Family-run Fraud


A father, his three sons and their alleged conspiracy to commit food stamp fraud are the subject of today’s ”Fraud of the Day.” An article in The Times of Northwest Indiana states that the family of four was indicted for their purported roles in a scheme that authorities say bilked the Supplemental Nutrition Assistance Program (SNAP) of more than $1 million in improper benefits.

The story reports that the father and his sons owned and operated four grocery stores in the Gary area. Over approximately a two-and-a-half year period, two of the sons allegedly directed employees to offer cash to food stamp beneficiaries in exchange for debits from their Electronic Benefit Transfer (EBT) cards. (Authorities say they offered $40 in exchange for $65 in benefits – getting about a 61 percent exchange rate instead of the usual 50 percent. If true, these guys were going for as much money as they could possibly get.) Court records also indicate that one of the stores received $1.7 million in reimbursements for approximately $595,000 in ineligible food items. (Some of the ineligible items cited were tobacco and clothing.)

It turns out that all of the family members entered into separate plea agreements with prosecutors for their part in the scheme. Two defendants agreed to plead guilty. According to the article, written on a Monday, the remaining defendants were scheduled to enter their plea agreements the following day. No further information is available at this time. However, we know they are each facing 20 years in prison and fines up to $250,000.

Family run businesses are good for the economy and have the ability to foster strong relationships within their community. However, these entities often have unique dynamics that affect the family-run company’s success. In this case, it looks like this family was lacking ethics, which impacted their businesses’ ability to succeed. They were only out to build their own wealth, not support their greater community. Let’s hope the judge accepts the pleas and gives them a stiff sentence that will prevent them from stealing from taxpayers and deserving beneficiaries in the future.

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Brothers To Admit Guilt In Food Stamp Fraud Case,” published by The Times of Northwest Indiana on June 9, 2014.

HAMMOND | A father-son team of Gary grocery store operators filed plea agreements in federal court Friday, admitting to stealing from the federally funded food stamp program, court records show.

Fayez Abdallah and his son, Amjad Muhamad, filed the pacts with prosecutors, agreeing to plead guilty at a June 9 Hammond federal court hearing to one count each of defrauding the Indiana Supplemental Nutrition Assistance Program, also known as food stamps.

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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.