12 Retailers Charged in Largest-Ever Case of Food-Stamp Fraud

Defendants allegedly received more than $20 million in scheme

MIAMI -- Twelve Florida convenience-store owners, operators and clerks have been charged in connection with schemes to illegally redeem food-stamp benefits in exchange for cash. This operation resulted in the largest combined financial fraud loss for a food-stamp-trafficking takedown in history, according to law-enforcement officials.

The indictments allege that eight small, locally owned c-stores in south Florida received more than $20 million in federal payments in total for transactions in which they did not provide any food, a fraud scheme commonly known as food-stamp trafficking. Stores and vendors allegedly took illicit profits from the fraudulent transactions with food-stamp recipients.

The defendants—possibly in conjunction with their employees—swiped recipients’ food-stamp benefits cards at the point-of-sale (POS) at an inflated amount and then paid the recipient, in cash, a reduced percentage of the value of food-stamp benefits charged on the card. A press release from District Court for the Southern District of Florida announced the charges, saying that many of the recipients the food-stamp benefits were meant for did not receive any food or eligible items for their benefits.

If the allegations are found true, the defendants were effectively stealing money from people in need who came to their stores to make purchases using food stamps, the court said. If convicted, the defendants face a possible maximum statutory sentence of 20 years of imprisonment for conspiracy to commit wire fraud, 20 years for wire fraud and five years for food-stamp/EBT fraud.

Some of the accused local stores include Yum-Yum Grocery, Community Food Store and Santa Ana Market. Click here for the press release from the Department of Justice for a more complete list of defendants.

Some of the defendants owned, operated or worked at stores that were not even authorized to accept Supplemental Nutrition Assistance Program (SNAP) benefits, a federally funded, national program established by the United States government to alleviate hunger and malnutrition among lower-income families. Instead, these retailers allegedly used the POS terminals of authorized retailers unlawfully.

“The Supplemental Nutrition Assistance Program offers nutrition assistance to millions of eligible, low-income individuals and families while providing economic benefits to communities,” said acting United States Attorney Benjamin G. Greenberg. “The exploitation of participants in the program by providing cash instead of nutrition for financial gain is criminal. The U.S. Attorney’s Office and our law-enforcement partners are committed to investigating and bringing to justice those who engage in these fraudulent schemes.”

“These retailers created an illegal benefits exchange system that defrauded the American taxpayer and denied healthy foods to needy children and their families. The store owners who allegedly orchestrated this trafficking scheme pocketed millions in 'fees,' which they charged for converting food assistance benefits into cash. Any retailer who chooses to defraud taxpayers through such schemes will continue to be aggressively investigated and prosecuted by the U.S. Department of Agriculture, Office of Inspector General (USDA-OIG) and its law-enforcement partners,” said Karen Citizen-Wilcox, special agent in charge, USDA-OIG, Washington, D.C. The USDA-OIG each year conducts hundreds of investigations relating to fraudulent use of SNAP, according to Citizen-Wilcox.

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