BALTIMORE —A federal grand jury has returned nine separate indictments charging a total of 14 retail store operators for committing food stamp fraud and wire fraud in connection with schemes to illegally redeem food stamp benefits in exchange for cash.
The indictments allege the retailers received over $16 million in federal payments for transactions in which they did not provide any food, a fraud scheme commonly known as “food stamp trafficking.” Stores allegedly split the proceeds with food stamp recipients. The indictments were unsealed Tuesday after arrests of the defendants, officials said.
Over 300 members of law enforcement participated in the arrests and execution of a total of 26 search warrants at the stores and related locations this morning. In addition, 46 bank accounts were seized."
"The food stamp program is intended to put food on the tables of needy recipients, not to put money in the pockets of greedy criminals," said U.S. Attorney Rod J. Rosenstein. "Honest storeowners work hard to earn a profit by actually selling food, and food producers and distributors also benefit. People who play by the rules deserve to know that criminals who defraud them will be held accountable."
"Far from being a victimless crime, the offenders in this investigation defrauded a combined amount of approximately $16 million from taxpayer-funded programs," stated Kevin Perkins, Special Agent in Charge of the FBI Baltimore Office. "These programs are intended to provide assistance for those in need, not a means of abuse or selfish enrichment. The FBI Baltimore Division, along with our federal, state and local partners, remain steadfast in our commitment to root out those who steal from taxpayers and defraud our government programs."
The Supplemental Nutrition Assistance Program (SNAP), previously known as the Food Stamp Program, is administered by the Food and Nutrition Service (FNS) of the United States Department of Agriculture (USDA), together with state agencies. The program funds low-income individuals to allow them to obtain a more nutritious diet. In Maryland, the program provides eligible individuals with an electronic benefit transfer (EBT) card called the Independence Card, which operates like a debit card. Recipients obtain EBT cards through the state Department of Human Resources, then use the EBT card to purchase approved food items from participating retailers.
Retailers must apply to and be approved by FNS to participate in the program. Authorized retailers use a point-of-sale terminal that checks the EBT card information and deducts the cash value of the purchase from the customer’s SNAP benefit balance. SNAP reimbursements are paid to retailers through electronic funds transfers. Retailers must bill the government only in return for providing approved food items.
The indictments allege that the defendants exchanged EBT benefits for cash, in violation of the food stamp program rules. The indictments allege that the defendants typically paid half the value of the EBT benefits in cash. To avoid detection, the defendants often debited the funds from the card in multiple transactions over a period of hours or days, or called a different store where the transaction was processed manually. As a result of unlawful cash transactions, the defendants obtained more than $16,482,270 in EBT deposits for transactions in which food sales never happened or were substantially inflated.
The names of the arrested are:
Shaheen Tasewar Hussain
Kelym Novas Perez
Mohammad Irfan, 59; and Muhammad Sarmad
Mahmood Hussain Shah
Kassem Mohammad Hafeed, a/k/a Kassam Mohammad Hafeed