Breaking the Cycle

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The goal of the Supplemental Nutrition Assistance Program (SNAP) is to alleviate hunger and malnutrition by providing monthly benefits to eligible low-income families through electronic benefit transfer (EBT) cards. An article posted on AL.com tells the story of how a few shoplifted steaks started an investigation into multiple convenience stores suspected of being involved in a plot to purchase and use EBT cards illegally. (The perpetrators allegedly stole hundreds of thousands of dollars from the food stamp program through the illegal use of EBT cards and wired some of the profits to Yemen.)

The article states that the investigation – dubbed ”Operation T-bone” – began with an inquiry into a shoplifting incident where several steaks and a few other items were stolen from a warehouse type store. (It would be interesting to know where the shoplifter tried to hide the meat.)

When questioned, the shoplifter revealed that he was boosting the goods for two convenience stores. (A booster is someone who steals items from a retail establishment for the purpose of reselling the items for a profit.) After the case, investigators compared notes with the warehouse store’s investigation unit, and they were able to link the crime to multiple convenience store owners and managers who allegedly used EBT cards to illegally buy bulk items and to resell the goods for a marked up price at their convenience stores.

The scheme purportedly involved the store owners buying EBT cards from SNAP recipients for roughly half the amount for which they were issued. The original beneficiaries, who supposedly also received half the value of the EBT cards in cash, used the proceeds to buy items they were not allowed to purchase under the SNAP program, such as alcohol, tobacco and drugs.

The article states that within a few hours, more than 242 arrest warrants were issued and 17 suspects placed in custody after law enforcement officers and government agents spread out over the Birmingham area. (Subsequently, investigators filed for the forfeiture and condemnation of 11 stores valued at $1 million in assets.)

While it is important to remember that just because arrest warrants are issued and suspects have been placed in custody, all the defendants in this case are innocent until proven guilty in a court of law. It is also important to understand that the government is serious about tracking down suspected criminals who pose a threat to programs intended to provide assistance to qualified beneficiaries. (SNAP benefits are intended to help beneficiaries break the cycle of poverty and the outcome of this case has the potential to help one Birmingham-area county break the cycle of fraud.)

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Corner Stores Turned EBT Cards into Cash for Drugs, Wired Profit to Yemen, Authorities Say,” written by Carol Robinson and posted on AL.com on June 3, 2015.

A couple of steaks shoplifted at a Gardendale Walmart three months ago led to the biggest food stamp fraud investigation in Jefferson County’s history, and launched 11 simultaneous raids this morning at convenience stores countywide.

Led by the Jefferson County District Attorney’s Office, teams of law enforcement officers met at 5 a.m. for a briefing and then fanned out across the county beginning at 6:50 a.m. The officers and agents were armed with 242 arrest warrants and plans to arrest 17 suspects.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.