Woman Who Defrauded Four Federal Needs-Based Programs Sentenced to Federal Prison
U.S. Attorney’s Office, Northern District of Iowa
A woman who lied to government agencies to receive benefit funds to which she was not entitled was sentenced to federal prison on April 13, 2026.
Gladys Louise Stephenson, age 48, from Chicago, Illinois, received the prison term after an October 27, 2025, guilty plea to theft of government property, supplemental security income benefits fraud, and false statement or representation.
Information from the plea and sentencing hearings showed that between March 2017 and April 2022, Stephenson made false statements to the Social Security Administration to receive Social Security benefits. Stephenson concealed her marital status and living arrangements, specifically that she was married to her spouse and that she lived with him. During this time, Stephenson made the same false representations to the Iowa Department of Human Services in connection with her receipt of food and family assistance benefits.
Stephenson also committed fraud in connection with two types of federal benefits authorized during the COVID-19 pandemic. As part of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Congress authorized forgivable loans to small businesses for job retention and other expenses through a program called the Paycheck Protection Program (“PPP”). In May 2021, Stephenson applied for a PPP loan and represented that she operated a sole proprietorship with nearly $100,000 in gross income. She received a PPP loan in the amount of $20,416 from the Small Business Administration based on those false representations. Stephenson spent that money on her personal expenses, including hotel rooms and casino visits. The CARES Act also authorized additional types of unemployment insurance benefits. In January 2021, Stephenson applied for unemployment benefits and falsely said that she had been employed as a housekeeper but could no longer work due to COVID-19. Based on these false statements, Stephenson received unemployment benefits to which she was not entitled.
Stephenson was sentenced in Cedar Rapids by United States District Court Chief Judge C.J. Williams. Stephenson was sentenced to 10 months’ imprisonment. She was ordered to make $106,058.97 in restitution. Stephenson was ordered to pay $58,950.97 to the Social Security Administration; $15,123 to the Iowa Department of Human Services; $20,416 to the Small Business Administration; and $11,569 to Iowa Workforce Development. She must also serve a three-year term of supervised release after the prison term. There is no parole in the federal system.
Stephenson was released on the bond previously set and is to surrender to the United States Marshal on May 11, 2026.
On April 7, the Department of Justice announced the creation of the National Fraud Enforcement Division. The core mission of the Fraud Division is to zealously investigate and prosecute those who steal or fraudulently misuse taxpayer dollars. Department of Justice efforts to combat fraud support President Trump’s Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within Federal benefit programs.
The case was prosecuted by Assistant United States Attorney Kyndra Lundquist and investigated by the Social Security Administration Office of Inspector General and the Iowa Department of Inspections and Appeals.