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Jewish World Review
Feb. 21, 2012/ 28 Shevat, 5772
A new way of attacking food-stamp fraud
The federal food stamp program, administered by the U.S. Department of Agriculture, is perhaps the nation's most important nutrition program.
At an annual cost of $75 billion, food stamps helped feed 46.2 million Americans last year.
Unfortunately, the program is afflicted by a persistent and resilient form of fraud that undercuts its intent and credibility with the broader public.
Crooked retailers encourage food stamp recipients to trade their benefits for cash or ineligible merchandise like liquor and tobacco, at a substantial markup. The recipient swipes the USDA benefit card and punches in a PIN number, as with a debit card.
The government or a participating bank reimburses the retailer for the full price of what has been represented as legal merchandise.
Food stamp recipients get their liquor, cigarettes or cash and the store owner pockets the mark up -- as much as $50,000 a month, in the case of one South Florida ring. The most recent USDA figures, for 2008, show that fraudulent trafficking accounted for $330 million in losses.
With 209,000 retailers nationwide approved to participate that year, the USDA estimated 17,000 retailers illegally trafficked in food stamps. The agency struggles to expel an average of 900 retailers a year for fraudulent operations.
Once convicted of food stamp fraud, the storeowners are supposedly barred from the program permanently, but they have a way of returning under new names or straw owners.
Scripps Howard News Service reporter Isaac Wolf, in a computer-assisted investigation, obtained a USDA list of 4,600 permanently disqualified vendors under the Freedom of Information Act.
He compared it against a USDA list of all the stores accepting food stamps, finding that about a third -- 1,492 -- of the banned stores continue to take them. Some of these may represent a legitimate change of ownership, but Wolf found dozens of cases where state and local records indicate that the owners are the same.
Impressed by Wolf's investigation, the USDA is now incorporating his methods to search the same records and broadly expand the number of vendor applications marked for closer review. And it is doing follow-up investigations of locations Wolf identified as participating in the food stamp program under false pretenses.
We wish the USDA investigators good hunting. It's too beneficial a program to be so coarsely tarnished.
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