June 12 2014
Patrice J. Lee
It’s nice to highlight when the government is doing good with its enforcement power by catching and prosecuting wrong-doers.
This week the Department of Justice filed charges against 54 individuals for a massive fraudulent scheme. The defendants conspired together to set up grocery stores around Georgia to purchase food stamp benefits for a fraction of their value. They laundered some $18 million in proceeds from their fraudulent activity. Federal officials call this one of the largest federal food program frauds ever prosecuted.
Separately, another almost 40 individuals were indicted for illegally selling their food stamp and WIC benefits for cash.
The U.S. Attorney’s bulletin explains:
The 54-defendant indictment alleges that a number of defendants conspired to open purported grocery stores in Savannah, Macon, Atlanta, Garden City, Lithonia, LaGrange, Stone Mountain, Riverdale, and elsewhere for the purpose of buying WIC and Food Stamp benefits for cash. Once the purported stores were opened and approved as WIC and Food Stamp vendors, many of the defendants allegedly canvassed low-income neighborhoods and solicited WIC and Food Stamp participants to illegally exchange their benefits not for food but for cash. The defendants then allegedly bought WIC and Food Stamp benefits for cash at a fraction of the amount they received from the USDA by redeeming the benefits they had purchased. The defendants also allegedly conspired to launder over $18 million in proceeds received from their fraud upon the WIC and Food Stamp programs.
Each of the 54 defendants listed in the larger indictment have been charged with one count of mail and wire fraud conspiracy, which carries a maximum sentence of 20 years in prison and a fine of up to $250,000, and one count of money laundering conspiracy, which carries a maximum sentence of 20 years in prison and a fine of up to $500,000. The United States further seeks the forfeiture of $20 million and various bank accounts and assets, including a 2008 Land Rover and a 2008 Mercedes Benz. Each of the 34 defendants charged with conspiring to sell their federal food benefits face a maximum sentence of five years in prison and a $250,000 fine…
Finally, taxpayers are getting some justice and those who abuse the system are in trouble.
Recently, we reported that the USDA made $6.2 billion in improper payments in 2013- accounting for 5.6 percent of spending on its programs. Some of that could have been avoided if the agency met its targets on compliance to catch fraudulent activity. While the President’s priority is getting more Americans on food stamps and welfare, a priority of the USDA and other agencies should be to ensure that benefits are going to those who truly need the help and removed from those who abuse it as well as throwing the book at those who scam the system.
In this instance, those who sold their benefits must not have needed the help otherwise they wouldn’t have sold them. It would be interesting to investigate what they spent the money on that they received in exchange for the food stamps. If it was to support a drug habit that gives credence to proposals to force recipients to be drug tested as a condition of receiving them.
It appears that the feds are going after tens of millions of dollars in assets from the scammers. That’s a good start, but they should be made a public example to deter other would-be and current scammers from engaging in the same behavior.
Unlike efforts of Miami police to catch drivers of ridesharing program Lyft through stings, this is a good us of time by law enforcement and federal agents. Taxpayers should be pleased, but there is much more to do.