity theft.

You could even be falsely accused based on clerical errors. After all, governmental bureaucracies are notorious for making mistakes.

The D.A. Offers You A Restitution Agreement

Prosecutors are primarily concerned with recouping monies for the county or state. If you are in a position to repay all or a substantial part of the money you are accused of bilking, the prosecution is often willing to reduce the charge or agree to a light sentence.

Example: Mary is accused of receiving $22,000 in welfare benefits while not reporting that her boyfriend was working and living in the home. She is charged with felony Welfare & Institutions Code 10980. The D.A. offers her a deal. If she can repay $15000 of it, they will reduce the charge to a misdemeanor and not seek jail time. The judge continues the case for a year to allow Mary to work to pay this restitution. She pays off the $15,000, earns a misdemeanor, and avoids jail.

4. Penalties

Your penalty under Welfare and Institutions Code 10980 will depend on the specific type of welfare fraud you are convicted of, as outlined below.

Statements

If you are convicted of making a false or misleading statement in an effort to obtain benefits, you face a misdemeanor, punishable by up to six months in jail and a maximum $500 fine.¹⁰

Filing Fraudulent Applications

You face a wobbler if you are convicted of filing a fraudulent application because:

• you have filed multiple applications for the same person,
• you have applied for aid for a fictitious person, or
• you have applied for benefits using a false identity.

The felony is punishable by:

• 16 months, or two or three years in jail, and/or
• up to $5,000 in fines.

The misdemeanor is punishable by:

• a maximum of one year in jail, and/or
• up to $1,000 in fines.¹¹

Obtaining or Retaining Benefits

Obtaining or retaining fraudulent benefits is a misdemeanor if:

1. you actually obtained or retained fraudulent benefits, and
2. those benefits totaled $950 or less.

As a misdemeanor, its sentence is:

• up to six months in jail, and/or
• a maximum $500 fine.

However, if the aid was for more than $950, you face a felony with a sentence of:

• 16 months, or two or three years in jail, and/or
• up to $5,000 in fines.¹²

Food Stamps

If you are convicted of engaging in any activity with unauthorized blank authorizations to participate in the food stamp program, you face a felony. It is punishable by:

• 16 months, or two or three years in jail, and/or
• up to $5,000 in fines.¹³

It is a wobbler offense, however, to

• use,
• transfer,
• sell,
• purchase, or
• possess

food stamps, electronically transferred benefits or food stamp authorizations in an unlawful manner.

If the value of the food stamp benefits or authorizations is $950 or less, it is a misdemeanor. It carries:

• up to six months in jail, and/or
• a maximum $500 fine.

If, however, the value exceeds $950, it is a felony. It carries:

• 16 months, or two or three years in jail, and/or
• a maximum $5,000 fine.¹⁴

Electronically Transferred Benefits

You face additional penalties if:

1. you are convicted of committing welfare fraud, and
2. the fraud (or attempted fraud) involved electronically transferred benefits.

On top of the sentence for welfare fraud, you face an additional and consecutive:

• one year of incarceration if the transfer of benefits exceeds $50,000,
• two years if the transfer exceeds $150,000,
• three years if the transfer exceeds $1,000,000, or
• four years if the transfer exceeds $2,500,000.¹⁵

Additional Penalties

In addition to the penalties noted above, a conviction for welfare fraud subjects you to

• professional discipline if you hold a state license (since criminal convictions can affect professional licenses), especially when the crime is classified as a crime of moral turpitude which is typically the case with fraud offenses),¹⁶
• deportation or removal if you are a legal immigrant or alien,¹⁷ and/or
• disqualification from receiving any future public assistance benefits.

Restitution in Lieu of Criminal Charges

Depending on the circumstances, there will be times when you may be able to repay your fraudulently obtained benefits without suffering a criminal conviction at all.  Many counties, including

• Fresno,
• San Diego, and
• San Francisco

offer welfare fraud diversion programs.

Individual diversion programs will vary. In general, if you have little or no criminal history and you have not deprived the county of too much money (Fresno, for example, sets the limit at $3,000), you have the opportunity to repay the money in exchange for a dismissal of the fraud charges.

You must typically plead guilty to the charge.  If you successfully complete a diversion class and repay the money that you fraudulently obtained, the court will dismiss the charges. Otherwise, the judge will pronounce judgment and impose a sentence.

If prosecutors are unwilling to allow you to pay restitution in lieu of filing criminal charges, voluntarily repaying your ill-gotten benefits may convince the judge to reduce your ultimate sentence.

5. Related Offenses

• Penal Code 118 PC – Perjury
• Penal Code 182 PC – Conspiracy
• Penal Code 470 PC – Forgery
• Penal Code 487 PC – Grand theft

Additional Reading

For more in-depth information, refer to these scholarly articles:

• Welfare Fraud and the Fourth Amendment – Pepperdine Law Review
• Broke people, broken rules: Explaining welfare fraud investigators’ attributions – Punishment and Society
• Detecting and preventing welfare fraud – Trends and Issues in Crime and Criminal Justice
• Welfare Law, Welfare Fraud, and the Moral Regulation of the ‘Never Deserving’ Poor – Social and Legal Studies
• Welfare fraud and welfare stigma – Journal of Economic Psychology

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