A federal grand jury indicted nine Baltimore retail storeowners for a food stamp fraud scheme that netted at least $7 million over the last three years.
According to officials, the storeowners would allegedly debit food stamp cards for cash instead of food and split the proceeds.
The food stamp scheme has been going on since 2010, officials said during a Sept. 17 news conference. U.S. Attorney Rod J. Rosenstein, Special Agent in Charge William G. Squires Jr. of the U.S. Department of Agriculture Office of Inspector General and Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation announced the indictment, stating that the retailers received federal transactions in which they did not provide any food—a fraud scheme commonly known as food stamp trafficking.
“As the search warrants were executed this morning, agents seized $590,000 in cash from the defendants,” Rosenstein said during the news conference. “We also have warrants outstanding for bank accounts and we anticipate money will be seized from those accounts as well.”
Officials said the Supplemental Nutrition Assistance Program, also known as SNAP, is the nation’s largest domestic food program and administered by state agencies and the U.S. Department of Agriculture’s Food and Nutrition Service.
Several years ago food stamps were an actual piece of paper. Today SNAP clients receive their benefits stored on electric benefits transfer, or EBT, debit cards similar to a personal debit card.
“Taxpayers fund the food stamp program to put food on the tables of needy recipients, not to put money in the pockets of greedy criminals,” Rosenstein said.
“The retailers involved had an obligation to provide food in return.” When the program operates properly the retailer receives the payment and passes as much of that money on to food producers and suppliers.
“When the program operates in a fraudulent way, as it did here all the money winds up in the pocket of the retailer and of the beneficiary,” said Rosenstein.
Sitting at the corner of Harlem and N. Fremont Avenues in West Baltimore is a mini market named Second Obama. On Sept.17, the mini-market’s iron shutters were down, the lights were out and potential customers were forced to go elsewhere for groceries.
According to court documents, Abdullah Aljaradi, 51, the owner of Second Obama had been under investigation for three years. Court documents show his store collected more than $2 million in payments for food sales that never occurred.
The indictment cited nine retail store owners and 10 stores. The defendants owned and operated their stores in Baltimore City and were authorized to accept SNAP.
Also included in the indictment are:
– Dae Cho, 66 and Hyung Cho, 40, both of Catonsville. They were listed as the owners of K & S Food Market in West Baltimore and allegedly obtained more than $1.4 million in payments for food stamps.
– Abdo Mohamed Nagi, 54, of Baltimore, owner of the New York Deli and Grocery and who allegedly obtained more than $1.2 million in payments for food sales that never occurred.
– Kim Man Chu, 38, of Rosedale, owner of the Long Hing Grocery Store and who allegedly obtained more than $750,000 in payments for food sales that never occurred.
– Amara Cisse, 50, and Fanta Keita, 45, both of Windsor Mill owners of the Simbo Food Mart and who allegedly obtained more than $600,000 in payments for food sales that never occurred.
– Jung Kim, 51, of Ellicott City, owner of C & C Market and who allegedly obtained more than $600,000 in payments for food sales that never occurred.
– John Cunningham, 54 of Baltimore allegedly obtained more than $348,000 in payments for food sales that never occurred.
The scheme represented a financial incentive for the retailers, the prosecutors said, because there was no cost or goods sold for them and they pocketed half the proceeds of a transaction that consisted of nothing more themselves for doing nothing other than cashing the EBT.
Witnesses wearing electronic surveillance equipment helped authorities gather the evidence that was presented to the grand jury.
FBI agents observed the Second Obama store, for instance, and said they saw a stream of customers conduct SNAP transactions and leave either with no merchandise or a small item such as a soft drink, while records showed half of the transactions were for more than $40.
None of the food stamp cardholders were charged in this incident, authorities said.
Prosecutors said the defendants face a maximum 20-year prison sentence for each count of wire fraud.
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