Flying High on Disability Fraud


Millions of people qualify for and receive disability assistance from the Social Security Administration (SSA) for physical or mental conditions that prevent them from working. While many who suffer from disabilities hold legitimate jobs, there are other scoundrels who collect disability benefits and fail to report that they are working or receiving additional income from other sources. This is called disability fraud, and it’s considered easy money for some criminals who know how to work the system. The Billings Gazette profiles one such man who received more than $25,000 in Social Security disability payments while failing to report income from running his medical marijuana growing business.

The article reports that the 48-year-old Missoula, Mont., man pleaded guilty to fraudulently receiving disability benefits between April 2010 and September 2011. Incidentally, in August 2009 the man legitimately became a medical marijuana business provider under Montana law. Two years later, the SSA received confidential information (Three cheers for the whistleblower!) that the fraudster was growing marijuana at his home and in a rented warehouse. According to the article, he deposited close to $38,000 in his bank accounts from January 2010 to April 2011. (Note that this amount did not include his monthly $1,400 disability payments. Do the math and that turns out to be an extra $2,375 per month. Gee, I wonder how he earned the extra income.)

In June 2011, federal and state law enforcement searched the man’s house and his warehouse. They seized more than 240 marijuana plants, nearly five pounds of bulk marijuana, more than five ounces of Hashish and marijuana processing equipment, including grow lights and digital scales. On the same day as the search, the man was interviewed by investigators and stated that he understood his obligation as a SSA disability beneficiary to report any changes in income. However, he denied that he had received income in excess of $500 per year from his medical marijuana business. (Could it be that the excess income was not coming from his medical marijuana business?) According to the fraudster, he was losing money from his business and did not think he had to report the income.

The marijuana grower and his green thumb will be sentenced in May. He faces penalties of 10 years in prison, a $250,000 fine and three years supervised release.

It’s often tough to determine whether or not a person is committing disability fraud. The article doesn’t state why the 48-year-old man was receiving disability compensation, (Perhaps too much marijuana use has led to abnormal brain function?) but one thing is for sure, he was fraudulently collecting disability benefits while profiting from selling marijuana whether it was used for medicinal purposes or not.

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Missoula Man Pleads Guilty to Disability Fraud,” published in the Billings Gazette on January 11, 2013.

MISSOULA — A 48-year-old Missoula man has pleaded guilty to fraudulently collecting more than $25,000 in Social Security disability payments while failing to report money that he made running a medical marijuana growing operation.

The U.S. Attorney’s Office said Scott Lee Hubeny pleaded guilty Thursday to theft of government money during a hearing before U.S. Magistrate Judge Jeremiah C. Lynch in Missoula. Sentencing is set for May 2.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.