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

Investigations Bulletin

January 13, 2017

Storeowner Sentenced and Ordered to Pay $1.18 Million in Restitution—Rhode Island 

On October 28, 2016, in United States District Court, District of Rhode Island, a storeowner was 

sentenced to 5 years’ probation with the condition that he will serve 730 days of “intermittent 

confinement” at a specified detention facility. He was also ordered to pay $1.18 million in 

restitution. The joint investigation determined that this store was trafficking in Supplemental 

Nutrition Assistance Program (SNAP) benefits.1 The storeowner pled guilty to conspiracy to 

commit SNAP fraud and money laundering. 

Lengthy Sentence and Restitution of $7.63 Million Ordered for Feeding Program Fraud 

Committed by Former State Employee—Arkansas 

On January 4, 2017, in the United States District Court, Eastern District of Arkansas, a former 

Arkansas Department of Human Services (DHS) employee was sentenced to 9 years in prison, 

and was ordered to pay restitution in the amount of $7.63 million in restitution and forfeit 

$17,600 in cash. The former Arkansas DHS employee admitted to accepting bribes from 

multiple feeding program sponsors in return for approving fraudulent Arkansas DHS 

applications with inflated numbers of children expected to be fed, and to help them avoid 

scrutiny from other Arkansas DHS feeding program employees. This defendant pled guilty to 

counts regarding wire fraud and bribery. Two months earlier, on November 2, 2016, in a related 

case in the same District Court, a feeding program sponsor was sentenced to 21 months in prison 

and was ordered to pay $182,700 in restitution. As a feeding program sponsor, he had one 

approved site in Arkansas where he claimed as many as 300 children were fed each day. The 

OIG investigation determined that no children were ever actually fed at this site. He received 

over $182,000 in USDA funds that were intended to feed needy children. The defendant pled 

guilty to conspiracy to commit mail fraud. Judicial proceedings involving other defendants in

this case are pending. 

Incarceration and Monetary Judgments Ordered for Drug and Fraud Offenses—Texas 

On October 17, 2016, in U.S. District Court, Western District of Texas, a man was sentenced to 

27 months in prison, ordered to forfeit the Texas property involved (which he purchased through 

a Rural Development (RD) home loan), pay a money judgment of $104,000, and forfeit 

$160,000 in currency seized from the RD-financed residence. This case was initiated by the U.S. 

Department of Homeland Security, Homeland Security Investigations (HSI) when the man was 

arrested for attempting to buy two kilos of cocaine from a narcotics task force. HSI received 

information that he was a member of a Mexican cartel and was affiliated with a local gang in 

Texas. HSI recovered RD documents addressed with a relative’s name. The RD documents 

were forwarded to USDA OIG. OIG investigated whether the defendant used the identity of a 

deceased relative in order to obtain a RD Section 502 home loan. The defendant pled guilty on 

charges pertaining to conspiracy to possess/distribute a controlled substance and false statements. 

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The joint investigation was conducted by USDA OIG and FBI, and was assisted by the Retailer Investigations 

Branch (RIB) of the Food and Nutrition Service (FNS). 
Storeowner Sentenced and Ordered to Pay $811,000 in Restitution in Extensive SNAP 

Fraud Case—Florida 

On November 7, 2016, in U.S. District Court, Southern District of Florida, a storeowner pled 

guilty to two counts of an indictment charging him with conspiracy to commit an offense against 

the United States and wire fraud. He was sentenced to 28 months in prison and ordered to pay 

$811,300 in restitution. USDA OIG and the Palm Beach County Sheriff’s Office determined 

that a suspect in an identity theft investigation obtained SNAP Electronic Benefits Transfer 

(EBT) cards with stolen identities. The identity thief took the fraudulently obtained EBT cards 

to a flea market to exchange SNAP benefits for cash. The investigation ultimately involved 

more than 160 SNAP trafficking transactions with 30 different flea market retailers. The 

estimated fraud attributable to the 18 flea market retailers targeted in this operation is more than 

$29 million. To date, 16 convictions have been obtained in this case, with associated monetary 

restitution orders exceeding $11.8 million.

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Second Storeowner Sentenced in WIC Fraud Case, Ordered to Pay $2.2 Million in 

Restitution—Michigan

On October 26, 2016, in U.S. District Court, Eastern District of Michigan, a storeowner involved 

in the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) fraud 

was sentenced to 28 months in prison and ordered to pay $2.2 million in restitution. The 

storeowner had pled guilty to WIC fraud. This joint investigation determined that two 

storeowners and an employee exchanged SNAP and WIC benefits for cash. A seizure warrant 

was executed on the store’s SNAP and WIC bank account which resulted in the seizure of 

$23,300. The three individuals were arrested on conspiracy to commit SNAP and WIC fraud. 

Previously, the other storeowner pled guilty to WIC fraud and was sentenced to 18 months in 

prison and was ordered to pay $927,700 in restitution. Charges against the employee were 

dropped

Additional Sentencings and Restitutions Ordered Against Former State Employees for 

SNAP Fraud Scheme—Delaware 

In late October 2016, in Delaware Superior Court, a former Delaware Health and Social Services 

employee (DHSS) was sentenced to 2 years in prison, ordered to pay $378,800 in restitution, and 

ordered to perform 120 hours of community service. The Delaware Attorney General’s Office

(DAGO) received information from DHSS regarding the creation of alleged fraudulent SNAP 

case files being created by DHSS employees. DHSS identified numerous statewide SNAP-only 

public assistance files with the recipients’ addresses listed as homeless individuals using a 

Delaware State Service Center location as their mailing address. Upon further investigation by 

the Delaware agencies, 14 DHSS employees were identified as opening 84 fraudulent SNAP 

files totaling $1.5 million in fraudulent SNAP benefits being paid to those accounts. USDA 

OIG, with the assistance of the Delaware Department of Justice and the Wilmington Police 

Department, executed a search warrant at the home of one of the employees. That individual’s 

residence was identified as an address to which fictitious SNAP benefits cards were being sent 

via U.S. mail. Previously in this case, two other former DHSS employees were sentenced to 2 

 

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This investigation is a multi-agency investigation involving State and Federal law enforcement as well as the 

United States Attorney’s Office and the Florida Attorney General’s Office of Statewide Prosecution. The Florida 

Department of Children and Families and the Palm Beach County Sheriff’s Office were involved.
years’ probation and $8,000 in restitution, and 1 year of probation and $727 in restitution, 

respectively. Charges remain pending against 2 employees. All of the DHSS employees 

involved were terminated.

Operator of Kennel and Breeding Facility Sentenced for False Statements—Iowa 

On November 3, 2016, in United States District Court, Northern District of Iowa, the operator of 

a large scale dog kennel and breeding facility was sentenced to 3 years’ probation, ordered to pay 

an additional $200 per month toward his civil judgment, and comply with all Animal and Plant 

Health Inspection Service (APHIS) regulations related to his kennel operation. This matter was 

worked by OIG at the request of the United States Attorney’s Office (USAO), Northern District 

of Iowa. At the conclusion of an APHIS Animal Care compliance investigation concerning the 

kennel operator, the USAO filed an $18,000 civil penalty for a variety of violations. During the 

process, the operator submitted financial affidavits to the USAO disclosing his financial 

status. It was later determined that the operator withheld banking information and other financial 

information from the USAO, thereby submitting a false statement. The operator pled guilty to 

one count of false statements. 

Conviction Upheld in SNAP Fraud Case; Sentence Included $1 Million in Restitution—New York

On October 25, 2016, the United States Court of Appeals for the Second Circuit upheld a store 

employee’s conviction. The employee had been found guilty in 2015 in the Southern District of 

New York on counts including theft of public money and transfer/unauthorized use of SNAP 

benefits. In 2015, he was sentenced to 2 years in prison and was ordered to pay $1 million in 

restitution. The joint investigation was initiated as a result of a compliance investigation 

conducted by FNS RIB. It was determined that the storeowner and cashier exchanged SNAP 

benefits for U.S. currency at a discount.

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 Previously, the storeowner was sentenced to 3 months 

in prison and was ordered to pay $230,000 in restitution.

Manager of Fish Market Sentenced and Ordered to Pay Restitution for SNAP/WIC 

Fraud—Michigan 

On November 3, 2016, in United States District Court, Eastern District of Michigan, the manager 

of a fish market was sentenced to 1 year and 1 day in prison and was ordered to pay $421,000. 

This joint investigation was conducted to determine if the owner and/or employees of a Michigan 

fish market trafficked SNAP and WIC benefits.4The investigation disclosed that the defendant 

exchanged SNAP and WIC benefits for cash, and had engaged in fraud involving other Federal 

and State programs. The defendant admitted to taking SNAP and WIC EBT benefits cards, 

which he had purchased from recipients at the fish market, to six different stores to exchange for 

cash, credit, or ineligible items. 

 

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The joint investigation was conducted by USDA OIG and the Yonkers Police Department.

4 The investigation was worked by USDA OIG, the MSP-BCET, and IRS-CI. Previously, the owner of the store—a 

brother of the store manager discussed above—was sentenced to six months in prison, to be followed by six months’ 

home confinement, and he was ordered to pay $204,200 in restitution. 
Additional Sentence and Monetary Judgment Obtained in Case Involving SNAP Fraud 

and Theft of Government Funds—New York 

On October 18, 2016, in U.S. District Court, Southern District of New York, the owner of an 

unauthorized store was sentenced to time served in prison and 3 years’ supervised release. A 

money judgment was entered against him in the amount of $363,000. The store had previously 

been permanently disqualified from participation in SNAP following an EBT administrative 

investigation conducted by FNS. Thereafter, the owners/operators of this store continued to 

exchange SNAP benefits for U.S. currency, utilizing two authorized retailers, to conduct SNAP 

transactions on their behalf. OIG’s investigation revealed that, when approached by a customer 

wishing to exchange SNAP benefits for cash, the owners/operators telephonically contacted the 

owners/operators of two other stores where manual SNAP transactions were conducted using 

EBT cards in the possession of the unauthorized store. U.S. currency was provided at a 

discounted rate to the customers at this store and funds were transferred from the two authorized 

retailors. The storeowner and two relatives all pled guilty to charges pertaining to SNAP fraud 

and theft of Government funds. One relative was sentenced in 2016 to five years’ probation and 

had a Consent Preliminary Order of Forfeiture/Money Judgment in the amount of $363,000 

entered against him. The other relative was sentenced to 3 years’ probation. 

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