Can anyone please settle this for me?

I've done tax returns for myself and family for years. Last year a family member separated from her husband. She didn't work at all in 2012. She has a boyfriend that she lives with; they are not married. She wants to sign a statement granting her boyfriend permission to claim her kids on his tax return. I refuse to do the return for them because I believe they are committing fraud. My family member insists that she spoke to a tax attorney who told her that it's perfectly legal for her to assign her children to a third party to be used as tax deductions, but I'm skeptical.

Is it legal for someone to sign authorization allowing a non-family member, non-custodial third party to claim children for the purpose of receiving the earned income credit and a larger tax return?