‘Welfare Queen’ Held on Tax Fraud Charges

Fourteen years after she was convicted of what may still be the largest welfare fraud in history, Dorothy Mae Woods was arrested Thursday on suspicion of another scheme to defraud the government--this time for allegedly garnering $89,000 in bogus tax refunds.

Woods, who was dubbed “Welfare Queen” in 1983 for collecting $377,500 of welfare while living in a mansion and driving a Rolls-Royce, and her son Leonard Bernard Palmer, 37, of Duarte, were arrested by IRS agents after a 29-month investigation, authorities said.

A grand jury indictment issued Wednesday alleges that Woods, 55, obtained the names and Social Security numbers of several low-income citizens in her role as director of the New Revelation Baptist Church’s homeless shelter in Pasadena.

Woods and Palmer forged tax returns for these people, fraudulently applying for refunds on their behalf through the earned-income tax credit, prosecutors allege. The mother-son team filed 135 bogus returns seeking $305,000 in refunds, and eventually collected $89,000 in checks and credits, Assistant U.S. Atty. Jeffrey C. Eglash said.

IRS agents uncovered part of the scheme in December 1994, when they arrested Woods on charges of trying to deposit a fraudulently obtained tax refund check, Eglash said. Woods was sentenced to two years in state prison and was on parole when arrested, he said.

The alleged tax scheme mirrors the fraud that landed Woods in the national spotlight in the early 1980s.

Sparked by a tip, authorities began investigating Woods, who lived in an 18-room mansion near the Rose Bowl and had six luxury cars.

It turned out that from 1974 to 1980, Woods posed as a dozen women claiming a total of 49 dependent children, gathering up to $5,000 in welfare payments a month. She fled to Jamaica during the investigation but was expelled because she entered the country under a false name.

Woods pleaded guilty to 15 felony charges in 1983 and was sentenced to eight years in state prison, but was paroled in 1986. In 1987 she was arrested on suspicion of a far smaller scheme--obtaining $700 in welfare for one of her 12 children--a teenage son--who did not live with her. She pleaded guilty and was sentenced to five years’ probation.

In 1993 she become head of the Pasadena homeless shelter, said Pastor William Turner of the New Revelation Baptist Church.

“We thought she had been rehabilitated,” he said. “She had no problems with people. She worked well with people and helped them get the money they had coming to them.”

If convicted of all 26 conspiracy and fraud charges they face, Woods and Palmer each face a maximum of 135 years in prison and a $6.5 million fine, authorities say.

Eglash said prosecutors are asking Woods and Palmer be held without bail.