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Office of Inspector General / U.S. Department of Agriculture

Investigations Bulletin

July 31, 2017

Warehouse Owner Sentenced and Ordered to Pay $13.2 Million in Restitution 

for Bank Fraud—Wisconsin 

On May 22, 2017, in U.S. District Court, Eastern District of Wisconsin, a USDA-licensed warehouse 

owner was sentenced to 3 years in prison and was ordered to pay $13.2 million in restitution. The United 

States Warehouse Act1

requires licensed warehouse operators to issue official warehouse receipts for all 

eligible product stored in the warehouse. After the Farm Service Agency determined that the warehouse 

had a shortage of grain, a liquidation of grain inventory was initiated to protect grain depositors. It was 

determined that the warehouse issued fraudulent warehouse receipts to financial institutions in order to 

obtain high dollar lines of credit. The owner pled guilty to bank fraud. 

Store Owner and Daughter Sentenced and Ordered to Pay $3.7 Million in 

Restitution for SNAP Fraud—Maryland 

On May 19, 2017, in U.S. District Court, District of Maryland, a store owner was sentenced to 46 months 

in prison and was ordered to pay $3.7 million in restitution. The defendant was sentenced for conspiring 

to commit fraud in the Supplemental Nutrition Assistance Program (SNAP) and wire fraud. On July 17, 

2017, in the same court, the store owner’s daughter was sentenced to 4 months in prison and was ordered 

to pay $194,000 in restitution. The investigation, conducted by OIG and the Federal Bureau of 

Investigation (FBI), was based on a complaint made to the OIG Hotline that alleged two stores were 

engaged in SNAP trafficking. The investigation revealed that the store owner and family members 

exchanged SNAP benefits for U.S. currency using seven convenience stores in Baltimore. The store 

owner and his daughter were indicted for fraudulently redeeming more than $3.7 million in SNAP 

benefits. 

Defendant Sentenced to Incarceration and $57,000 in Restitution Related to 

RD Loan Scheme—Texas 

On April 19, 2017, in the 390th District Court, Travis County, Austin, Texas, a business owner and real 

estate agent pled guilty to a charge of securing execution of documents by deception and paid $57,000 in 

upfront restitution. Subsequently, he was sentenced to 1 year in prison and was ordered to forfeit his

mortgage broker license. The investigation was conducted to determine if a borrower (a separate 

defendant) had submitted fraudulent documents in order to qualify for a Rural Development (RD) 

Guaranteed Loan. The borrower defaulted on the loan, resulting in a loss claim payment of $57,000 from 

RD to the lender. The OIG investigation disclosed that the business owner/real estate agent provided 

false statements to lenders as part of a scheme to obtain mortgage loan approval for six unqualified 

borrowers. Four out of the six borrowers were approved under the RD Guaranteed Loan Program. The 

1 7 U.S.C. §§ 241-256 (2012). 
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real estate agent’s commission payments from the fraudulent loans totaled approximately $27,000. 

Charges against other defendants in the case were dismissed. 

Store Owner Sentenced to Prison and Ordered to Pay $3.55 Million in 

Restitution for SNAP Fraud—Maryland 

On May 18, 2017, in U.S. District Court, District of Maryland, a store owner was sentenced to 51 months 

in prison and was ordered to pay $3.55 million in restitution, jointly and severally, with a store clerk. A 

consent order of forfeiture was issued for $3.55 million. The OIG investigation revealed that the store 

owner exchanged SNAP benefits for U.S. currency. In addition, three other stores he controlled through 

straw owners were exchanging SNAP benefits for U.S. currency at his direction. The defendants either 

used the other stores’ point-of-sale devices or called in manual transactions to the other stores. The store 

owner was sentenced for conspiracy to commit food stamp and wire fraud.2

Former NRCS Employee Sentenced to Probation and Fined $10,000 for 

Conflict of Interest—Arkansas 

On May 8, 2017, in U.S. District Court, Eastern District of Arkansas, a Natural Resources 

Conservation Service (NRCS) contract specialist was sentenced to 3 years of probation, 100 hours of 

community service, and was assessed a $10,000 fine. The NRCS State Office in Arkansas notified the 

NRCS National Office of a possible conflict of interest situation with this contract specialist. Preliminary 

information gathered by the State Office documented that this contract specialist awarded a $22,500 

contract to a company purportedly owned by his wife. During OIG’s investigation, the defendant 

provided a signed statement, stating he had never received financial compensation from the business. The 

investigation revealed the $22,500 amount awarded for the contract was deposited into the couple’s 

checking account. OIG documented that he and his wife likely comprised the entire business. The 

defendant was suspended from NRCS in late 2015 and thereafter retired. In January 2017, he pled guilty 

to one count of conflict of interest. 

Two Defendants Sentenced for SNAP Fraud Scheme; Restitution Exceeding 

$1 Million Ordered—Pennsylvania 

On May 8, 2017, in U.S. District Court, Eastern District of Pennsylvania, a store owner was sentenced to 

42 months in prison and was ordered to pay $1,063,000 in restitution, jointly and severally with his coconspirator. On the same date in U.S. District Court, his co-conspirator, a street vendor, was also 

sentenced. The details of his sentence are currently under seal. OIG began a joint investigation into a 

market allegedly involved in SNAP trafficking.3 During the course of this investigation, the store owner 

 

 

 

 

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In March 2017, the clerk was sentenced to 18 months in prison, and was ordered to pay $3.55 million in restitution (jointly and 

severally). A forfeiture order of $3.55 million was also issued. 

3 OIG conducted the investigation with U.S. Immigration and Customs Enforcement, Homeland Security Investigations. 

 
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and a street vendor conspired to exchange SNAP benefits for U.S. currency at a discount for customers 

who visited the street vendor’s vending table. The two individuals were indicted on charges of SNAP 

fraud, wire fraud, conspiracy, and aiding and abetting. The street vendor pled guilty and the store owner 

was found guilty at trial. 

Former Forest Service Employee Sentenced and Fined for Unlawful Entry—

Idaho 

On May 15, 2017, in Boise County District Court, Idaho, a former Forest Service (FS) employee was 

sentenced to 30 days of incarceration, 100 hours of community service, and was ordered to pay a $1,000 

fine. The defendant pled guilty to a misdemeanor count of unlawful entry. OIG received a referral from 

FS Law Enforcement and Investigations, alleging that a FS employee in Idaho violated State law when 

she entered a privately owned structure under special use permit within the Boise National Forest (BNF), 

with the intent to steal several items. The investigation disclosed that the FS employee gained access to 

two sheds while performing a special use permit inspection of a privately owned residence located in the 

BNF. The defendant removed a turkey fryer, a rifle, and several garden tools, and placed the items in her 

Government-owned vehicle.

Store Clerk Sentenced and Ordered to Pay $1.6 Million in Restitution for 

SNAP Fraud—Maryland 

On May 11, 2017, in U.S. District Court, District of Maryland, a store clerk was sentenced to 27 months 

in prison and was ordered to pay $1.6 million in restitution. A consent order of forfeiture was also issued 

for $1.6 million. OIG’s joint investigation with the FBI revealed that the clerk and the store’s owner 

exchanged SNAP benefits for U.S. currency. The clerk was sentenced after being indicted on charges 

including food stamp fraud and wire fraud. Judicial proceedings against the owner are pending. 

Store Owner and Husband Sentenced and Ordered to Pay $879,500 for SNAP 

Fraud—Maryland 

On May 10, 2017, in U.S. District Court, District of Maryland, a store owner and her husband were 

sentenced related to charges involving SNAP fraud and wire fraud. The store owner was sentenced to 

two months in prison, 10 months of home detention, and $879,500 in restitution, jointly and severally 

with her husband. The husband was sentenced to 2 years in prison and the same restitution amount. The 

OIG investigation revealed that the defendants exchanged SNAP benefits for U.S. currency. It is 

estimated that the two redeemed more than $879,500 in SNAP benefits for food sales that never occurred.