PROVIDENCE, R.I. (WPRI) – Food stamp fraud is a “significant problem” in Rhode Island.
That was the message U.S. Attorney Peter Neronha sent Thursday when he announced that nine people are facing criminal charges for allegedly defrauding the federally funded Supplemental Nutrition Assistance Program out of more than $3 million.
During a two-year undercover investigation, Neronha said eight Rhode Island residents and one New York man were found to be illegally allowing food stamp recipients to use their EBT cards to obtain cash in exchange for a large surcharge at five Providence convenience stores.
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“The conduct alleged in the charging documents removed a tremendous amount of money from the food stamp benefit program that could otherwise go to feed a hungry adult or a hungry child,” Neronha said in a statement.
Here’s how the scheme worked, according to Neronha.
A food stamp recipient would attempt to make a small purchase and would then request cash back. The retailer would then provide the person with the money and usually pocket the same amount that was disbursed.
In one example, Neronha said an undercover agent purchased just under $4 in food and drinks and received $80 in cash. The retailer then took $85 for himself, costing SNAP more than $168 in one single transaction.
“This was $3 million in fraud $160 at a time,” Neronha said during a press conference.
Neronha said it is not believed that all of the nine people charged were working together. He said they face a wide range of federal charges, including conspiracy to defraud the United States; SNAP benefit fraud; wire fraud; money laundering; and filing a false tax return. If convicted, they face maximum sentences of between five and 20 years in prison and fines of $250,000 and $500,000.
Six people were charged by way of indictment, including Mustafa Al Kabouni, 52, Cranston; Mohamad Barbour, 53, North Providence; Mohamad Amir Al Kabouni, 43; Mohamad Eid Al Kabouni, 22, Cranston; Amir Rasheed, 33, Flushing, NY; and Karuna Mehta, 43, North Smithfield.
Three others were charged by information and have already agreed to plead guilty, including Cristiana Ramirez, 37, Providence; Glenda Lopez, 39, West Warwick; and Farhan Mustafa, 37, Providence.
The five Providence stores where the transactions took place included Corner Store, 549 Broad Street; Regency Mart, 3 Regency Plaza; Stop & Go, 776 Douglas Avenue; Dugout Convenience Store, 97 Burnside Street; and Cristina’s Market, 524 Smith Street.
During the course of the two-year investigation, Neronha said 37 food stamp retailers in the state were disqualified from accepting EBT cards and 15 others were sanctioned for violating the program’s laws and regulations. There were 1,014 certified SNAP retailers in Rhode Island as of March, according to the U.S. Department of Agriculture.
“As long as I’m U.S. Attorney, this kind of fraud will be a priority for the office,” Neronha said.
As of July, there were 101,070 households in Rhode Island receiving SNAP benefits, according to the state Department of Health and Human Services. The average monthly benefit per household is $249. Individuals qualify for the SNAP program if their monthly income is less than 185% of the federal poverty level – approximately $36,000 annually for a family of three.
Approximately 8% of the nation’s food stamp retailers engaged in food trafficking between 2006 and 2008, according to data published by the USDA. During the 2011-12 fiscal year, 1,400 stores across the country were permanently disqualified for trafficking and nearly 700 stores were sanctioned.
Last year, Syed Shah, a Providence convenience store, was sentenced to six months home confinement and ordered to repay $648,000 for his role in a scheme that involved allowing customers to redeem their benefits for cash and other ineligible items. Shah admitted that he used the fraudulent money to lead an extravagant lifestyle, including paying nearly $77,000 in cash for a new Mercedes.
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