In what is surely the first comprehensive study of food stamp fraud with the most shocking revelations about how food stamp dollars are leaving the country, with some of those taxpayer funds ending up in the hands of terrorists in places like Pakistan, Somalia and Yemen, was released this week by the Government Accountability Institute (GAI).
Report authors charge that the U.S. Department of Agriculture’s Food and Nutrition Service (FNS) “has hidden systemic fraud and allowed large-scale waste and abuse to go unabated for years.”
When most people think of food stamp fraud they think of cases were shrewd individuals have found loopholes in the law to become eligible to receive SNAP benefits.
Cases like the one in Cleveland, Ohio where the so-called “Food Stamp Millionare” Pascal Mahvi was sentenced in 2017 to only 30 days in jail for defrauding the American taxpayer out of thousands of dollars, infuriate taxpayers.
According to the GAI report:
Pascal Mahvi, who claims to be the son of an Iranian prince, received food stamp benefits from 2014 to 2016, while boasting of multi-million-dollar properties his companies had developed, and living in an 8,000-square foot mansion. Mahvi had vast personal and family assets, but low income. He was arrested in September 2016, and in court proceedings said he lived off hundreds of thousands of dollars in loans from friends that were not required to be disclosed per program eligibility rules.
Cheating on the program, as many attempt to do by buying ineligible items such as alcohol, pet foods, and cigarettes, or cheating for one’s personal financial gain, like in Mahvi’s case, are small potatoes for the Department of Agriculture’s FNS program. Fraud and mismanagement on a massive scale involves a practice known as “trafficking.”
Trafficking works like this:
Looking for cash rather than food, a customer with a SNAP card enters a small convenience store that has been licensed to participate in the Agriculture Department’s EBT system.
Through quiet community networks, the store is known to offer cash for benefits.
The store owner or manager, often an immigrant, offers the customer 50 cents for every dollar of benefits the customer wants to sell.
The customer leaves with his or her half of a dollar amount in cash and the store seeks reimbursement from the government for the full dollar amount that the government presumes bought necessary food items – often racking up hundreds of thousands of dollars before being caught.
According to a report earlier this year by CNS News, nearly 36,000 stores in the US have been involved in “trafficking” amounting to a billion dollars in losses to the government in just one three-year period.
Retailers in small grocery stores across the US have been participating in trafficking for years, occasionally getting caught, being found guilty and then sentenced to very light sentences, often less than two years. Rarely are any deported.
Millions gained through trafficking ends up in the hands of terrorists says GAI.
GAI raises the alarm charging that mismanagement of many aspects of the program allows SNAP dollars, meant to feed hungry Americans, to be sent out of the economy through terror financing networks in the Middle East and Africa. The 74-page report says that,
“ Millions of dollars have been sent to terror-prone nations such as Yemen and Somalia through hawalas and money-laundering by SNAP-approved vendors who were known to be supporting terrorist organizations including “Al Qaeda in the Arabian Peninsula.”
Government watchdog, GAI, says that one form of money transfer is the largely unregulated network of Hawalas used in Muslim communities in the US to send money abroad. It is a way to transfer funds, to launder the money, making the funds virtually untraceable.
The exhaustive study sites cases in North Carolina, Illinois, Florida, Michigan and Indiana, all Muslim immigrant-owned or operated stores, that have been linked to money laundering for the purpose of funding jihadists in Somalia and Yemen and in one case to benefit Palestinian Islamic Jihad.
Reform of the USDA’s SNAP program is yet another reform initiative that the Trump Administration could undertake that would not only save us money, but would surely make the world safer.
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Anna Marie Bolton is a reporter for The Ohio Star.