A Dime A Dozen

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13488926 - a shot of market cart and supermarket view

It seems that retailers who abuse the Food and Nutrition Service’s (FNS) Supplemental Nutrition Assistance Program (SNAP) are a dime a dozen. The U.S. Department of Agriculture reports that approximately 35,891 food retailers illegally trafficked more than $1 billion in SNAP benefits between 2012 and 2014. Today’s fraudster is one of more than a dozen owners of small grocery or convenience stores in the Baltimore, Maryland area who committed food stamp fraud by paying SNAP beneficiaries half the value of their benefits.

Another important statistic to note from the USDA report is that small stores accounted for approximately 16 percent of all food stamp redemptions, but accounted for 94 percent of all dollars trafficked. (The UDSA report shows that food stamp trafficking occurred exclusively in privately owned stores located in neighborhoods with high rates of poverty.)

The 53-year-old owner of Baltimore’s Yemen Grocery committed the typical food stamp fraud trafficking scheme by exchanging 50 cents on the dollar for his customer’s SNAP benefits. (Why reinvent the wheel when you know other grocers in the area are getting away with the same scam?) Additional research found that many perpetrators of food stamp trafficking typically debit funds from Electronic Benefit Transfer (EBT) cards through multiple transactions over hours or days, while others call a different store to manually process the transactions.

After six years, the store owner’s free ride on the food stamp express came to an abrupt end as part of a larger crack down on food stamp fraud. Area law enforcement officials executed 36 search warrants and seized 46 bank accounts containing unlawful cash transactions worth $16,482,270 in EBT deposits. The Yemen Grocery store owner was responsible for more than $1.5 million of that amount. (It’s not like he didn’t know what he was doing.) When the store owner received authorization to participate in the SNAP program, he knew that he could only accept EBT benefits for eligible food items. (As far as I know, cash is not an eligible food item.)

The Yemen Grocery store owner, who was one of more than a dozen Baltimore-area retailers from Glen Burnie to Park Heights involved in the crackdown, pleaded guilty to food stamp fraud and wire fraud. He received a sentence of 27 months in federal prison and was ordered to pay $1,532,642 in restitution. At the time the article was published, a dozen of the defendants in the case previously pleaded guilty to similar charges, resulting in prison time for four of the perpetrators and more than $10 million in restitution orders.

 While food stamp trafficking doesn’t increase costs for the government program, it diverts the benefits from helping low-income families receive nutritious food. So, was it really worth it to the grocery store owner to commit this egregious crime? This “dime a dozen” fraudster effectively exchanged greed for the punishment of spending more than two years behind bars and a restitution payment. (Easy come easy go. It looks like he’ll be paying for his illegal acts for the rest of his life.)

Today’s “Fraud of the Day” is based on an article entitled, Baltimore store owner sentenced to 27 months in federal prison in ‘food stamp trafficking’ case,” published by The Baltimore Sun on January 3, 2018.

A 53-year-old Baltimore man was sentenced this week to 27 months in federal prison and ordered to pay more than $1.5 million in restitution after pleading guilty to food stamp and wire fraud, federal prosecutors announced Wednesday.

Between 2010 and 2016, Kassem Mohammad Hafeed gave cash to customers of his Yemen Grocery, in the 1400 block of W. Lombard St. in Union Square, in exchange for Supplemental Nutrition Assistance Program or SNAP benefits, normally paying them half of what the benefits were worth, prosecutors said.

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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.