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“Food stamp” fraud has high cost



This news story was published on August 13, 2012.
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Vanessa Miller, CR Gazette –

The federal government distributes enough food aid every year to help feed more than 46 million low-income Americans. But a sliver of that “food stamps” pie doesn’t make it to the table.

Some food aid recipients and businesses misuse benefits distributed through the government’s Supplemental Nutrition Assistance Program, formerly known as food stamps, by purchasing things other than food — such as alcohol or cigarettes — and by trafficking the benefits.

“We don’t like it when the program is misused,” said Kevin Concannon, undersecretary for the U.S. Department of Agriculture and former director of the Iowa Department of Human Services. “So we have about 100 people spread across the country whose job it is to track purchases.”

Since the U.S. Department of Agriculture swapped its paper food coupons for electronic benefit transfer cards, food aid fraud has dropped from about 4 percent nationwide to about 1 percent, Concannon said. But that’s not good enough, he added.

“It’s one percent of a much larger number now,” Concannon said.

How big is that number? It cost $80 billion to assist 46 million people in 2011 through the government’s food assistance program. That would put the estimated cost of fraud this past year at about $800 million.

In an effort to crack down on food aid abuse in the United States, the Agriculture Department this past week rolled out new, tougher sanctions available for retailers who misuse the program. It also announced new requirements that states take specific actions to catch fraud and abuse on the front end and make sure ineligible individuals can’t access the program.

“We are upping the stakes on the penalties, so if you’re going to risk this, you are risking something significant,” Concannon said. “And the vast majority of stores aren’t going to risk it.”

Businesses and individuals who do “risk it” and get caught can now face criminal charges, fines and disqualification — before last week’s announcement, businesses could not be both fined and barred from the program. Disqualifications can be permanent or temporary, lasting six months or longer.

In Iowa in the past 10 years, 30 businesses have been temporarily or permanently disqualified from the program after committing some type of abuse against the food aid program. Temporary disqualifications are typically for less serious offenses, such as letting someone buy something other than food.

Permanent disqualifications often are handed down in more serious trafficking cases.

Regarding individual violations, the USDA completed about 785,000 investigations and disqualified more than 44,000 people nationwide in the 2010 budget year, the most recent data available.

In Iowa that year, officials completed 2,953 investigations and disqualified 91 people.

‘BLACKLISTED’

Of the 30 “blacklisted” businesses in Iowa, 12 have been permanently barred from the program and 18 were temporarily punished. Most recently, Nanas Oriental Grocery Store in Waterloo was permanently disqualified in April, and a small African and Mediterranean food store in Coralville called Almadina was temporarily disqualified in June.

Owners of Nanas and Almadina could not be reached for comment.

Most of the businesses that make the blacklist are small, family-run grocery or convenience stores. Large chain stores very rarely commit violations. And Concannon said those larger stores process more than 80 percent of the food aid dollars.

Ruth Comer, a spokeswoman for Hy-Vee, said the grocer takes compliance with the food aid program seriously, but the electronic card system has made enforcement of the rules much simpler.

“When items are scanned and an order is totaled, all the items that are eligible are separated out from all those that are not,” Comer said. “It takes the guess work and the variances out of the system.”

Meaning, according to Comer, cashiers don’t have to endure much training about what is and what is not allowed to be purchased with food stamps and how to make change with the coupons.

“It takes a lot of the potential for mistakes and fraud out of the system because there is no counting of paper stamps,” Comer said. “In the past, with the paper stamps, change had to be given in that same form, and it was much more cumbersome, and there was more opportunity for human error.”

This list of sanctioned businesses came from the U.S. Department of Agriculture

‘I DID NOT REALIZE’

Despite efforts to eliminate opportunities for would-be food aid offenders, some people still manage to skirt the system — at least for a while. Simple violations include purchases of things not allowed under the food stamp program, including non-food items such as diapers, pet food, alcohol and cigarettes.

More serious violations involve food aid trafficking in which a person might sell his or her card for cash. Individuals and stores can be caught for such violations if, for example, a business owner buys a card for less than it’s worth.

What’s the payoff? Such a transaction allows the store owner to make sure that all the card’s dollars are spent at that business, and it sends the individual away with cash – albeit less than what the card was worth – that he or she can spend on anything.

The individual then can request another card, claiming the original was lost. And, officials say, some people run the scam over and over again.

That, in part, is how the government has been able to catch offenders. A data-mining system tracks millions of transactions a day, scanning for suspicion activity – such as 50 redemptions in one day at a smaller store, or consistent use of a card hours away from where the recipient lives.

Before businesses are sanctioned, they are put on a “watch list,” allowing suspicious behavior to be monitored. There are currently about 40 businesses on the watch list in Iowa.

D&T Gas & Food, a small convenience store in Baldwin, is among the Iowa businesses with permanent bans from the federal food assistance program. Owner Dan Singh said his business’ violation was the result of a misunderstanding of how the program works.

He told The Gazette that his violation was for allowing food stamp recipients to swipe their electronic benefit cards once at the beginning of the month for the total amount, and then come in during the month to take items without swiping the card again.

“Every time you have to swipe it,” Singh said. “Being a new owner, I did not realize, and that was the only violation.”

Singh said he isn’t discouraged to be out of the program, noting that he brought in only about $30 a day in food assistance.

“I don’t need it,” he said. “I don’t want the headache for a couple thousand dollars a month. I don’t need all that nonsense.”

‘WE DON’T TOLERATE THAT’

 

Not only does abuse of the food assistance program misuse taxpayer dollars, but Undersecretary Concannon said it often means someone in a low-income household is being nutritionally shorted.

“We don’t tolerate that,” he said. “We don’t want it to happen. One percent is a good percentage number in terms of reducing fraud, but I’m not satisfied.”

Concannon sent letters to governors, human-services departments and grocers last year asking them to redouble efforts to pursue and prevent food aid fraud.

The tougher sanctions announced Thursday mean the USDA will not only be allowed to permanently disqualify an offending retailer from the food aid program, but it also will be allowed to fine the business.

Monetary penalties will be proportional to the amount of benefits the store was processing, according to Concannon.

The USDA also recently sent letters to officials at Craigslist, eBay, Facebook and Twitter asking for help preventing the illegal online sale or purchase of food aid benefits. And the government is helping states monitor recipients who have requested an “excessive” number of replacement cards, while also increasing the documentation required for “high-risk” stores applying to redeem food assistance benefits.

“The (food assistance) program cuts across all programs as being very important,” said Roger Munns, a spokesman for the Iowa Department of Human Services. “When people abuse it, it threatens other programs.”

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20 Responses to “Food stamp” fraud has high cost

  1. Glenna Kaesemeyer Reply Report comment

    May 6, 2013 at 1:28 pm

    Data on global food aid deliveries in metric tons are from the database of the International Food Aid Information System (INTERFAIS), which was developed by WFP as a contribution to a coordinated international response to food aid shortages. INTERFAIS is a dynamic system, which involves the interaction of all users, represented by donor governments, international organizations, non-governmental organizations, recipient countries and WFP field offices. They are sharing information and data on food aid transactions.**

    Stay in touch
    <http://www.foodsupplementcenter.com

  2. Bobby G Reply Report comment

    August 13, 2012 at 9:34 pm

    If you want to read something funny google. eric holder wants to give mexico food stamps. Then click on U.S partners with mexico to give out more food stamps. There you will find Obama and Calderone. We got to get him out of the big house.

    • sickastupd Reply Report comment

      May 6, 2013 at 3:41 pm

      STEP BACK EVERYONE!

      Brain death has occurred in Bobby G. Repeat – brain death has occurred in poster Bobby G!

      • maybe Reply Report comment

        May 6, 2013 at 4:05 pm

        Step back in awe because Bobby is right.

        • sickastupd Reply Report comment

          May 6, 2013 at 4:49 pm

          Now I KNOW you’ve lost your mind.

          The USDA provides info at Mexican consulates for people working in the US about this food stamp program which was started by GEORGE BUSH (LOOK IT UP) in 2004.

          Secondly, the program doesn’t actually provide food stamps to immigrants — that too was a product of a Bush-era Farm Bill — but merely information. Again, it does this NOT in Mexico, as some claim, but at the country’s 45 consulates across the U.S.

          Third, you can’t even qualify for food stamps as a non-citizen until you’ve been in the country legally for five years.

          According to the USDA, Food Stamps have NEVER been extended to non-citizens. NEVER.

          And when this asinine story first started on Fox and Friends, it was Obama they were blaming. Now I see Holder gets the blame for something that isn’t happening.

          I really can’t stomach this much stupidity.

        • LVS Reply Report comment

          May 6, 2013 at 5:22 pm

          @maybe-typical liberal rant. Always using lies and misdirection but never telling the truth. I think she has been smoking the funny stuff again.

        • maybe Reply Report comment

          May 6, 2013 at 5:55 pm

          I think she actually believes what she is saying so I can’t fault her for that. It has been a few months but there was at least 3 articles online about flyers being passed out on food stamps at the U.S. consulate in mexico city, plus if I remember right the 2 boston bombers were on welfare and food stamps and they were not citizens.

        • sickastupd Reply Report comment

          May 6, 2013 at 6:02 pm

          The flyers are in the Mexican consulates in the UNITED STATES. For god’s sake! And the Boston bombers came here in the late 1990’s or early 2000’s – as little kids! Jesus, man, do you know anything??? Come on, Maybe!

          And as usual, LVStd has NOTHING but insults. He can’t dispute what I say because even HE knows it’s the truth.

        • maybe Reply Report comment

          May 6, 2013 at 6:08 pm

          it figures, your information is completely opposite than mine.

  3. Mom Reply Report comment

    August 13, 2012 at 2:24 pm

    When I lost my job, I applied for food stamps and my family of 6 (4 kids, hubby and I) received $780 a month, when I got hired at my part-time job (yes part time because my kids need me around as my husband works on the road).My income only brings in $500 a month, after paying for daycare the rest goes to groceries since our new food stamp amount is $220 a month…This is why there are people out there NOT WORKING!!!! This kind of logic does not make sense…one can sit, not get a job and get an outrageous amount of food stamps, and those who are actually working are struggling more and more to make ends meet.

  4. Just My Opinion Reply Report comment

    August 13, 2012 at 12:30 pm

    So, it’s a crime for poor people’s kids to get to have a can of pop or a candy bar once in a while? You people who want to punish the innocent kids for the actions of their parents really get on my nerves. It’s difficult enough being poor and getting picked on in school. Now you don’t even want them to enjoy a few treats? I just don’t know about this world anymore.

    • Katie Reply Report comment

      August 13, 2012 at 7:46 pm

      How can you afford to buy candy bars for your kid(s) if you are on food stamps? I know families where the kids each got a candy bar for a Christmas present and that’s the only time they ever got candy! If you’re on the dole, candy should be a luxury. I would be so humiliated to be on welfare, spending someone else’s money, that I would watch every penny. Every meal would be from scratch, there would be no eating out, and I’d probably freeze to death from turning the heat down so low.

      • sickastupd Reply Report comment

        May 6, 2013 at 3:34 pm

        Surely you can come up with some more nasty things to punish little kids for being poor, can’t you? Maybe a few beatings? Wearing cardboard in their shoes? Porridge for every meal? Homemade, of course, because everybody knows how to make that.

  5. Vince Ventura Reply Report comment

    August 13, 2012 at 9:29 am

    You used to could just beat hell out of bums like him to bad we cant still do that. welfare scum like him dont need no soady pop I say don’t allow no candy or soady pop yes specially if their fat.

    • V.V. II Reply Report comment

      August 13, 2012 at 7:55 pm

      Yup and specialty if thay caint use gooder grammur liken you kin. Drinken soady pop, whut the hull air the peepole a thinken anyhow. And evin more specialty ifin thar phat. Yeas.

  6. concernedcitizen Reply Report comment

    August 13, 2012 at 8:53 am

    I have no problem with someone getting food stamps if they need them. However, I have a problem with the fact that they use them to get candy, pop, chips, and junk food. And they wonder why our kids are obese?????? There is no reason they can’t be set up to reject any junk food and only buy something of a nutrional value. Also, there are jobs and they shouldn’t be given to people that don’t want to get off their asses and work. The whole welfare system is screwed up in this country and they wonder why we are in trouble financially. Overhaul the welfare system for starters!

    • Anonymous Reply Report comment

      August 13, 2012 at 9:04 am

      Yeah, why should poor people get to drink pop? Not like they have anything else nice in their lives, why start with Doritos.

  7. LVS Reply Report comment

    August 13, 2012 at 8:41 am

    I can tell you how some of this fraud works. I was approached by a man on food stamps at one of our local stores. I had a met him in the work place where he was on work release from guess where (BeeGee). He told me if I would buy him a pack of cigarettes he would get me tow 12 packs of soda pop with his food stamps. I told him I wasn’t interested in committing fraud and he went to the next guy coming out of the store. I am sure he found someone willing to do it for him. I really don’t know how you can protect against this type of fraud.

    • Anonymous Reply Report comment

      August 13, 2012 at 9:06 am

      Protecting against that would require concerned citizens who the man approached to call the cops at the time. I’m afraid posting about it isn’t as effective.

      • LVS Reply Report comment

        August 13, 2012 at 9:58 am

        I am sure the cops would have arrested him just like they do the druggers and rapist. There are a hell of a lot worse crimes going on than this. Why the hell would I want a guy who already has nothing to get fined and take up the courts time and the police time. This is part of the issue today. No one will take care of it themselves, they just want to call the police. Get Real.