Food stamp fraud feeds the drug problem

DAYTON, Ohio (WDTN) — It’s a federally funded program that is costing you, the taxpayers, billions of dollars and is actually feeding the drug problem.  Authorities say food stamp fraud is a catalyst for other crimes and they admit they don’t believe it can be stopped completely.

It’s illegal to use food benefits for anything other than food, but that doesn’t stop some people.  2 NEWS Investigates found food stamps for sale on Craigslist.

“Using cash to purchase alcohol, tobacco, drugs, just about anything you can imagine,” said Eric Wolf, Agent in Charge, Ohio Investigative Unit.

Authorities say people are selling food stamp benefits for cash about 50 cents on the dollar and the buyers are often those whom the federal government authorizes to accept the benefits.

SNAP, or Supplemental Nutrition Assistance Program, is administered through the United States Department of Agriculture using Electronic Benefit Transfer, or EBT cards.

Ohio received nearly $3 billion in SNAP benefits to help feed 1.8 million people, about 42 percent of them children in the last fiscal year.

“Every fraud that takes place is taking away money for groceries that could go to families that are in need,” said Wolf.

Eric Wolf is the agent in charge of the Ohio Investigative Unit, OIU. It’s the only agency in the state that can set up accounts to use EBT cards in undercover operations.

2 NEWS Investigates got audio from a bust in Fairborn.

Undercover Officer: I’m going to get these cards. I’m not paying a lot for them. Why don’t we do 35%?
Undercover Officer: You’re stretching it out for me on a car helping me out. I’ll help you out.

Wolf told 2 NEWS Investigates it took multiple visits to the Main Express Food Mart in Fairborn to gather enough evidence against the owner, George Daoud. Daoud is now in prison for swapping cards for drugs and even a car.  Investigators claim he was responsible in some way for 500 separate fraudulent transactions in a two year period.

2 NEWS Investigates requested an interview with Daoud. He declined.

Shelby County Sheriff John Lenhart says food stamp fraud is rampant, but the state and the USDA don’t share key information with local authorities to get at violators.

“We can investigate murders, homicides, kidnappings, rapes, dog bites, but this we don’t have the authority to do which is absolutely crazy,” he said.

“Crazy” because he and his colleagues don’t have access to SNAP data.

Pam Elliot: So the enforcement arm of this is really lacking?

Sheriff Lenhart: I think non-existent would be a better term.

OIU has 100 sworn officers to investigate food stamp fraud and liquor violations in all 88 counties. The USDA has 100 officers across the country assigned to food stamp fraud with 250,000 retailers to monitor. The man who oversees SNAP is Under Secretary Kevin Concannon.

Pam Elliot spoke with him by phone: You mention 100 people spread throughout the country, that doesn’t seem like a lot of enforcement help.

Under Secretary Kevin Concannon: Well again, most of the way in which identify bad actors is not through those 100 people it’s through data mining.

But again, that’s data Sheriff Lenhart and his colleagues can’t see.

“I really don’t believe that the guy in USDA in Washington knows what really goes on here in the hinterlands. If he thinks he’s got great working relationships, he’d better be talking to some sheriffs and police chiefs because they’ve never heard of it,” said Lenhart.

Just hours before this story was to air Sheriff Lenhart called us to say because of this 2 NEWS investigation the USDA has reached out to Shelby County and is willing to provide resources and information so there can be a better working relationship.

2 NEWS Investigates also learned there is now a newly signed agreement between the USDA and the state to share resources and information.

The USDA says more than 10% of the retailers authorized to accept SNAP benefits are trafficking. They are usually the small convenience stores, but Under Secretary Concannon told 2 NEWS Investigates the USDA can’t just authorize big supermarkets.

Concannon said, “Well unfortunately there are a number of places in the country, rural areas as well as areas in cities where there are no supermarkets, there are plenty of bodagas and small stores, but no supermarkets. I think that would be a little harsh. That would be extreme to go to that.”

If you want to see what Miami Valley stores have withdrawn from the program or have been permanently disqualified we have information here on our website.

Tips generate most enforcement, so if you witness the buying and selling of EBT cards, you are asked to call #677.

The Ohio Department of Job and Family Services reports 2,782 individuals were removed from the program due to fraud, 391of those cases were referred for prosecution.

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