United States Attorney's Office District of Connecticut
Press Release

STONY CREEK WOMAN SENTENCED FOR SOCIAL SECURITY AND TAX FRAUD

Kevin J. O'Connor, United States Attorney for the District of Connecticut, announced today that KATE McCABE, age 61, of 2 Prospect Hill Road, Stony Creek, Connecticut, was sentenced to a five-year term of probation for Social Security and tax fraud. In proceedings today in federal court in New Haven, United States District Judge Janet Bond Arterton also ordered McCABE to pay both a fine of $3,000 and restitution in the amount of $52,166.80 to the Social Security Administration and the Internal Revenue Service. McCABE pleaded guilty on September 18, 2003, to a two-count criminal information charging her with defrauding the Social Security Administration and filing a false income tax return.

According to the prosecutor and documents filed in court, McCABE had been receiving Social Security Disability payments since 1974, based upon her claim that she was totally disabled. However, from 1999 through 2002, when she was supposedly totally disabled and collecting monthly disability payments, McCABE was president and owner of Kate McCabe's Connections, an exclusive match-making service, located at her residence in Stony Creek. As president and owner, McCABE was personally involved in all aspects of the operation of Kate McCabe's Connections, including supervising several employees, marketing and public relations, customer relations, finances and accounting, and matchmaking. During this period of time, Kate McCabe's Connections generated substantial gross receipts.

Notwithstanding her self-employment, McCABE concealed and failed to disclose to the Social Security Administration the fact that she was able to engage in substantial gainful activity and was in fact doing so. According to the prosecutor, McCABE wrongfully collected $45,155.80 in Social Security benefits during this period of time, which formed the basis for the Social Security fraud charge against her. Under federal law, in order to qualify for Social Security Disability benefits, a claimant must certify to the Social Security Administration that she is completely unable to work as a result of her disability. As part of her plea agreement with the Government, McCABE admitted not only that she failed to report her work to the Social Security Administration, but also that she falsely informed that agency that she had not done any work since becoming disabled.

In addition, McCABE pleaded guilty to one count of filing a false tax return. According to documents filed in court, on her 2000 U.S. Individual Income Tax Return (IRS Form 1040), McCABE did not report approximately $13,000 in Social Security Disability benefits, which she had fraudulently received that year, nor did she report than an employee of her company, KSD Enterprises (the parent company that owns Kate McCabe's Connections), performed a variety of personal services for her. Although payment of the employee's $29,000 annual salary constituted taxable income to McCABE, she did not report any amount of the employee's salary as income on her 2000 U.S. Individual Income Tax Return.

As part of the plea agreement, McCABE agreed to repay the Social Security Administration the money that she wrongfully received and to pay the Internal Revenue Service the outstanding tax due on her 2000 tax return.

"The federal government will vigorously prosecute those who fail to report all their income, pay their fair share of taxes, and defraud the United States by collecting Social Security Disability benefits when they are, clearly, able to work," U.S. Attorney O'Connor stated.

The case was investigated by Special Agents of the Social Security Administration, Office of the Inspector General, and the Internal Revenue Service, Criminal Investigation. The case was prosecuted by Assistant United States Attorney John A. Marrella.

CONTACT:

U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722
thomas.carson@usdoj.gov