USDA Worker, 5 Others Charged in Food Stamp Fraud Operation – Source: securityboulevard.com

Federal investigators charged a U.S. Department of Agriculture (USDA) employee and five other people in connection with a massive fraud operation through which they stole more than $36 million from the government’s food stamp program.

The complex scheme included installing unauthorized systems with fake codes in retail stores to allow those businesses, which had not been authorized to access the SNAP (Supplemental Nutrition Assistance Program), to accept food stamps as payment for goods and thus draw money from the program.

The defendants, all from New York City or the surrounding area, “facilitated the provision of electronic payment terminals, known as Electronic Benefit Transfer (“EBT”) terminals, to hundreds of retail stores that were not authorized to accept SNAP benefits,” prosecutors wrote in the 20-page indictment released this week, adding that the terminals let the businesses process SNAP and other electronic transactions in a way that similar to that of a credit card machine. “The defendants facilitated [the] retail stores’ unauthorized acceptance and redemption of over $30 million in SNAP benefits.”

Unauthorized Terminals, Fraudulent Numbers

According to the indictment, Michael Kehoe, a 46-year-old Long Island, New York, resident and founder and president of an unidentified credit card and payment processing company, in 2019 contracted with a payment machine company in California to supply EBT terminals to be distributed to stores in and around New York City.

Over the years, the California company shipped about 200 of the systems to Kehoe and co-conspirators, some 160 of which were unauthorized and operating with fraudulent Food and Nutrition Service (FNS) numbers. The co-conspirators who helped distribute the systems to retail stores were Mohammad Nawafleh, Omar Alrawashdeh, Gamal Obaid, and Emad Alrawashdeh.

Allegedly supplying the fraudulent FNS numbers was Arlasa Davis, a 56-year-old longtime USDA employee who starting in 2022 – and through at least March – took cash bribes from an unidentified coworker to supply them with hundreds of misappropriated numbers. The identified worker then sold the FNS numbers to Kehoe and the other co-conspirators as well as store owners, the prosecutors wrote.

Bribes for License Numbers

“Davis photographed handwritten lists of license numbers intended for qualifying stores with her personal cellphone and funneled them to an intermediary who sold them to co-conspirators,” who included Obaid, Nawafleh, and both Alrawashdehs, prosecutors wrote in a statement.

They used the license numbers to fraudulently get EBT terminals that weren’t authorized to process SNAP transactions.

“In return, Davis received substantial bribes that were disguised in communications as, among other things, ‘birthday gifts’ and ‘flowers,’” they wrote.

All six were charged with one count each of conspiracy to steal government funds and misappropriate USDA benefits and another count of theft of government funds. Davis faces additional charges of conspiracy to commit bribery, bribery, and conspiracy to commit wire fraud.

“Michael Kehoe and his co-conspirators misappropriated tens of millions of dollars in taxpayer funds meant to help low-income families put food on the table,” U.S. Attorney Perry Carbone said in a statement.

Food Stamps a Political Target

The food stamp program has been a particular target of interest to the Trump Administration, which wants to prove that people illegally in the United States are committing fraud by accessing such public benefits. Along those lines, USDA officials earlier this month said they want state agencies to turn over a range of personal data of people receiving such food assistants.

According to NPR, that information includes Social Security numbers, addresses, and for some states, citizenship status. The news outlet said that last year, the SNAP program served about 42 million people each month at a cost of about $100 billion.