TX state criminal code, punishment for welfare fraud

It depends. If she had answered questions falsely to get the welfare, it would have been fraud (prosecuted generally under Texas's theft statute; a felony if the amount illegally received was more than $1,500).

Nobody is going to give you a medal for ratting on her. So what makes it any of your business?

You should do what I did when it came to my husband's ex-wife. Report the case to the Office of the Inspector General. You can go online and make a report that way.
She was collecting TANF on a son that was not living with her and living with his father instead. She told HHS that he was a part-time residence and that his father was not giving her any money for child support. Well, he was paying her cash because he delivered pizza for a living and made the majority of his money through tips and it was just easier that way. Well needless to say she didn't report it and ended up getting over $9,000 in money from TANF over a 2 year period. She had a live-in boyfriend of several years and didn't disclose this fact to HHS. He was also claiming them on his tax returns and they were making a killing. My husband received a letter after years stating that HE now owes the $9,000 back to the state and he couldn't provide proof because he made the mistake of paying her in cash. When he confronted her with this, he asked her to please sign the affidavit stating that she was paid so that they can lower what it was that he owed back to the state. Well she was not about to do that because then she would be admitting that she double dipped the system and defrauded the state. He had no choice but to ask for a review so that he could present his case and get it lowered. It went in front of the attorney general and they ruled partially in his favor because he was able to provide proof that the son was living full-time with him and that he was even working p/t on the weekends so he didn't even go to his mother's house at all. She called the son into court to testify and basically tried to get him to lie on her account but he didn't and told the truth. The judge ended up giving my husband partial credit but he was still left with about $7,000 and when he received his tax returns they took all $4000 out it. This was all on a recording transcipt and when we told this to the OIG, they ordered the transcript and this has been used against her. She was caught lying and not stating any income that the son was getting from his part-time job if he was living with her part-time. She was now actually triple dipping the system in the form of getting money from the state, her ex-husband and current live in boyfriend through the IRS tax refund. Which was in access to about $5,000/year.
They have completed the investigation after about 6 months and she's being prosecuted after the New Year for welfare. In addition they have also turned her case over to the SSA because she is now collecting disability. She had not worked in almost 9 years yet she claims that she has permanent heart and lung damage as well as narcolepsy but she still is able to drive a car. She is facing more charges on a federal level now as well to the state charges.
Provide as much proof as you can for them. Provide, names, places, dates and events.
Stick with your convictions because one person can't do this alone. But together we can make a difference. People like this must be stopped because they are taking the resources away from the truly needy in which welfare was designed for.
Good Luck!