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COMMENTARY: Weathering the Fraud Storm

Gloucester TransmissionBy Larry Benson

It never ceases to amaze me how many ways fraudsters capitalize on government benefits. (These fraudulent opportunists specialize in lining their pockets with additional cash they don’t deserve at the expense of their victims.) An article posted on CSPnet.com explains how convenience store co-owners took advantage of emergency food stamp funds intended to help out Hurricane Sandy victims in New York.

As a result of the devastating storm, the U.S. Department of Agriculture’s Food and Nutrition Service approved disaster nutrition assistance replacement benefits for survivors across 13 states, including New York. The agency made sure that Supplemental Nutrition Assistance Program (SNAP) beneficiaries living in disaster areas continued to have access to food in the wake of the natural disaster.

The story states that the husband and wife owners of a Long Island convenience store processed bogus SNAP transactions using emergency funds at their gas station and convenience store without selling any food. (Of course, it takes two to tango. Nearly two dozen beneficiaries sold their government benefits to the store owner in exchange for cash worth half of the SNAP benefits value.)The convenience store owners charged the USDA the full value of the food stamp benefits and kept the other 50 percent for themselves. (The article states that the man laundered the proceeds through a store bank account set up for state lottery sales.)

The 60-year-old husband pleaded guilty to grand larceny, money laundering, felony misuse of food stamps, falsifying business records and conspiracy. He is facing a prison sentence of between one and a third and four years in state prison. The 59-year-old wife pleaded guilty to grand larceny, falsifying business records, misuse of food stamps and conspiracy. She will be sentenced to 60 days in jail plus five years of probation. Their corporation will be dissolved. In addition, the co-owners are responsible for paying restitution of $566,011.49 to SNAP. (Twenty-two SNAP beneficiaries also pleaded guilty to their part in the scheme.)

Emergency benefits are specifically for emergencies, not for criminals who just want more money. The convenience store owners were responsible for diverting tens of thousands of dollars in benefits that were meant for those less fortunate. (My guess is that this couple probably understands that they are in the midst of a personal emergency that they caused. Unfortunately, they will have to weather out their fraudulent storm in jail.)

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