Food stamp fraud: $800,000 here, $700,000 there adding up

02/26/2013 4:14:24 PM
Tom Karst

National Editor Tom Karst I just did a Google search for "food stamp fraud" and found a story had just been posted six hours ago about a wayward Illinois grocer. The gist: the grocer defrauded government and food stamp programs to the tune of $844,000 over two years. It was predictable enough. From the story:

Khaled Saleh, the owner of Sunset Food Market in Waukegan, has been charged with illegally exchanging cash with customers using food stamp cards and nutrition coupons.

Yay, we caught the wrongdoer. But $844,000?

Just about a week earlier, the USDA Office of Inspector General issued  a press release about another case. 

This time, John William of Fox Point, Wisc., “redeemed approximately $778,000 in QUEST benefits from food stamp benefit recipients who were not purchasing food, but instead receiving cash for providing access to their QUEST benefits.”

Another bad apple, spoiling the notion that food stamps are actually having their entire intended effect.

The USDA has some bad public relations  in that regard, but on Feb. 21 the agency announced “tough new measures” to ensure the integrity of the Supplemental Nutrition Assistance Program (SNAP).

 From the release:

"Where there is a will to commit malfeasance, bad actors will try to find a way, and we must do everything we can to stay ahead of the curve," Concannon said. "Today's announcement reaffirms USDA's ongoing commitment to cracking down on abuse and protecting taxpayers' investment in this critical nutrition lifeline."

Today's announcement codifies an expanded legal definition of "trafficking" that incorporates not only the direct exchange of SNAP benefits for cash but other indirect methods of obtaining cash for SNAP benefits. The expanded definition now includes so-called "water dumping," or the purchase of beverages in containers with returnable deposits for the sole purpose of discarding the contents and returning the containers to obtain cash refund deposits; and the sale or purchase of products originally purchased with SNAP benefits for purposes of exchanging those products for cash or other items.

 USDA is also seeking comment on a new proposal that would authorize USDA to immediately suspend payments to retailers suspected of flagrant trafficking violations from accepting SNAP benefits. Currently, when a retailer is suspected of trafficking, USDA must first conduct an investigation before suspending the retailer. If USDA determines that a retailer is a flagrant trafficker, the Department would be authorized to immediately suspend its redemptions. Such a step would happen concurrently with the retailer being charged; thereby allowing the Department to hold funds that might ultimately be forfeited by the store if the disqualification is upheld.

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It is time for the farm industry to do a little more PR. With the budget issues, folks are looking for cuts, and the "bloated" USDA budget is an attractive target. A friend who is actually politically astute, and educated, gleefully asked me how much of my "share" of USDA subsidies I am getting. He thoughtfully added that my share of the USDA budget is $850,000. When I said that I get NO direct payments, and that most of the USDA budget is for food stamp type benefits he was actually surprised. Even he does not resent the small UMass Extension budget which I do benefit from. When I asked where his $850,000 came from he said it was the USDA budget divided by the number of farmers. Even with food stamps thrown in, I think that the number is balogna, but it is scary that folks are throwing the number around.