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December 2 2015

A $2 Million Food Stamps and Housing Scam in New York

Patrice J. Lee

New York City officials said this week that two city workers managed to exploit the city’s welfare program to steal over $2.1 million worth of food stamps and rental subsidies.

Petronila Peralta and Cherrise Watson-Jackson, both employees of the Human Resources Administration, reportedly used their positions to hatch noxious schemes. The pair solicited the help of others and at least 11 other co-conspirators joined them in being charged charges as part of their scams.

Watson-Jackson pulled down $1.5 million though an elaborate scheme where she paid welfare recipients for access to their benefit cards and directed money to their accounts. Some of that money was used to buy Red Bull in bulk quantities, which was then be resold to bodegas and small grocery stores. Other conspirators reportedly illegally turned food stamps in to bodegas or small stores for a portion of their value in cash.

The scammers didn’t just target food stamps, but housing benefits as well. Watson-Jackson allegedly registered people as fake landlords and issued fraudulent rental subsidy payments to them.

Peralta stole over $600,000 in cash benefits more than three years by issuing hundreds of fraudulent benefit payment to 140 people who weren’t entitled to receive them and they give her a portion back in return.

The New York Times reports:

Mark G. Peters, the investigation commissioner, said the workers arrested on Tuesday had used paper forms to bypass computerized record-keeping systems, a workaround he said the resources agency had already taken steps to guard against. “It was essentially an invitation to fraud,” he said in an interview.


The arrests followed a years-long investigation by agencies including the Investigation Department, the Federal Bureau of Investigation, the State Office of the Inspector General and the United States attorney’s office for the Southern District of New York.


“This defendant was entrusted to provide government assistance to New York’s neediest families but instead abused that trust and her authority,” the state inspector general, Catherine Leahy Scott, said in a statement.


The Investigation Department recommended disciplinary action against six supervisors at the resources administration for approving those payments, a step the administration agreed to take.

Beyond disciplinary action for wrong doers, what is the city doing to ensure that this doesn’t recur:

Steven Banks, commissioner of the Human Resources Administration, said fraud was one of the first issues brought to his attention when he began his job in April 2014. Soon after, he said, the administration centralized the rental arrears assistance program, improving efficiency and helping to prevent fraud.


He said he had also created an accountability office to help detect fraud. Under an agreement with the Investigation Department, the agency will begin training employees in fraud prevention.

Fraud is intolerable, but it’s especially abhorrent when we are subsidizing it with our tax dollars. Government workers, whether federal, state or local, are stewards of the public trust. When even a handful of rotten apples abuse the system to their gain, it forces us to rightly be suspect of everyone in the public sector. And those who suffer are not just us taxpayers but those who need legitimately need some help.

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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