Moving to America, opening your own store and making a profit seems to be the American dream, right? Who said you ever have to do it in the most lawful and moral way? In today’s Fraud of the Day from Chicago Tribune, an Iraqi immigrant did just that – only he conducted some pervasive food stamp fraud along the way to increase his profits. And to top it all off, he had his father come and try to defend him in court and explain exactly why none of this could possibly be his fault.
The story recounts that the 46 year-old man came to America and opened his store sometime around 2004. Authorities said the man cheated the government out of more than $2.5 million by trading cash and other non-approved items, including cigarettes, for electronic benefit transfer (EBT) funds from 2006 to 2010. These funds are essentially debit cards issued by the government to those who qualify for the Supplemental Nutrition and Assistance Program (SNAP) – and only certain nutritionally necessary items qualify. (Hey, he can count cigarettes as nutritionally necessary if the customer is addicted to them, right??)
The fraudster store owner was indicted in April 2011, where he faced three counts of food-stamp fraud. After a plea bargain, he pleaded guilty to one of these counts while the other two were dropped. During this time, more evidence was gathered and it was discovered that between 2004 and 2009, the EBT transactions at this man’s store allegedly exceeded those of other comparably sized stores in the area – $322,800 vs. $3.1 million. (So then why isn’t he going to be charged for the crime from 2004 to 2010?)
During the trial, it was determined that the government’s loss was over $2.5 million and federal prosecutors were hoping for the man to be sentenced to at least four years in jail. When his father came into court, he asked the judge to show some leniency towards his son – since he had never been the same person after suffering through the loss of his ex-wife in the 2007 bridge collapse on I-35W. (Totally believable excuse since he started this anywhere from 2004-2006. He must be psychic!) All in all, the store owner was sentenced to three years and five months and jail, while having to pay a restitution of $2.4 million.
So, $2.4 million adds up to a lot of cigarettes. This case demonstrates not only the specific fraud – trading EBT cards for cash and other items, but also that fraudsters are patience and meticulous. It probably takes a lot of discipline and creativity to slowly siphon off that much cash. To combat these fraudsters, the government must adopt a similar approach.