Maryland Man Sentenced to Prison for $200,000 Social Security Fraud

February 25, 2015

From the U.S. Attorney’s Office, District of Maryland:

Baltimore, Maryland – U.S. District Judge Ellen L. Hollander sentenced John Wharton, age 74, of Baltimore, late on Friday, February 20, 2015 to a year and a day in prison followed by three years of supervised release for conspiring to defraud the federal government of Social Security benefits, making a false statement in regard to Social Security benefits, and two counts of theft of government property. Judge Hollander also entered an order that Wharton forfeit and pay restitution of $172,731.

The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Michael McGill of the Social Security Administration (SSA) - Office of Inspector General, Philadelphia Field Division; and Special Agent in Charge Nicholas DiGiulio, Office of Investigations, Office of Inspector General of the Department of Health and Human Services.

According to evidence presented at trial, John Wharton lived with his wife Joeann Wharton, except for a few brief periods of time. John Wharton knew that Joeann applied for disability benefits with the SSA, falsely stating that she was separated from John Wharton. Based on that false claim, she was approved for disability benefits with the diagnosis of mental retardation. From May 1997 to December 2012, Joeann fraudulently received at least $54,000 in disability benefits.

Trial evidence showed that in 1993, Joeann applied with SSA and was approved for disability benefits as a representative payee for the couple’s then-minor son. Although she was required by SSA to spend the SSI benefits for their son on his care and support, John and Joeann hid the benefits from him. From January 1996 to December 2004, Joeann unlawfully received over $36,000 in disability benefits as representative payee for their son. Although Joeann provided a written statement to SSA in which she falsely claimed that her son was living with her, the son testified at trial that he had not lived with his parents since the mid-1990’s, and he had to work two jobs to make ends meet during most of the period when his mother was collecting disability benefits on his behalf.

In late 2000, Joeann Wharton signed the couple’s son up for benefits as a disabled adult on John Wharton’s Title II record, which would entitle their son to benefits in addition to his disability benefits, if he was disabled and unable to work—which he was not. Between 2001 and 2004, Joeann received at least $15,121 in Title II benefits for their son, none of which she spent for his care or support. The son testified at trial that he was also unaware of these benefits. Prior to 2004, SSA became aware of his work activity and assessed an overpayment of $10,328 against him, which he paid to SSA despite never receiving the benefits in the first instance. He paid back the overpayment from wage and income tax refund garnishments. When he called his parents to complain, they both disclaimed any knowledge of the benefits paid in his name.

After the death of one of the Whartons’ daughters, Joeann applied and was approved to be representative payee for their two granddaughters in May 2002, who at that time were seven and nine years old. In July 2011, Joeann forged a granddaughter’s signature on a check from SSA that she then deposited into her personal account. From June 2009 to August 2012, Joeann received $50,152 in SSA survivor’s benefits as representative payee for her two granddaughters, despite the fact that both granddaughters had moved into their aunt’s house no later than June of 2009. The granddaughters testified at trial that from 2002 to 2009, their grandparents sometimes did not provide them food, and never provided clothing and school supplies. The granddaughters also testified that while living with their grandparents, they were required to spend most of their time in their room, and were not allowed to use the kitchen or living room. Joeann and John Wharton concealed Joeann’s receipt of the survivor’s insurance benefits from their granddaughters, and failed to spend the benefits for their care and support as required by SSA.

Twice in August 2012, John and Joeann Wharton appeared together at an SSA office in Towson and made false statements that their granddaughters continued to reside with them. At her initial appearance and arraignment on February 22, 2013, Joeann falsely claimed to U.S. Pretrial Services that she occupied the upper floors of her home, while John Wharton lived exclusively in the basement. A subsequent search of the home revealed that the Whartons resided together in the home.

John Wharton previously pleaded guilty to theft of government property in connection with his scheme to collect a second set of Title II retirement benefits under the alias “James L. Wharton,” for which he received more than $30,000 in benefits after April 2010. He received these benefits while also collecting retirement benefits under his true name and Social Security number. At trial, John Wharton was convicted by the federal jury of conspiring to defraud the federal government of Social Security benefits, making a false statement in regard to Social Security benefits and a second count of theft of government property.

Joeann Wharton, age 61, of Baltimore, was convicted by the federal jury of the conspiracy, making a false statement in regard to Social Security benefits, Social Security benefit fraud, and two counts of theft of government property. Judge Hollander sentenced Joeann Wharton on February 12, 2015 to five years of probation, and entered an order that she forfeit and pay restitution of $155,783.

United States Attorney Rod J. Rosenstein praised the SSA – OIG and HHS - OIG for their work in the investigation. Mr. Rosenstein thanked Special Assistant U.S. Attorney Paul K. Nitze and Assistant United States Attorney Judson T. Mihok, who prosecuted the case.