A Permit by Any Other Name Would… Still be Fraud

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According to the USDA Food and Nutrition Service’s guidance for retailers accepting SNAP benefits, there are several requirements that retail owners must fulfill. Among these are the requirement that the store owner must have a permit for each store they own, and the permit must be in their name. Store owners are expressly forbidden from taking over someone else’s SNAP permit. However, that did not stop this week’s fraudster from attempting to execute a brazen $1.7 million food stamp fraud scheme.

An owner of multiple storefronts in Erie, Pennsylvania enlisted a co-conspirator to submit a fraudulent application for a food stamp license so that the food stamp terminals at the owner’s stores would not be in the owner’s name. This is obviously a deliberate and egregious violation of the USDA’s policy. (And is guaranteed to get you busted in a very short amount of time.)

The fraudsters weren’t about to stop there, though. The owner, along with several co-conspirators proceeded to use the food stamp terminals at locations where they were not authorized. The fraud ring then allowed food stamps to be exchanged for cash or ineligible items, a common practice in food stamp fraud schemes. (Not very smart, as the government tends to spot common methods of fraud the quickest.)

The first method, commonly referred to as SNAP trafficking, occurs when a SNAP benefit is exchanged for cash, usually at a discounted value. As a store owner, our fraudster of the day was able to illegally buy these SNAP cards at a discounted cash value, and then billed the government for the full value of the benefit. (This usually only earns the fraudster about one cent on the dollar, meaning the store owner had to be doing this A LOT.)

The second method relies on the owner allowing the SNAP benefits to be exchanged for ineligible items. According to the Food and Nutrition Service, SNAP cannot be used to purchase items of insufficient nutritional value, such as alcohol, tobacco, nonfood items like pet food or household products, foods eaten in the store, or hot foods. Some fraudulent retailers disregard these limitations so that they can rake in even more illegally-gotten gains.

However, the small ring of fraudsters couldn’t keep their scheme going for long. All four defendants pleaded guilty to felony counts of conspiracy to defraud the United States. Two of the fraudsters received two years’ probation, with one conspirator still awaiting sentencing. As for the Erie, Pennsylvania store owner, he will be repaying the federal government $1.7 million and spending the next year and nine months behind bars. (He can also say goodbye to any legitimate SNAP revenue in the future as a result of this food stamp fraud.)

Today’s “Fraud of the Day” is based on an article entitled, “Erie man must pay $1.7 million in food stamp fraud case,” posted on GoErie.com on September 12, 2018.

An Erie man was sentenced to pay more than $1.7 million in restitution and to serve time in federal prison Monday for his involvement in a food stamp fraud scheme.

Nureden Jibul, 34, received one year and nine months in prison at his sentencing before Senior U.S. District Judge David S. Cercone, the U.S. Attorney’s Office in Erie announced.

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.