other words, Ward engaged in criminal activity in order to pay for drugs. Ward's criminal activity included burglary, theft, and shoplifting in addition to fencing. Ward has been a criminal for many years. Ward stated that he sometimes worked all day in order to have enough money to purchase drugs.
In reviewing the ALJ's decision, this court's function is not to reweigh the evidence or to decide whether the claimant is actually disabled. See Dugan v. Sullivan, 957 F.2d 1384, 1387 (7th Cir. 1992). The Social security Act ("Act") states that the district court's review of the ALJ's decision is limited to determining whether substantial evidence supports the Secretary's findings of fact and to determine whether the Secretary applied the proper law. 42 U.S.C. § 405(g); Dugan, 957 F.2d at 1387. Substantial evidence is defined as evidence which a reasonable person might accept as adequate to support a conclusion. See, e.g., Ray v. Bowen, 843 F.2d 998, 1001 (7th Cir. 1988).
The first step in evaluating eligibility for disability benefits is to determine whether the claimant was engaging in substantial gainful activity. "Substantial" activity "involves doing significant mental or physical activities." 20 C.F.R. § 404.1572(a). Activity is "gainful" if "it is the kind of work done for pay or profit, whether or not a profit is realized." 20 C.F.R. § 416.972(b). Average monthly earnings of over $ 500 in years after 1990, or $ 300 in years before 1990, create the presumption that the claimant engaged in substantial gainful activity. 20 C.F.R. § 416.974(b)(2)(vi), (vii). This presumption, however, is a rebuttable one. See Dugan 957 F.2d at 1390.
The ALJ concluded that Bell and Ward were not disabled under the meaning of the Act and thus, did not satisfy the first step of the sequential analysis. This conclusion was based on two findings: (1) Bell and Ward each, through their illegal activities, earned well over the $ 500 per month earnings level corresponding to the presumption that work activity is substantial gainful activity See 20 C.F.R. § 416.974(b)(2)(vii) (1992); and (2) performing the illegal activities required significant mental and physical activity. See 20 C.F.R. § 416.972 (1992). The ALJ's conclusion was based on her finding that illegal activity can qualify as substantial gainful activity for purposes of the Act. We agree.
The ALJ's decision that Bell and Ward engaged in substantial gainful activity was based on her determination that illegal activity can be considered substantial gainful activity. There are no statutory provisions or regulations which impose a requirement that substantial gainful activity must be lawful. Hart v. Sullivan, 1992 U.S. Dist. LEXIS 20109 (N.D. Cal. Dec. 28, 1992); Jones v. Sullivan, 804 F. Supp. 1045, 1047 (N.D. Ill. 1992) (Holderman, J.). Moreover, the tax code requires that income obtained through illegal activity be included in calculations. United States v. Sullivan, 274 U.S. 259, 71 L. Ed. 1037, 47 S. Ct. 607 (1927). This reflects the understanding that criminal activity can involve "work" rising to the level of a trade or business for purposes of the code. Id. This conclusion comports with other District Court decisions like the recent determination in Hart that illegal activities are not excluded from the Act's definition of substantial gainful activity. see also Jones, 804 F. Supp. at 1047 (affirming ALJ's denial of benefits based on claimant's admitted ability to engage in criminal activity to support his alcohol and drug habits).
The ALJ's Conclusion That Bell and Ward Engaged in Substantial Gainful Activity is Supported by Substantial Evidence.
The ALJ calculated that Bell and Ward each earned more than the $ 500 per month minimum earnings level through illegal activities. Specifically, Bell admitted to shoplifting, stealing, hustling, committing armed robbery and stealing checks, and also working as a drug runner so that he could support his drug habit. (Bell's Tr. 26-27, 30). Ward admitted to supporting his drug habit by reselling illegally obtained merchandise, burglary, theft and shoplifting.
The ALJ's calculations, in each instance, were based on the value of the drugs. For Bell's monthly income, the ALJ determined the value of the drugs Bell received as compensation for acting as the middle-man between drug dealers and buyers and multiplied that number by the frequency with which Bell admitted receiving the drugs.
The ALJ found that Bell's drug running generated in-kind income of between $ 840 and $ 1,120 per month. The ALJ calculated Ward's monthly income by multiplying the value of the drugs that Ward stated he purchased by the frequency with which he admitted buying the drugs. (Ward's Tr. 13). Ward admitted that he used between $ 60-80 of drugs per day (Ward's Tr. 47-48) and the ALJ estimated that he earned $ 1,800 per month. Thus, the ALJ's findings place both Bell and Ward well over the $ 500 minimum earnings level necessary to establish the presumption of substantial gainful activity. 20 C.F.R. § 416.974(b)(2)(vi), (vii).
Furthermore, the ALJ's finding that Bell and Ward's illegal activities required significant physical and mental capabilities is supported by substantial evidence. Bell and Ward each made statements indicating the seriousness with which each takes the responsibilities attendant to supporting their drug habits. Bell said he rose early in the morning "to hustle and steal for money to obtain drugs." (Bell's Tr. 124). Similarly, Ward said that he sometimes worked all day so that he would have enough money to purchase drugs. (Ward's Tr. 49, 54). The regularity of their routines suggests not only a systematic and determined way of living, but also reflects planning and perserverence. These acts reflect the requisite mental capacity necessary to overcome the presumption. Through their actions, Bell and Ward evidence an initiative similar to that of any other hard-working person and their success at sustaining their drug use is proof. Bell and Ward each had the physical and mental capacity to perform these illegal activities in order to successfully realize their objective.
The ALJ's conclusion that Bell and Ward's illegal activities are substantial is supported by the initiative displayed by each to achieve his objective. The ALJ's conclusion that illegal activity is gainful is also correct because it is the kind of work usually done for pay or profit. See Hart, No. C-92-1172.
For the reasons stated above, we deny Bell and Ward's motion for summary judgment and affirm the ALJ's denial of Social Security benefits.
GEORGE M. MAROVICH
UNITED STATES DISTRICT JUDGE