USDA cracks down on food stamp fraud

The first food stamps were issued by the Agriculture Department in 1939 (Photo: Library of Congress).
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Brooks Hays

A nationwide crackdown on food stamp fraud has landed dozens of abusers in jail, while others have been hit with hefty fines and banned from the program.

Participation in the Supplemental Nutrition Assistance Program (SNAP) has ballooned to a 12-year high in the aftermath of the 2008 financial collapse. Though critics have been quick to harp on the program as an example of out-of-control federal spending, Obama administration officials insist that the spike is temporary.

A report earlier this year by the Center on Budget and Policy Priorities called SNAP "efficient and effective." Its 1 percent rate of fraud is one of the lowest among federal assistance programs.

But for a program of its magnitude, 1 percent still means millions of dollars. Over the summer, the Department of Agriculture renewed its commitment to ridding the program of fraud and abuse, The Associated Press reported.

The agency has proposed several new rules to bolster its fraud-fighting abilities, including stiffer penalties for scammers and increased tracking of people who request multiple Electronic Benefit Transfer (EBT) cards.

The USDA has hired data mining company SRA International Inc. to help regulators locate and pursue traffickers – that is, people who exchange food stamps for cash. The agency has begun demanding more documentation from high-risk stores applying to redeem SNAP benefits. Recently, it issued a letter to the CEOs of Craigslist, eBay, Facebook and Twitter, asking for their help in preventing food stamp trafficking.

Those efforts have led to convictions. Earlier this month, a Connecticut woman was sentenced to six months of home confinement for her role in a $1.6 million food stamp fraud scheme, as The AP reports. Her husband, who allegedly masterminded the scheme, is already in prison. A deli operator in Buffalo, New York who made more than $140,000 in fraudulent exchanges is currently awaiting sentencing, as the Buffalo News reports. He faces up to 20 years in prison and a $250,000 fine. The Post-Tribune reports that a businessman in Gary, Indiana is likely going back to jail after his guilty plea in $1.4 million food stamp fraud case. He had previously been punished for perpetrating a similar food stamp scheme in Chicago.

But at least one of the accused says the agency's crackdown is over-zealous. Kenny Parlet, a supermarket-owner in Lakeview, California, says his store has been unfairly banned from the SNAP program due to a mere $132.50 in illicit food stamp transactions carried out by a lone employee. 

"We do about $40,000 a month in food stamp sales on average," Parlet recently told the Lake County News. Without that business, he says he may have to shut his doors.

The USDA Food and Nutrition Service confirmed to the newspaper that Parlet’s business had been disqualified, but would not speak further about the case.

While major cases of abuse find their way into the news, many more go unreported. As many as 1,016 stores were permanently disqualified for trafficking SNAP benefits in the third quarter of 2012, the USDA said in August.