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, 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.