14 Retailers Facing Federal Indictment for $16 Million Food Stamp Fraud

https://www.justice.gov/usao-md/pr/14-retailers-facing-federal-indictment-16-million-food-stamp-fraud

Department of Justice
U.S. Attorney’s Office
District of Maryland


FOR IMMEDIATE RELEASE
Tuesday, August 30, 2016

14 Retailers Facing Federal Indictment for $16 Million Food Stamp Fraud

Defendants Allegedly Received Over $16 Million from USDA for Food Stamps Allegedly Traded for Cash; 26 Search Warrants Executed; 46 Bank Accounts Seized

Baltimore, Maryland - A federal grand jury has returned nine separate indictments charging a total of 14 retail store operators for committing food stamp fraud and wire fraud in connection with schemes to illegally redeem food stamp benefits in exchange for cash. The indictments allege the retailers received over $16 million in federal payments for transactions in which they did not provide any food, a fraud scheme commonly known as “food stamp trafficking.” Stores allegedly split the proceeds with food stamp recipients. The indictments were unsealed today upon the arrests of the defendants.

Over 300 members of law enforcement participated in the arrests and execution of a total of 26 search warrants at the stores and related locations this morning. In addition, 46 bank accounts were seized.
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The Supplemental Nutrition Assistance Program (SNAP), previously known as the Food Stamp Program, is administered by the Food and Nutrition Service (FNS) of the United States Department of Agriculture (USDA), together with state agencies. The program funds low-income individuals to allow them to obtain a more nutritious diet. In Maryland, the program provides eligible individuals with an electronic benefit transfer (EBT) card called the Independence Card, which operates like a debit card. Recipients obtain EBT cards through the state Department of Human Resources, then use the EBT card to purchase approved food items from participating retailers.
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The indictments allege that the defendants exchanged EBT benefits for cash, in violation of the food stamp program rules. The indictments allege that the defendants typically paid half the value of the EBT benefits in cash. To avoid detection, the defendants often debited the funds from the card in multiple transactions over a period of hours or days, or called a different store where the transaction was processed manually. As a result of unlawful cash transactions, the defendants obtained more than $16,482,270 in EBT deposits for transactions in which food sales never occurred or were substantially inflated.

According to the indictments, the defendants listed below owned and/or operated stores in the Baltimore area that were authorized to accept SNAP. The defendants received instruction regarding the requirements and regulations of the food stamp program, including that only eligible food items could be exchanged for EBT benefits and that a retailer may never exchange EBT benefits for cash or non-food items.
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