My name is Lucy and I'd be happy to answer your questions today. I'm sorry to hear that this happened.
She can fight the case, if she has a defense to the action. Ignorance of the law will not help her, but they do have to show that she intended to defraud the government, and they may not be able to do that, depending on the facts. If she's willing to plead guilty, she can try to negotiate a lesser offense, such as theft
instead of fraud, or something like that. In that case, she might be able to do probation instead of jail, and do monthly payments until the amount is repaid in full. The DA has a lot of discretion in arranging a plea bargain.
There's no way to fight them reporting her to the DA for prosecution, unfortunately. She can keep trying to work with them, or see if they'll accept monthly payments, but, if they are determined to hand it over, she can't stop them. The DA will send her a notice explaining the charges against her and giving her a court
date. When she goes to court, she can plead not guilty and request a trial
. The judge will appoint a public defender to represent her at no cost, if she cannot afford a lawyer. The public defender will see if there is any way to avoid jail time. If this is her first offense, she may not end up going to jail.