Posted on 06/25/2002 6:06:48 PM PDT by Marianne
Buffalo's small corner groceries - a staple of inner-city life for decades - are the target of a federal investigation into a food stamp scam that costs taxpayers millions of dollars.
These family-owned stores are at the core of a new type of crime - abusing food stamp debit cards, the very tool government hails as an effective weapon in fighting fraud, investigators say.
A yearlong undercover probe has resulted in 14 owners and employees being charged this month with illegally exchanging food stamp benefits for cash. Investigators believe the cash was often used to buy drugs.
In Buffalo, eight neighborhood stores, scattered across the West Side and East Side, have been implicated. Most of the stores are no bigger than a large living room, yet they generate hundreds of thousands of dollars in food stamp sales.
Investigators said one tiny store on the East Side took in $600,000 in food stamp revenue last year - some of it legal, some not.
Food stamp fraud is nothing new, but what's unusual about this case is the unlawful use of food stamp debit cards, a relatively new tool in the federal government's efforts at reducing waste and fraud.
Investigators say the cards, designed to make fraud harder, have done little to cut down on the crime. They also believe dozens of other local stores are involved in the same type of activity.
"It's all over," said Lonnie Williams, senior detective in the Narcotics and Intelligence Bureau of the Erie County Sheriff's Department. "All the dealers, all the crack heads know about the scam. And taxpayers are still losing lots of money."
The cards, which look like a credit card, are a key element in the federal government's efforts to curb fraud. The Welfare Reform Act of 1996 required that New York and other states switch from the old coupon system to debit cards. In Erie County, the cards have been in use for about 18 months.
The problem is that the cards, like the old coupons, are being illegally traded for cash, not groceries.
Here's how the scam works:
A food stamp recipient walks into a store, gives the retailer his card and pin number and privately asks for cash instead of food. Often, the recipient gets 50 cents for each dollar of benefits he gives up.
The store owner, in turn, walks away with a 100 percent profit, or a dollar for each 50 cents of cash. The money is automatically deposited by the government into the owner's personal bank account.
In one local case, prosecutors accused Abdulla Mohmed Alhaj of Adam's Store on Fillmore Avenue of accepting $315 in food stamp benefits in return for about $190 in cash. The allegations are outlined in a grand jury indictment.
Another indictment charges Anwar H. Muflahi of the Five Star Food and Beverage Center on Jefferson Avenue of exchanging $280 worth of benefits for $150 in cash.
The same scenario is outlined over and over in the 10 grand jury indictments and three criminal complaints issued by the government.
"Generally, the indictments allege that the defendants unlawfully exchanged 50 cents for each dollar in food stamp benefits given out," said MaryEllen Kresse, the assistant U.S. Attorney handling the case.
Most of the defendants could not be reached to comment, and most of their lawyers would not return phone calls.
The owner of one of the stores named in the indictments denied the allegations against his employee, Kaid Nassar, and called the government's case a mistake.
"We don't do that here," said Khalil Nassar of No Limit Plus on Jefferson Avenue. "I don't know why he was named (in the indictment). But as far as the store, we don't do that kind of thing here. I think it was a mistake."
Another defendant, Ernesto G. Viruet of Arecibo Grocery on Connecticut Street, said the government's allegations stem from his long-standing practice of offering credit to food stamp recipients and then using their debit cards for payment the following month.
Speaking through an interpreter, he said the result is a $100 charge to the card might result in less than $100 in groceries. He denied exchanging benefits for cash.
"I told them," he said of the federal government, "that everything is OK."
Viruet's lawyer, Mark Grisanti, echoed those comments and said his client doesn't recall the transactions cited by prosecutors in the indictment. "He's never had any problems before," Grisanti said.
Investigators say their case against the 14 defendants is a strong one. They claim to have taped conversations of the illegal transactions between store employees and undercover police officers.
Investigators also wonder how prosecutors and the courts will react to the allegations. If found guilty, will the defendants get a serious punishment?
"I want to see these stores closed down," Williams said. "What's the federal government going to do - slap them on the wrist or get serious about crimes like this?"
The federal government, which has encouraged the change to debit cards, acknowledges that fraud still exists but claims the cards have helped reduce the frequency and cost associated with fraud.
Figures from the U.S. Department of Agriculture, which oversees the food stamp program, indicate the loss connected to fraud, or trafficking as it's known in some circles, has dropped from $815 million in 1993 to $660 million in 1998. And that was before most states made the switch from paper coupons to debit cards.
Government officials say the cards, known as Electronic Benefit Transfer (EBT) cards, are not foolproof but they do provide an efficient system for monitoring food stamp use and, therefore, a better means for identifying fraud.
"EBT provides accountability that we didn't have in a paper system," said Susan Acker, a spokeswoman for the agriculture department, "and that makes it easier to track food stamp trafficking."
The defendants in the Buffalo case face a maximum of five years in prison, a fine of $5,000, or both.
11 CHARGED WITH FOOD STAMP FRAUD
The Buffalo News, page B-3
June 8, 2002
Eleven Buffalo-area store owners and clerks have been indicted on charges of food stamp fraud, said U.S. Attorney Michael A. Battle.
The 11 are accused of giving cash to food stamp recipients, in exchange for using their benefit identification cards to rack up false food stamp claims paid to the stores by the government, said Assistant U.S. Attorney MaryEllen Kresse.
The maximum penalty is five years in prison and a $250,000 fine.
The indictments were the culmination of an undercover investigations by the U.S. Department of Agriculture, the Office of the Inspector General, the Erie County Sheriff's Office and State Police.
Charged were: Saleh Mosad Abdulla, 26, and Mohamed H. Muflahi, 24, both of Lackawanna; and Buffalo residents Ahmed Ali Ahmed, 69; Mohamed A. Ahmed, 19; Abdulsalam A. Ahmed, 21; Abdulla Mohamed Alhaj, 44; Akeel K. Kaid, 21; Anwar H. Muflahi, 37; Hussein Mohammed-Ahmed Saeed, 27; Abudssalam A. Sofian, 33; and Ernesto G. Viruet, 65.
In addition, criminal complaints alleging food stamp fraud were lodged against Haider J. Al Sultani, 27; Amin M. Alsaidi, 42; Mutee Hezam Nagi, 24; Abdulizzez Nasr, 27; and Kaid K. Nassar, 47, all of Buffalo
A nation of chumps.
The story makes it look like this is new - it's been going on since the first food stamp was issued.
When I was a kid, I worked in a store in a seedy neighborhood. This one guy would keep coming in to buy a 25 cent pack of cookies so I would have to give him 3 quarters back (for booze).
I eventually became so fed up with having to keep going to the register, I told him to give me a ten dollar food stamp for the cookies, and I'd give him cash.
And he did just that!
I live in rural North Carolina and travel a lot statewide. Two brothers were just convicted in Charlotte of smuggling cigarettes to Michigan and diverting profits to Hezbollah.
In my travels I frequently visit gas stations, convenience stores, restaurants, and hotels. I see lots of Mid Easterners in these places. Working. Actually more like running these places. Some of the motels that I know to be Mid East operated (I don't know who owns them, but they're not major chain hotels) don't attract many visitors. But the lights are still on. Some of the C-stores are the same way. I know of one that has gone into severe direpair in the 5+/- yrs since control was assumed by ME operators. Very little traffic anymore. But it's still open. Funny thing is, I just don't see ME types everywhere. Mainly just working. In retail/hospitality.
Do any of you see this type of ME involvement in your own community, or is it just me?
The true measure of the fraud perpetrated by individuals such as those mentioned here may be in the billions of dollars. What do you think these con artists want to use this money for? Their culture doesn't condone an extravagant lifestyle.
I run a small business. I believe in free enterprise. I believe in legal immigration for hard working people who want a better life for their families. But I also believe that we must protect our citizens, on our soil, first
If the business operators I mentioned above are innocent I defend their opportunity to participate in the local economy. The potential for abuse such as that outlined herein is great enough, however, to warrant a crisis.
IMO, it is time for the authorities to start auditing any non-citizen owned small businesses, and they should start with hospitality/convenience/food services/retail type businesses owned by resident aliens from ME countries. INS already has employment requirements and reporting standards for work visas and such. I don't believe non-citizens should be held to a higher standard of accountability in order to operate a business in the US. I just believe that they should be held against that standard continuously if they don't want to naturalize. What do other FReepers think?
Too lazy to learn English, he's not too lazy to learn how to scam the taxpayers.
Other than the typical Indian head dressings how can one distinguish Arabs from Indians? What is your area of travel?
When President Bush spoke about the war on terror on September 20, he specifically said that he was calling on ALL CABINET MEMBERS to assist. I believe the Department of Agriculture under Anne Venneman has been doing a terrific job in clamping down on a source of terrorist funds. It has not been noticed publicly because the prosecutions are done in each city. My guess is that you would find cases like this is almost every large and medium sized city.
Food stamp fraud is under Agriculture. Motels will have to be caught in something illegal which may vary from place to place....tax violations, workplace violations, etc. Those businesses may survive a bit longer.
It also appears that they can get these establishments on taxes as they have to show sales greater than the food stamp redemptions. They went to this card in Texas in the mid 90s and had some of the same problems. Texas also uses finger imaging as a requirement for the recepient to secure the cards.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.