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88 Charged in One of Largest Food Stamp Frauds Ever

6:50 AM, Jun 11, 2014 • By JERYL BIER
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The FBI announced Tuesday in Savannah, Georgia that eighty-eight people have been charged in "one of the largest federal food program frauds ever prosecuted." Fifty-four of the defendants were charged with conspiring to open "purported grocery stores" specifically for the purpose of defrauding the Women, Infant, and Children (WIC) and Food Stamp program.  After the fake stores were "approved as WIC and Food Stamp vendors," many of the fifty-four defendants went through neighborhoods soliciting WIC and Food Stamp participants to exchange government benefits for cash instead of food in clear violation of the law.  The remaining thirty-four defendants werebenefit recipients who sold over $1,000 of their own or their minor children's benefits for a fraction of their worth.  In all, over $18 million was laundered in this way in at least nine cities in Georgia.

The list of those charged includes some colorful nicknames, like Grand Hustle, Big Bo, Da Man, Rah Rah, and even The Money Wizard. The fifty-four defendants were charged with mail and wire fraud conspiracy and money laundering conspiracy, each of which carry a maximum of twenty years in prison plus fines of $250,000 and $500,000 respectively. The thirty-four defendants charged with selling their benefits could face five years in prison and a $250,000 fine.  The government is attempting to seize "$20 million and various bank accounts and assets, including a 2008 Land Rover and a 2008 Mercedes Benz."

report in August 2013 revealed that in the latest period studied, 2009-2011, Food Stamp fraud had increased from 1 percent to 1.3 percent, an increase of 30 percent over the previous study period of 2006-2008. However, with the explosion in Food Stamp participation beginning with the 2008 financial crisis and subsequent recession, the increase in the dollar value of fraud illustrates the jump more dramatically, from $330 million in 2006-2008 to $858 million in 2009-2011.

It is unclear from the FBI's press release how the "purported grocery stores" managed to acquire approval from the USDA as WIC and Food Stamp vendors without, at least initially, arousing suspicion. The FBI did not reveal how the fraud was uncovered, but credited a number of federal, state and local agencies and authorities for cooperation in the investigation.

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