Bagging Fraud

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A common scam used against the U.S. Department of Agriculture’s (USDA) Supplemental Nutrition Assistance Program (SNAP) involves the illegal exchange of benefits for cash. Approved SNAP retailers usually carry out the crime by paying food stamp beneficiaries 50 percent of the value of their electronic benefit transfer (EBT) card. A Louisville, Kentucky specialty food store owner committed SNAP fraud via this method, but the government ultimately caught him by counting grocery bags.

The Louisville business man owned two specialty food stores that carried a variety meats. The SNAP retailer violated program rules, which only allow benefits to be exchanged for approved food items by paying 50 cents on the dollar for the government benefits. (The store owner got the card with the government allowance, and in return, the beneficiary got cash that could be spent on anything.)

An investigation into the store’s SNAP redemption practices began when monthly redemption rates were found to be 20 times higher than other similar stores in the area. (Investigators from the USDA and the Federal Bureau of Investigation (FBI) went undercover to bag this fraudster.)

Under video surveillance, undercover agents exchanged food stamps for cash with the man who owned the meat store on nine occasions. (During some of those exchanges, the agents would present multiple EBT cards in different names while requesting cash for all of them.)

Evidence presented at the meat store owner’s trial included video surveillance spanning four days that showed customers who left the store with a purported $100 in purchases in only one grocery bag. (That must have been one very heavy bag containing $100 bucks worth of meat.)

After six government witnesses testified – five customers and one former employee – the Kentucky meat store owner was convicted of SNAP fraud. When sentenced in early 2018, the man faces up to five years in prison, three years of supervised release and a fine of up to $10,000. Let’s hope that the judge offers up this food for thought when sentencing this fraudster – the SNAP program is not a free buffet. When you steal food out of the mouths of those who deserve it, you will pay for it.

Today’s “Fraud of the Day” is based on an article entitled, Louisville business owner convicted of food stamp fraud in federal court,” published by Louisville Courier Journal on November 10, 2017.

A Parkland business owner has been convicted of food stamp fraud after an investigation involving undercover agents from the Department of Agriculture and FBI.

Elias Estephane, who owned two specialty meat stores, faces up to five years in prison, three years of supervised release and a fine of up to $10,000, according to a news release from the U.S. Attorney’s Office. He was convicted in federal district court Thursday.

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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.