Prior to the Michigan Department of Human Service's announcement that they had taken Amanda Clayton off of the Michigan Bridge Card program, the web was abuzz with talk of the woman who recently won $1,000,000, and yet was still collecting food stamps.

Clayton is quoted as saying, "I thought that they would cut me off, but since they didn't, I thought maybe it was OK because I'm not working."  She also stated that she owns two homes and a car, while she continued to collect the $200 a month through the Michigan Bridge Card program. Clayton, however, is not the first person to fall under scrutiny for continuing to collect food stamps after winning the lottery.

Generally speaking, the problem is two fold. First, contrary to popular belief, once you qualify for a governmental assistance program of any kind, the impetus is on the recipient to inform the agency once they are no longer eligible or entitled to receive assistance. In other words, society relies on the honor system.

True, agencies may have some sort of enforcement officers that occasionally investigate claims of fraud, but in large part, people who sign up for these programs usually have to sign some sort of paperwork stating that they are affirming that everything in their application is true and correct, and that if their financial position changes, or they are no longer otherwise eligible for the program, they will arrange to stop receiving the benefits.

The reason for this is straightforward: there simply aren't enough resources to police these programs, the funding is going to the benefits, not to policing those people who attempt to game the system and hope that no one finds out. If the government does find out, however there is the potential for the recipient to be required to indemnify the program, and the further threat of fraud charges, which can be civil or criminal. Thus, the impetus is for people to stay honest about their financial resources, to ensure that governmental programs are only being used by those who really need them.

Secondly, there is much discussion about whether a lottery prize can be considered income for these governmental assistance programs. In most cases, it probably doesn't matter whether a prize is considered income, in the IRS's sense of the term, because these programs usually ask applicants in depth questions about their bank account balances, real estate, cars, and other assets in order to get a complete financial picture.

Certainly if the government only asked people what their employer supplied them with in terms of monthly income and didn't prod any further, the incidents of fraud would probably be higher, since people with $10,000,000 trust endowments don't have any "work income."

Thus, a person publicly proclaiming that they have won the lottery and yet are still collecting checks from the government, probably will not continue collecting those checks for very long.

 

Facebook
Twitter