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Owner of Food Service Company Sentenced, Ordered to Pay $1.2 Million for Fraud in 

Child Nutrition Programs—Delaware 

 

On October 19, 2017, in U.S. District Court, District of Delaware, the owner of a food service 

company that participated in the Food and Nutrition Service’s (FNS) School Breakfast Program 

and National School Lunch Program was sentenced to 23 months in prison, and was ordered to 

pay $1.2 million in restitution. The IRS, Criminal Investigations Division (CI) contacted OIG 

regarding allegations that the food service company was defrauding school feeding 

programs. The company operated as the primary food service company for several charter 

schools in Pennsylvania. The joint OIG/IRS-CI investigation revealed that the company inflated 

the number of meals being served in various schools, and failed to report income when filing 

taxes. The owner pled guilty to filing false tax returns, theft from the two nutrition programs, 

and structuring monetary transactions. An employee of the company pled guilty to charges of 

tax fraud and SNAP fraud on November 30, 2017. Sentencing is scheduled for February 2018. 

Child Pornography Investigation Leads to Sentence of 310 Months in Prison for Former 

USDA Contract Employee—Kansas 

On October 25, 2017, in Johnson County District Court, Kansas, a former Office of Chief 

Information Officer contract employee was sentenced to serve 310 months in prison and lifetime 

post-release supervision. OIG received information from the USDA’s Agriculture Security 

Operations Center that an employee may have been accessing child pornography sites on his 

Government issued computer. OIG determined that the subject, a USDA contract employee who 

worked at a USDA facility in Missouri, was accessing child pornography on his USDA-issued 

laptop. OIG immediately notified the contractor of the defendant’s illegal activities and he was 

subsequently terminated. The investigation also determined that the defendant and his wife had 

served as foster parents for approximately 30 young girls. The defendant was charged with 

multiple counts of sexual crimes pertaining to children. When OIG and local law enforcement 

went to the defendant’s residence to arrest the subject, they discovered he had left the U.S. and 

was working as a contractor for a firm in Iraq. OIG worked closely with the firm and Federal 

personnel to locate the defendant and ultimately return him to the U.S. to face prosecution. In 

June 2017, the defendant pled guilty to the exploitation of a child and no contest to the counts of 

rape. The Diplomatic Security Service and U.S. Marshals Service assisted in this investigation.

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

Investigations Bulletin

December 11, 2017
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Settlement Agreement Reached with a Third State Agency Regarding Use of Third-Party 

SNAP Consultants—Alaska 

On September 15, 2017, the Alaska Department of Health and Social Services entered into a 

settlement agreement with the U.S. Department of Justice (DOJ), whereby the Alaska State 

agency agreed to pay $2.4 million. The agreement resolved allegations that the State agency 

violated the False Claims Act in their administration of the Supplemental Nutrition Assistance 

Program (SNAP), resulting in FNS funding unjustified monetary performance bonuses. OIG 

jointly investigated the case with the U.S. Attorney’s Office for the Eastern District of 

Washington and DOJ’s Civil Division, Commercial Litigation Branch. The investigation arose 

from complaints submitted by quality control caseworkers from States that used a third party 

consultant in a manner that improperly reduced their error rates.

Company Sentenced and Ordered to Pay $760,000 in Monetary Fines for Sale of Protected 

Plants—Utah 

On September 18, 2017, representatives of an essential oils company appeared in U.S. District 

Court, District of Utah, and pled guilty to misdemeanor charges regarding trafficking of 

rosewood oil and spikenard. The defendants’ actions violated the Lacey Act and the Endangered 

Species Act. Rosewood and spikenard are protected by the Convention on International Trade in 

Endangered Species CITES of Wild Fauna and Flora, a multilateral treaty to prevent the 

extinction of species of wild animals and plants by regulating the international trade of at-risk 

species. The company harvested rosewood in Peru without authorization, obtained fraudulent 

Peruvian forestry permits, and re-exported spikenard oil without a CITES permit. The company 

voluntarily disclosed the rosewood oil violations and cooperated with Government investigators. 

Pursuant to the plea agreement, the company’s sentence included: a $500,000 fine, $135,000 in 

restitution, and a community service payment of $125,000 for the conservation of protected 

species of plants used in essential oils. 

Two New Sentencings Obtained in Children’s Feeding Program Investigation, with 

Restitution Orders Totaling $4.3 Million—Arkansas 

Two additional sentencings and large restitution orders were obtained in the OIG investigation 

into fraud in the Summer Food Service Program and At-Risk Afterschool Programs in 

Arkansas. To date, 16 individuals have been convicted for their involvement in the schemes. On 

October 19, 2017, in U.S. District Court, Eastern District of Arkansas, the husband of an 

Arkansas Department of Human Services (ADHS) employee was sentenced to 175 months in 

prison and ordered to pay $3.3 million in restitution, jointly and severally. The defendant signed 

up sponsors and encouraged inflated reimbursement claims in a conspiracy with his spouse. The 

spouse was an ADHS employee with responsibility for approving such applications.1

 Three 

weeks earlier, on September 26, 2017, in the same Federal court, a defendant was sentenced to 

34 months incarceration and $1 million in restitution (jointly and severally) for her role in the 

schemes. The defendant applied to be a sponsor in the two USDA child-feeding programs. She 

paid at least $160,000 to ADHS employees whom were responsible for approving the 

 1 The spouse (the former State employee) was sentenced in July 2017 to 9 years of incarceration and $9.6 Million in 

restitution.
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defendant’s application and reviewing her organization. This defendant operated child-feeding 

sites at a number of locations across Arkansas during an approximately 30-month period. She 

admitted inflating reimbursement claims submitted through her organization to ADHS, resulting 

in her organization receiving approximately $1 million from ADHS. The defendant pled guilty 

to conspiracy to commit wire fraud.

Three Defendants Sentenced for SNAP and WIC Fraud at Store—Wisconsin 

An OIG investigation into SNAP trafficking at a Wisconsin store resulted in the sentencing of 

three defendants in September 2017. On September 27, 2017, in U.S. District Court, Eastern

District of Wisconsin, one defendant—a previously disqualified store owner—was sentenced to 

20 months in prison. He was ordered to pay $1.24 million in restitution, jointly and severally 

with a second defendant, his father, the store owner. The father was sentenced earlier in the 

month to 15 months imprisonment and the aforementioned restitution. The third defendant 

sentenced was a nominee owner (person listed as the owner of the store in official 

documentation, but whom does not actually run the store or make any of its business decisions). 

He was sentenced to 1.5 years in prison. During the course of OIG’s investigation, the store 

exchanged SNAP and Special Supplemental Nutrition Program for Women, Infants, and 

Children (WIC) benefits for cash and/or ineligible items. All three defendants pled guilty to 

charges related to wire fraud charges and conspiracy to commit SNAP and WIC fraud. 

Defendant and Son Sentenced Regarding Transport of Quarantined Citrus Trees—

Michigan 

On October 17, 2017, in U.S. District Court, Eastern District of Michigan, a defendant was 

ordered to pay a $5,000 fine. His son was sentenced to one day in prison, to be followed by one

year of home confinement. OIG’s investigation determined that the father and son transported 

quarantined citrus trees from Florida to Michigan with the intention of selling the trees online for 

profit. The two defendants arranged for the purchase of the citrus trees from a nursery stock 

supplier in Florida and traveled by vehicle to take delivery. Upon their return to Michigan, they 

repackaged the trees and sold them throughout the U.S. via online sales in violation of the 

quarantine. The two defendants pled guilty to conspiracy to transport flora out of a quarantine 

area. The son also pled guilty to obstruction. 

Defendant and Spouse Sentenced for Summer Food Service Program Scheme—Illinois 

On October 6, 2017, in U.S. District Court, Central District of Illinois, a defendant and his 

spouse were sentenced for their roles in a scheme to submit false SFSP claims to the Illinois 

State Board of Education (ISBE). He was sentenced to 37 months in prison and was ordered to 

pay $440,000 in restitution. The defendant’s wife was sentenced to one year and one day in 

prison, and was ordered to pay $40,000 in restitution, jointly and severally with her husband. 

The investigation disclosed that defendants submitted false claims to ISBE to obtain increased 

reimbursements from the SFSP. The husband, a pastor, pled guilty to wire fraud and money 

laundering. His wife pled guilty to theft of government funds. The two defendants admitted that 
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they embezzled more than $100,000 from the SFSP, including more than $60,000 in direct 

payments to themselves.2

Defendant Sentenced for Loan Application Fraud in Crop Insurance Program—Missouri 

On November 16, 2017, in the Western District of Missouri, a defendant was sentenced to 2 

years of probation after pleading guilty to Loan Application Fraud. OIG initiated an 

investigation after receiving a referral from USDA’s Risk Management Agency. The defendant 

was a crop insurance agent implicated in a scheme involving forged names on insurance 

applications, Power of Attorney Forms, and production worksheets. The fictitious crop 

insurance applications enabled another party to receive additional Government subsidy payments 

and crop insurance indemnity payments.

Defendant Sentenced and Ordered to Pay $541,000 in Restitution for Conspiracy to 

Defraud the Government—Kansas 

On October 2, 2017, in U.S. District Court, District of Kansas, a defendant was sentenced to 18 

months in prison and was ordered to pay $541,000 in restitution. The sentence followed his 

guilty plea to conspiracy to defraud the Government and mail fraud. This defendant was the 

employee of an individual who owned a number of businesses. OIG opened an investigation to 

determine if the business owner falsified SNAP eligibility documents in order to receive benefits. 

The owner and her employees created a series of fictitious companies, then filed fraudulent tax 

returns for non-existent employees. The owner and employees also applied for unemployment 

benefits using stolen Social Security Numbers. The primary defendant in the case was 

previously sentenced to 75 months in prison and $894,000 in restitution. One co-defendant 

remains to be sentenced.3

 

Store Manager Sentenced and Ordered to Pay $349,000 in Restitution Regarding SNAP 

Fraud—New York 

On October 18, 2017, in U.S. District Court, Southern District of New York, a store manager 

was sentenced to 2 years in prison, was ordered to pay $349,000 in restitution, and to forfeit 

$437,000 (jointly and severally). OIG initiated an investigation after receiving information from 

the Food and Nutrition Service’s (FNS) Retailer Investigations Branch. OIG determined that the 

store was exchanging SNAP benefits for cash. While employees of the store believed the 

defendant was the store’s owner and manager, he had been permanently disqualified by FNS 

from participating in SNAP over a decade earlier due to past program violations. The defendant 

pled guilty to a criminal conspiracy to steal Government funds and commit food stamp 

fraud. The store’s owner of record was sentenced in mid-2017 to time served, probation, and 

$87,000 in restitution.

 2 Previously in this case, three other defendants involved in the scheme received sentences ranging from 5 years of 

probation and $40,000 in restitution, to five months in prison and $49,900 in restitution. 

3 This case was worked jointly with Internal Revenue Service-Criminal Investigations; the OIGs of the Federal 

Departments of Labor, Housing and Urban Development, and Education; and the Kansas Department of Children 

and Family Services.