North Carolina Woman Sentenced for Identity Theft and Tax, Social Security Fraud

From the U.S. Attorney's Office, Eastern District of North Carolina:

RALEIGH – The United States Attorney for the Eastern District of North Carolina, Robert J. Higdon, Jr., announced that Chief United States District Judge Terrence W. Boyle sentenced  KHADIJA FATIMA HOWARD, 38, of Fayetteville to 30 months imprisonment followed by three years of supervised release. 

HOWARD was named in a three-count Criminal Information filed on February 26, 2018.  On May 1, 2018, HOWARD pled guilty to Making and Filing False Income Tax Returns, Aggravated Identity Theft, and Making False Statements.  Pursuant to the Plea Agreement, HOWARD agreed to make restitution to the Internal Revenue Service in the amount of $47,247 and, to the Social Security Administration in the amount of $44,000.

The investigation revealed that HOWARD applied for Title II disability benefits on July 20, 2009, claiming that the onset of her disability was April 1, 2009. After the SSA denied HOWARD’S application for disability benefits several times, HOWARD requested a hearing on November 21, 2012.  Prior to the hearing, HOWARD’S attorneys submitted a memorandum outlining HOWARD’S theory of the case and provided relevant medical records and additional evidence. At the hearing on March 20, 2014, a medical doctor testified on HOWARD’S behalf and proposed an amended date of January 24, 2012, as the date of onset of her disability. On April 25, 2014, the SSA awarded HOWARD disability benefits dating back to January 24, 2012, for the following impairments: inflammatory arthritis, idiopathic peripheral neuropathy, degenerative disc disease, and anxiety.

From the time of her initial application and continuing until the hearing, HOWARD swore that she had no earnings, other than a $7,500 disability insurance distribution from her employer, after she became unable to work in April 2009. Additionally, HOWARD denied using other names or Social Security numbers (SSN) for any purposes, and denied owning any vehicles, bank accounts, or property of any kind.  According to HOWARD’S representations, the only social services assistance she received was food stamps from the Department of Social Services in Fayetteville, North Carolina.  At the hearing, HOWARD told the administrative law judge (ALJ) that she still owned a house in Baltimore, Maryland; however, there was no indication that HOWARD earned any income from the house, as HOWARD merely advised the ALJ that a friend was residing in the house.

In November 2014, investigators with the SSA learned that HOWARD had changed her name to Maryam Rachel Smith (Smith) and obtained a new SSN ending in 1431 in November 2008, after claiming she was the victim of abuse.  The SSA permits a legal name change if a person claims harassment, abuse, or life endangerment, but does not require that a legal name change be made.  HOWARD utilized the name Smith and the SSN ending in 1431 to file income tax returns with the Internal Revenue Service (IRS), reporting self-employment business income from HOWARD’S parents’ retail fragrance store.  HOWARD’S self-employment business earnings were greater than the amounts allowable by SSA under substantial gainful activity (SGA).  When SSA investigators confronted HOWARD, she claimed that her parents deposited funds into her bank account, which HOWARD improperly reported as income.  The funds should have been reported as dividends on a Schedule B, rather than a Schedule C, since the payments reportedly represented a return on HOWARD’S $65,000 investment in her parents’ retail fragrance store. HOWARD’S mother advised that HOWARD did not earn the Schedule C business income reported on the Smith income tax returns.  Moreover, her mother advised that she provided support to HOWARD and to HOWARD’S minor child, claiming both HOWARD and HOWARD’S daughter as dependents on her income tax returns. According to her mother, HOWARD prepared those income tax returns.  HOWARD also falsely claimed that she had filed amended income tax returns for the tax years 2010, 2011, 2012, and 2013 to correct this mistake.  HOWARD provided the SSA investigators with “copies” of the purportedly filed amended returns.  Investigators with the IRS advised that the amended returns submitted to the SSA by HOWARD were never filed, contrary to HOWARD’S representations.  As a result of HOWARD’S concealment of work, investigators with the SSA determined that she caused an overpayment of SSA funds in excess of $44,000.

An investigation conducted by the IRS determined that between February 22, 2011, and January 17, 2015, HOWARD filed seven false income tax returns.  For tax years 2010 and 2011, HOWARD filed false income tax returns under her birth name of “Howard,” as well as under the name Smith.  All four income tax returns were found to contain false representations.  HOWARD also filed three false income tax returns for the tax years 2012, 2013 and 2014 in the name Smith.  All seven income tax returns reported either wages or business income which were never earned by HOWARD under the name “Howard,” or under the name Smith.  HOWARD also claimed head of household filing status and false dependents to qualify for earned income, child care, and making work pay credits, resulting in the issuance of seven fraudulent income tax refunds, totaling $47,247.  The dependents who were claimed by HOWARD on her income tax returns were real individuals; however, they were not supported in any manner by HOWARD during those tax years.

The case was investigated by the Social Security Administration’s Office of Inspector General and the Internal Revenue Service Criminal Investigation.  Assistant United States Attorney Susan B. Menzer prosecuted the case on behalf of the United States. 

From the U.S. Attorney's Office, Eastern District of North Carolina:

RALEIGH – The United States Attorney for the Eastern District of North Carolina, Robert J. Higdon, Jr., announced that Chief United States District Judge Terrence W. Boyle sentenced  KHADIJA FATIMA HOWARD, 38, of Fayetteville to 30 months imprisonment followed by three years of supervised release. 

HOWARD was named in a three-count Criminal Information filed on February 26, 2018.  On May 1, 2018, HOWARD pled guilty to Making and Filing False Income Tax Returns, Aggravated Identity Theft, and Making False Statements.  Pursuant to the Plea Agreement, HOWARD agreed to make restitution to the Internal Revenue Service in the amount of $47,247 and, to the Social Security Administration in the amount of $44,000.

The investigation revealed that HOWARD applied for Title II disability benefits on July 20, 2009, claiming that the onset of her disability was April 1, 2009. After the SSA denied HOWARD’S application for disability benefits several times, HOWARD requested a hearing on November 21, 2012.  Prior to the hearing, HOWARD’S attorneys submitted a memorandum outlining HOWARD’S theory of the case and provided relevant medical records and additional evidence. At the hearing on March 20, 2014, a medical doctor testified on HOWARD’S behalf and proposed an amended date of January 24, 2012, as the date of onset of her disability. On April 25, 2014, the SSA awarded HOWARD disability benefits dating back to January 24, 2012, for the following impairments: inflammatory arthritis, idiopathic peripheral neuropathy, degenerative disc disease, and anxiety.

From the time of her initial application and continuing until the hearing, HOWARD swore that she had no earnings, other than a $7,500 disability insurance distribution from her employer, after she became unable to work in April 2009. Additionally, HOWARD denied using other names or Social Security numbers (SSN) for any purposes, and denied owning any vehicles, bank accounts, or property of any kind.  According to HOWARD’S representations, the only social services assistance she received was food stamps from the Department of Social Services in Fayetteville, North Carolina.  At the hearing, HOWARD told the administrative law judge (ALJ) that she still owned a house in Baltimore, Maryland; however, there was no indication that HOWARD earned any income from the house, as HOWARD merely advised the ALJ that a friend was residing in the house.

In November 2014, investigators with the SSA learned that HOWARD had changed her name to Maryam Rachel Smith (Smith) and obtained a new SSN ending in 1431 in November 2008, after claiming she was the victim of abuse.  The SSA permits a legal name change if a person claims harassment, abuse, or life endangerment, but does not require that a legal name change be made.  HOWARD utilized the name Smith and the SSN ending in 1431 to file income tax returns with the Internal Revenue Service (IRS), reporting self-employment business income from HOWARD’S parents’ retail fragrance store.  HOWARD’S self-employment business earnings were greater than the amounts allowable by SSA under substantial gainful activity (SGA).  When SSA investigators confronted HOWARD, she claimed that her parents deposited funds into her bank account, which HOWARD improperly reported as income.  The funds should have been reported as dividends on a Schedule B, rather than a Schedule C, since the payments reportedly represented a return on HOWARD’S $65,000 investment in her parents’ retail fragrance store. HOWARD’S mother advised that HOWARD did not earn the Schedule C business income reported on the Smith income tax returns.  Moreover, her mother advised that she provided support to HOWARD and to HOWARD’S minor child, claiming both HOWARD and HOWARD’S daughter as dependents on her income tax returns. According to her mother, HOWARD prepared those income tax returns.  HOWARD also falsely claimed that she had filed amended income tax returns for the tax years 2010, 2011, 2012, and 2013 to correct this mistake.  HOWARD provided the SSA investigators with “copies” of the purportedly filed amended returns.  Investigators with the IRS advised that the amended returns submitted to the SSA by HOWARD were never filed, contrary to HOWARD’S representations.  As a result of HOWARD’S concealment of work, investigators with the SSA determined that she caused an overpayment of SSA funds in excess of $44,000.

An investigation conducted by the IRS determined that between February 22, 2011, and January 17, 2015, HOWARD filed seven false income tax returns.  For tax years 2010 and 2011, HOWARD filed false income tax returns under her birth name of “Howard,” as well as under the name Smith.  All four income tax returns were found to contain false representations.  HOWARD also filed three false income tax returns for the tax years 2012, 2013 and 2014 in the name Smith.  All seven income tax returns reported either wages or business income which were never earned by HOWARD under the name “Howard,” or under the name Smith.  HOWARD also claimed head of household filing status and false dependents to qualify for earned income, child care, and making work pay credits, resulting in the issuance of seven fraudulent income tax refunds, totaling $47,247.  The dependents who were claimed by HOWARD on her income tax returns were real individuals; however, they were not supported in any manner by HOWARD during those tax years.

The case was investigated by the Social Security Administration’s Office of Inspector General and the Internal Revenue Service Criminal Investigation.  Assistant United States Attorney Susan B. Menzer prosecuted the case on behalf of the United States.