FORT SMITH, Ark. (KNWA/KFTA) — On June 27, a Fort Smith husband and wife were sentenced to federal prison for theft of government funds and aiding and abetting.
According to a press release, the Honorable Judge P.K. Holmes, III, presided over the sentencing hearings in the United States District Court in Fort Smith.
Stephen Wayne Schwartz, 55, was sentenced to six months in prison followed by three years of supervised release and Rebekah Jolea Schwartz, 44, was sentenced to six months in prison followed by three years of supervised release. They were ordered to pay restitution, jointly and separately, to the Social Security Administration in the amount of $167,756.60.
Rebekah Schwartz was formerly the Sebastian County Justice of the Peace and resigned in March after her conviction. Stephen Schwartz also served in that role from 2019-2020 before his wife’s election.
“The Social Security Administration is set up to make funds available to those who are truly in need because of a disability. However, through their criminal conduct, Mr. and Mrs. Schwartz lined their own pockets with this money that was intended to help those with legitimate disabilities,” said United States Attorney David Clay Fowlkes. “Our office will continue to pursue fraud cases such as this one and will continue to seek to protect programs like this, which are designed to help some of the most vulnerable members of our society.”
“Stephen and Rebekah Schwartz conspired to defraud the Social Security Administration (SSA). By misrepresenting Mr. Schwartz as having a disabling condition that prevented him from working — although he had steady employment – their fraudulent scheme caused SSA to pay Mr. Schwartz more than $167,000 that he was not entitled to receive,” said Gail S. Ennis Inspector General for the Social Security Administration. “Today’s sentence demonstrates that my office will continue to hold people accountable when they defraud SSA’s programs for personal gain.”
Inspector General Ennis thanked the U.S. Attorney’s Office for its support of this investigation and its efforts to bring these individuals to justice and recover taxpayer funds. According to court documents, Stephen Wayne Schwartz began receiving Social Security Administration Title II Disability Insurance benefits in 2000. In 2010, the Social Security Administration informed Stephen Wayne Schwartz he was no longer entitled to Social Security Administration disability insurance payments, due to his employment and income.
In November 2012, the Social Security Administration reinstated Stephen Wayne Schwartz’s disability insurance payments based in part on his report that he was no longer working. He was instructed to tell the Social Security Administration if he returned to work, or his disabling medical condition improved.
In 2015, while receiving Social Security Administration disability insurance payments, Stephen Wayne Schwartz worked as a school bus driver. He did not report his job and earnings to the Social Security Administration. When the Social Security Administration learned about his school bus driver job and income, Stephen Wayne Schwartz’s disability insurance payments were stopped.
On June 15, 2016, Stephen Wayne Schwartz, aided and abetted by his wife Rebekah Jolea Schwartz, submitted a document asking the Social Security Administration to reinstate his disability insurance payments. The couple claimed Stephen Wayne Schwartz’s current medical condition prevented him from working. At the time the couple made the reinstatement request, Stephen Wayne Schwartz was working as a driver for a roofing company. The money he earned from the roofing company was paid directly to Rebekah Jolea Schwartz to hide his income from the Social Security Administration.
On July 13, 2016, Stephen Wayne Schwartz signed a document filled out by Rebekah Jolea Schwartz that claimed Stephen Wayne Schwartz could not “drive a big truck, keep log books, follow map/directions . . . carry on a conversation, count, concentrate, [and] follow instructions . . . .”
Stephen Wayne Schwartz claimed the information was true. At the time Stephen Wayne Schwartz signed the document, he was working as a driver for a roofing company, counting roofing materials for delivery and pick up, and following his employer’s delivery and pick-up instructions.
In 2017, the Social Security Administration reinstated Stephen Wayne Schwartz’s disability insurance benefits from 2016 forward. The decision to reinstate benefits was based, in some part, upon information provided by the couple.
On April 8, 2020, Stephen Wayne Schwartz and Rebekah Jolea Schwartz completed a form entitled “Work Activity Report – Employee” to determine whether Stephen Wayne Schwartz should continue getting disability benefit payments. The couple reported that Stephen Wayne Schwartz’s job was Justice of the Peace. The pay was listed as $224 per week with “zero hours” worked per week “on average.”
On February 22, 2021, the Social Security Administration, having learned that Stephen Wayne Schwartz had worked for a roofing company in 2016 and a marble and granite company, determined Stephen Wayne Schwartz was not eligible for disability payments for the period of June 2016 through and including February 2021. In response, Rebekah Jolea Schwartz told the Fort Smith Social Security Administration Office that her husband had never worked for a roofing company.
Rebekah Jolea Schwartz subsequently gave documentation to the Social Security Administration claiming she was the one who had earned income from the roofing company. On July 6, 2021, Stephen Wayne Schwartz and Rebekah Jolea Schwartz appeared in person at the Fort Smith Social Security Administration Office to ask about the status of Stephen Wayne Schwartz’s disability benefits payments.
Investigators from the Office of the Inspector General for the Social Security Administration were present when the couple arrived. Stephen Wayne Schwartz gave a voluntary statement to investigators and confessed he had committed fraud. Rebekah Jolea Schwartz gave a voluntary statement to investigators. She admitted to completing the June 2016 “Expedited Reinstatement Request” form the same month her husband began working for the roofing company.
The loss to the Social Security Administration resulting from the couple’s criminal conduct, for the period of June 2016 through and including July 2021, was $167,756.60.
The Office of the Inspector General for the Social Security Administration investigated the case, and Assistant U.S. Attorney Kyra Jenner prosecuted the case.