It Doesn’t Pay to Work the Register

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The Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps, provides people who can’t afford to buy food with Electronic Benefit Transfer (EBT) cards loaded with funds so they can purchase it at stores. Of course, there are rules and regulations governing the program, but that’s the basic gist of it. Sounds pretty straightforward, doesn’t it? So, when business owners trade the EBT cards for cash – the case in today’s fraud from the Associated Press, it is clear that something isn’t right.

The article reports that two men were sentenced in connection with a $4 million food stamp fraud case. One of the defendants owned a fruit and vegetable business that ”bought customers’ food stamp benefits for cash and allowed customers to buy nonfood items.” A related article noted that the other defendant handled the cash register. People would come in to buy cheap items and the cashiers ”would ring up the transactions for around $80 to $100, give the individual half and keep half.”

The store owner was sentenced to 18 months in prison and was ordered to pay $1.6 million in restitution. The cashier received five years in prison. (Seriously, it did not pay to work the register. On the bright side, he now has plenty of time to rethink his career in retail.)

As is often the case with fraudsters, these guys didn’t work alone. (Guess that’s what is meant by ”partners in crime”.) Two other defendants – one the owner of a second store and the other a cashier – were previously sentenced in connection with this case. There, the owner was sentenced to three and a half years in prison (what about restitution from him?); the cashier received five years of probation.

How did they get to $4 million? When investigators looked at the numbers, they found that the average monthly EBT redemption for one store was $76,000 per month and the other was $94,000 per month – figures far exceeding the $2,000 monthly average redemptions for a South Carolina store.

These criminals were not the first to trade EBT cards for cash and they won’t be the last. The good news is that we know how they are doing it – one transaction at a time – and agencies can leverage data and analytics to find fraud in their programs.

Source: These criminals were not the first to trade EBT cards for cash and they won’t be the last. The good news is that we know how they are doing it – one transaction at a time – and agencies can leverage data and analytics to find fraud in their programs.

Today’s “Fraud of the Day” is based on an article entitled, “2 Columbia Men Sentenced in Food Stamp Fraud Case,” written by Tony Santaella of the Associated Press and published by WLTX.com on March 30, 2012.

COLUMBIA, S.C. (AP) — Two Columbia men have been sentenced to prison for a $4 million food stamp fraud case involving their fruit and vegetable operation.
Thirty-eight-year-old Xavier Roedran Pinckney was sentenced to five years in prison 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.