Perfectly Clear

18600248 - empty shopping cart abandoned, empty metal grocery cart in a suburban parking lot cars, store buildings in the background horizontal view

The U.S. Department of Agriculture’s food stamp program, otherwise known as the Supplemental Nutrition and Assistance Program (SNAP), is perfectly clear on what items are eligible for purchase using the government benefits. (It’s also clear on what cannot be bought.) A man from Jersey City, N.J., who worked at a grocery store in Waterbury, Conn., committed food stamp fraud when he allowed patrons to trade in their food stamps for cash, cigarettes, other ineligible items, and even a glass bong. (Let’s be clear – that last one is definitely not subsidized by the federal government.)

The man happened to be related to the store owner and worked shifts later in the day. The clerk routinely charged his customers’ electronic benefits cards double the value of the items. For two years, the ruse continued and electronic benefits were transferred to the grocery store’s bank account. (I’m sure the store owner gave his minions a cut of the take, which further motivated them to commit more food stamp fraud.)

Fortunately, the Food and Nutrition Service (FNS) can identify suspicious card activity, mostly when purchase amounts are higher than normal. This is how today’s food stamp fraud case was discovered. By estimating the stock of eligible food items, number of cash registers and customer amenities, the FNS figured that the Connecticut grocery store could lawfully redeem between $120,000 and $240,000 per year in food stamp benefits. Over an 18-month period, the store redeemed around $3.2 million in food stamp benefits.

The 50-year-old New Jersey man, who is one of four workers caught up in the illegal scheme, pleaded guilty to food stamp fraud. Today’s fraudster faces five years behind bars for his illicit behavior. The co-conspirators previously pleaded guilty to food stamp fraud. Two of them were sentenced to 30 months each in prison and the other defendant is waiting to be sentenced.

The USDA makes it clear that federal tax dollars are to be used to subsidize low-income households so they can eat a more nutritious diet (NOT cash, cigarettes, or bongs.) I’m sure that when sentenced, the judge will make today’s fraudster’s sentence perfectly clear so he will be reminded that his behavior violated the rules and regulations of the food stamp program.

Today’s “Fraud of the Day” is based on the Justice Department press release, “Wate Grocery Store Worker Pleads Guilty to Defrauding Federal Food Stamp Program,” released on June 17, 2019.

John H. Durham, United States Attorney for the District of Connecticut, today announced that, on June 14, 2019, MUHAMMAD SHAHBAZ, 50, of Jersey City, New Jersey, pleaded guilty in Hartford federal court to food stamp fraud. The federal Supplemental Nutrition and Assistance Program (“SNAP”) is administered by the USDA’s Food and Nutrition Service and utilizes federal tax dollars to subsidize low-income households to provide them with the opportunity to achieve a more nutritious diet by increasing their food-purchasing power.  SNAP recipients purchase eligible food items at retail food stores through the use of an Electronic Benefits Transfer (EBT) card, and SNAP benefits may be accepted by authorized retailers only in exchange for eligible items.  Items such as alcoholic beverages, cigarettes, paper goods and soaps are not eligible for purchase with Food Stamp benefits, and it is a violation of the rules and regulations governing the food stamp program to allow benefits to be used to purchase ineligible items.  SNAP benefits may not lawfully be exchanged for cash under any circumstances.  The program is designed so that the total amount of each purchase is electronically transferred to the retailer’s designated bank account

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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.