Business Owners Get Prison Time for Food-Stamp Fraud

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The Supplemental Nutrition Assistance Program (SNAP) – aka food-stamps – provides eligible beneficiaries with Electronic Benefit Transfer (EBT) cards so that recipients can buy food at the store. It sounds pretty straightforward, doesn’t it? It is…if everyone follows the rules. But that didn’t happen in today’s fraud from The Seattle Times.

The article reports that two business owners were sentenced to prison for periods of 18 and 24 months, respectively, for engaging in what the U.S. Department of Justice (DOJ) called ”’food-stamp trafficking.’? It worked like this? a card holder would enter the first business owner’s restaurant where he/she would present the card. An employee would leave the recipient and take the card out back where it would be swiped at the second business owner’s store. The card holder would then leave with cash (not how it is supposed to work) – but not all of it? the business owners took a cut. ”For instance, a card would be swiped for $100, with $60 going to the card holder, and the ‘co-conspirators’ making a $40 profit.”

How much fraud are we talking about? One defendant admitted $700,000 worth of food- stamp fraud in his plea agreement. ”In 2010 alone, records showed [that this defendant] redeemed $380,000 in food-stamp reimbursements – more than the store’s total sales.’? (Soun

Of course, it does take two to traffic; and the cardholders who exchanged the cards for cash are in some trouble, too. According to the article, ”20 food-stamp recipients were cut off, and 31 more may be disqualified, in the wake of the probe.”

Prosecutors pointed out that, cases like these create a negative perception of the food-stamps program, ”hurting families who use them as intended, to put food on the table in hard times.’? That’s absolutely true. The good news is that by continuing to expose the work of fraudsters, we know how the crooks are defrauding the program, so authorities can implement more effective measures to prevent fraud.

Source: Today’s ”Fraud of the Day” is based on an article entitled, ”2 Sentenced for Food-Stamp Fraud in White Center,” posted by Mike Lindblom and published by The Seattle Times on March 30, 2012.

Two small-business owners were sentenced to prison this week in what the U.S. Department of Justice calls a case of food-stamp trafficking in White Center.

Prosecutors said crimes like these lead to political calls to end food stamps because citizens come to associate them with fraud — hurting families who use them as intended, to put food on the table in hard times.

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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.