Janet Cooke won a Pulitzer Prize for a made-up story. She was a reporter for the Washington Post and in 1980, she wrote a story about 'Jimmy' the 8-year-old heroin addict. Cooke's story described Jimmy as having 'needle marks freckling the baby-smooth skin of his thin, brown arms.' Ben Bradlee very much wanted to have a prominent female, black reporter, so the Post nominated this story for the Pulitzer, which it won on April 13, 1981.
Another reporter, familiar with the neighborhood where Jimmy lived, was surprised never to have heard about the kid. Upon a bit of investigation, he determined that Cooke's story (and little Jimmy) were entirely fake. Cooke admitted to the fake on April 15, and resigned. Ironically, in the meantime, Marion Barry had claimed that the kid was known to the city and receiving treatment. Ben Bradlee was humiliated. It later turned out that Cooke's whole resume was lies.
Many people were distressed to discover that America's most prestigious award for journalism had gone to an article from one of America's most respected newspapers, and yet was totally fake. People questioned the value of a Pulitzer Prize if the award-giving board did not even check into the accuracy of the stories they were judging. The Pulitzer board, in turn, responded that it was the responsibility of the publisher to ensure accuracy, and that they could not be expected to double check every one of the hundreds of articles submitted to them every year.
Cooke, for her part, blamed the Post. She appeared on the Phil Donahue show in January 1982 and claimed that the high-pressure environment of the Washington Post had corrupted her judgment. She claimed that her sources on the had hinted to her about the existence of a boy such as Jimmy, but unable to find him, she eventually just created a story about him in order to satisfy her nagging editors.
For a while after the incident Cooke worked as a salesclerk in Washington. She married a Washington lawyer and briefly moved to Paris with him, but the marriage failed. She moved to Kalamazoo, Michigan and became a salesgirl again. However, she is doing better today: she gave an interview to GQ magazine in 1996 and sold the movie rights from that interview for $1.6 million, of which Cooke gets 55%, the rest going to agents and the screenwriter. Some amount was paid up-front, with the rest to be paid when principal photography begins. So crime pays, but not up-front.
Sources:
New Yorker, September 18, 1995
A Good Line by Ben Bradlee
http://www.museumofhoaxes.com/day/04_17_2001.html
Southcoast Today, June 5, 1996