Food stamp fraud, bloat overshadow debate on farm bill
By Melissa Daniels
Published: Sunday, Dec. 8, 2013, 10:30 p.m.
A Craigslist ad from mid-November, titled “food stamps,” offers $90 worth of Supplemental Nutrition Assistance Program benefits for 50 cents on the dollar.
A federal judge last week gave probation to two sibling store owners in Wilkinsburg who fraudulently obtained more than $119,000 by letting shoppers cash in food stamps for money at 50 cents on the dollar or buy ineligible products, such as cigarettes.
In March, a federal grand jury in Pittsburgh separately indicted the owners of stores in Mt. Oliver and Carrick for similar frauds.
As critics continue to worry about its bloat and potential for fraud, the program remains under debate in Washington.
Congress could enact a farm bill that cuts food stamps and expands federally subsidized crop insurance in January if negotiators break a deadlock. The food stamp fight has delayed the five-year, $500 billion bill for more than a year.
Conservative Republicans want to cut $40 billion from SNAP over 10 years; House Democrats oppose cuts.
The benefits, which go to one in seven Americans, fluctuate based on factors that include food prices, inflation and income. In the weak economy, the rolls swelled. In November, temporary supplemental benefits that were added in 2009 expired. A family of four that received $668 a month through October now gets $632.
SNAP trafficking cases represent just over 1 percent of benefits in the program, according to federal data. But in a nearly $80 billion program, 1 percent is a substantial amount of money diverted from recipients — nationwide, $858 million worth of SNAP benefits were trafficked annually in 2009 through 2011, according to an August report from the U.S. Department of Agriculture.
More than 1.8 million Pennsylvania residents receive SNAP benefits, according to federal data. Nationwide, 47.6 million Americans are enrolled.
Last year, Pennsylvania's Office of Inspector General disqualified 823 individuals from receiving benefits, resulting in $1.7 million in cost savings by preventing further enrollment. The office filed 556 criminal complaints related to SNAP fraud, though records do not indicate disposition of the cases.
Kevin Concannon, USDA undersecretary for food, nutrition and consumer services, said the switch to electronic benefits has aided fraud investigators.
“It has had the dramatic effect of making the program more efficient and more accountable,” Concannon said.
SNAP trafficking is down to about 1.3 percent of benefits, according to USDA figures. Nearly two decades ago, in the paper voucher era, it was nearly 4 percent.
Still, SNAP fraud is a major focus for the USDA's Office of Inspector General. Last year, the department devoted 52 percent of its resources to SNAP fraud investigations, resulting in 342 convictions of store owners and $57.7 million in recoveries.
“One of OIG's most important goals is helping USDA safeguard its programs and ensuring that benefits are reaching those they are intended to reach,” USDA Inspector General Phyllis Fong told a congressional subcommittee in May.
This year, USDA investigations resulted in 667 indictments, 70 more than in the year before, yielding 399 convictions. In the Northeast region, which includes Pennsylvania and surrounding states, investigators made 137 indictments, compared with 64 last year, with 56 convictions so far.
Given the size of the program, Fong said, her office “has made a concerted effort” to oversee compliance.
In the digital era, finding fraud means examining electronic card data to find out when, where and how benefits were used.
Lucas Miller, director of the state inspector general's Bureau of Fraud Prevention and Protection, said data-mining can ferret out trends — for example, whether people appear to go out of their way to visit a store, which could indicate SNAP trafficking.
SNAP trafficking cases happen at the store or individual level, Miller said. A store owner might scan items not covered by SNAP under a different bar code. Sometimes those stores are linked to other illegal activity — Miller recalls a case in Lancaster in which the owner sold synthetic marijuana from a back room.
An increasing number of individual fraud cases start through social media — people selling SNAP cards on Craigslist, Facebook or eBay, Miller said. People may think the online forum gives them anonymity, he said.
“But people are looking, and we do get tips on it,” he said. “As soon as we're tipped off, we go to the data metrics and look to see, ‘Are there any trends here? Where's this person using their cards? How many replacement cards do they have?' ”
Some posts lead to setting up sting operations, Miller said. His office does not have prosecuting powers but works with local law enforcement officials.
To watch for card trafficking, the state flags SNAP beneficiaries who request four or more replacement cards in a six-month period.
Since January, 2,745 targeted participants received letters addressing suspicious activity, according to state Department of Public Welfare figures.
Yet for every case of fraud, there are hundreds of cases of beneficiaries using the program properly. Concannon said the SNAP fraud rate is one of the lowest of any federal program, though he worries it could shake public confidence in the program.
“The vast majority of people who receive the program play by the rules,” he said, “and the vast majority of the stores that process the purchases play by the rules.”
Staff writer Adam Smeltz, Reuters and The Associated Press contributed to this report. Melissa Daniels is a Trib Total Media staff writer. Reach her at 412-380-8511 or firstname.lastname@example.org.
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