Andrea Vaughan-Owen, 42, and her sister Roberta, 37, from Colwyn Bay, were also found guilty of working tax credit, insurance and mortgage fraud at Caernarfon Crown Court.
The court heard the sisters had used the money to fund a 'lavish, greedy' lifestyle which included a £400,000 Colwyn Bay home, a £24,000 Mercedes with a personalised number plate, and spa treatments.
Sentencing them, Judge Niclas Parry said: "It beggars belief that incapacity benefit and working tax credits were being paid out of public funds to the same people for so long."
He also criticised the 'willingness' of banks to grant 'huge mortgages on the flimsiest unchecked evidence', adding: "It’s no wonder this country is financially on its knees.”
Andrea denied eight offences and Roberta denied five. They were found guilty of all charges spanning 2003 to 2009 in three hours and 15 minutes.