Sarah Jane Smith, 41, also pretended her two real kids were severely disabled to justify claiming child tax credits.
She even falsely claimed SHE was disabled. Divorcee Smith admitted fraud but was spared jail by a judge yesterday.
The staggering case proves the need for The Sun’s Beat The Cheat campaign to tackle benefit fraud — which costs taxpayers £1.2billion a year.
Mike O’Grady, assistant director of HM Revenue and Customs criminal investigation department, said last night: “This fraud was a cynical and calculated attack on the tax credits system.
“Sarah Jane Smith lied about her circumstances time and time again, knowing full well that this would increase the amount of money she received.”
Smith’s claims spanned a six-year period between 2005 and 2010.
She was not even charged over the first £27,854 she received.
It was dealt with by tax inspectors, who believed she had only been wrongly over-claiming on what she was due.
She was repeatedly warned to stop applying for massive amounts, which rose year by year. A criminal investigation by the Revenue began in 2009.
Only then was her making up of ten fictitious children discovered, officials told The Sun.

Sun campaign … Beat The Cheat
Smith tried to claim sums of up to £1,000 a week in child care costs but none of it went on looking after the son and daughter she does have.
Charges were brought for false claims totalling £14,199 between October 2009 and August 2010.
Smith, who has dishonesty convictions going back ten years, appeared at Minshull Street Crown Court in Manchester to be sentenced.
Her lawyer Austin Welch told the judge she was due to start treatment for breast cancer for the second time.
He said: “She found herself about £6,000 in debt after purchasing items on hire purchase.
“She was then told about this foolish scheme by a friend. She was always going to be caught.”
Smith, of Salford, was given a six-month jail term suspended for 18 months, plus 120 hours of community service.
Judge Adrian Smith told her: “This was not fraud from the outset. But then there was the deliberate, fraudulent act of claiming for fictional children.
“If I was dealing with you for obtaining £42,000, you would be looking at a custodial sentence.”
Britain has an estimated 50,000 benefit cheats. Mr O’Grady warned them: “Those who defraud the system can expect to be investigated and pursued all the way to court.”

DO you know a cheat? Call the National Benefit Fraud Hotline, on 0800 854 440.
t.newtondunn@the-sun.co.uk
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