United States General Accounting Office

GAO Report to the Committee on Agriculture,

Nutrition, and Forestry, U.S. Senate

March 1998 FOOD STAMP

PROGRAM

Information on

Trafficking Food

Stamp Benefits

GAO/RCED-98-77

GAO United States

General Accounting Office

Washington, D.C. 20548

Resources, Community, and

Economic Development Division

B-279120 

March 26, 1998

The Honorable Richard G. Lugar

Chairman, Committee on Agriculture,

 Nutrition, and Forestry

United States Senate

Dear Mr. Chairman:

The Food and Nutrition Service (FNS) of the U.S. Department of

Agriculture (USDA), in partnership with the states, administers the Food

Stamp Program—the nation’s largest food assistance program. About 1 out

of every 10 Americans participates in the program by redeeming food

stamps—either through coupons or electronically—at about 185,000

authorized retail stores. In fiscal year 1997, the program provided over $21

billion to about 23 million recipients. Our past reports have demonstrated

that the system for delivering food stamps has been vulnerable to

significant fraud, waste, and abuse.1

 The program prohibits the exchange

of food stamp benefits for cash—a process known as trafficking—and for

nonfood items, such as beer or tobacco products. This report focuses on

food stamp trafficking at the retail level—store owners or clerks

purchasing stamps at a discount from recipients and redeeming them

through USDA at their full value.

Because of the program’s high costs and vulnerability to food stamp

trafficking at retail stores, you asked us to identify (1) information on the

extent of retailer trafficking and the characteristics of the stores engaged

in such trafficking, (2) the roles and efforts of federal agencies in

minimizing food stamp trafficking by retailers, and (3) whether store

owners or clerks were generally caught for trafficking food stamps and the

extent of discipline for the trafficking.2

 As part of this review, we obtained

and analyzed information from USDA and the U.S. Department of Justice,

and we examined 432 food stamp trafficking cases in which the store

owners were disqualified from the Food Stamp Program or paid a civil

money penalty in lieu of being disqualified between July 1, 1996, and

June 30, 1997, in six states—California, Florida, Georgia, New York, South

Carolina, and Texas.

1

See, for example, Food Assistance: Reducing Food Stamp Benefit Overpayments and Trafficking,

(GAO/RCED-95-198, June 23, 1995).

2

We use “clerks” to refer to all store personnel other than the owner.

Page 1 GAO/RCED-98-77 Trafficking Food Stamp Benefits
B-279120 

Results in Brief According to the most recent Food and Nutrition Service study available,

about $815 million, or about 4 percent of the food stamps issued, was

trafficked at retail stores during fiscal year 1993.3

 Supermarkets and large

grocery stores redeemed 82.5 percent of all food stamp benefits and had a

combined trafficking rate of 1.9 percent of all benefits redeemed. In

contrast, smaller grocery stores redeemed 17.5 percent of the benefits and

had a combined trafficking rate of 13 percent of the benefits redeemed.

This study did not reflect the electronic redemption of food stamps, which

is becoming a widespread practice and which allows easier identification

and prosecution of food stamp trafficking. Therefore, an analysis of the

extent of trafficking that includes electronic data may detect that

violations are now occurring at a greater or lesser rate.

The departments of Agriculture and Justice are the principal federal

agencies responsible for minimizing food stamp trafficking by retailers.

Within the U.S. Department of Agriculture, both the Food and Nutrition

Service and the Office of Inspector General are responsible for identifying

and investigating retail stores engaged in trafficking. The Food and

Nutrition Service can take administrative actions against store owners

engaged in trafficking, including disqualifying them from participating in

the program and/or assessing fines. The Office of Inspector General

conducts criminal investigations and can refer store owners or clerks

engaged in trafficking to the Department of Justice or state or local

governments for prosecution. During fiscal years 1990 through 1997, the

Food and Nutrition Service identified food stamp trafficking in over 5,700

retail stores, the Office of Inspector General investigated and reported on

5,551 trafficking cases, and the Department of Justice and state and local

governments prosecuted about 2,650 cases referred by the Office of

Inspector General. The Department of Justice, in some jurisdictions, will

pursue civil actions against store owners to collect money under the False

Claims Act4

 when it has not allocated resources to conduct criminal

prosecutions or when it has a case in which the evidence for criminal

prosecution is insufficient. Since 1992, when the U.S. Department of

Agriculture began referring cases to Justice, 566 false claims totaling over

$5.9 million have been settled.

3

The Extent of Trafficking in the Food Stamp Program, FNS (Aug. 1995). This study analyzed data from

the Store Investigation and Monitoring System database, which contains information on the stores

suspected of trafficking.

4

The False Claims Act (31 U.S.C. 3729) provides that individuals who present a false claim for payment

(i.e., a food stamp coupon or an electronic benefit transfer card used in a trafficking exchange) from

the U.S. government are subject to a fine and damages.

Page 2 GAO/RCED-98-77 Trafficking Food Stamp Benefits
B-279120 

In the 432 food stamp trafficking cases we reviewed, store owners alone

were caught trafficking in about 40 percent of the cases, clerks alone were

involved in 47 percent of the cases, and store owners and clerks together

were caught trafficking in 13 percent of the cases.5

 The Food and Nutrition

Service permanently or temporarily disqualified the owners caught

trafficking from participating in the Food Stamp Program in 428 cases and

assessed financial penalties totaling $1.1 million against owners in 175

cases. In addition, the courts assessed $1.4 million in financial penalties

against owners in 92 cases and sentenced owners to jail in 16 cases. Store

clerks—caught trafficking in 260 cases—were subject to court-ordered

actions in 43 cases. These actions included about $36,500 in financial

penalties in 33 cases and jail sentences in 9 cases.

Background The Food Stamp Program helps recipients—individuals and families with

low incomes—to obtain a more nutritious diet by providing food stamp

benefits to supplement the funds they have to spend on food. Recipients

must use their food stamp benefits to purchase only allowable food

products from retail food stores that FNS authorizes to participate in the

program.

FNS administers the program in partnership with the states. FNS funds all of

the program’s food stamp benefits and about 50 percent of the states’

administrative costs. FNS is primarily responsible for developing the

program’s policies and guidelines, authorizing retail food stores to

participate in the program, and monitoring retailers’ compliance with the

program’s requirements. The states are responsible for handling the

day-to-day operation and management of the program, including such

duties as certifying the eligibility of individuals or households to

participate in the program, delivering the benefits to recipients, and

monitoring recipients’ compliance with the program’s requirements.

Recipients use food stamp coupons or an electronic benefit transfer (EBT)

card to pay for allowable foods. EBT systems that provide food stamp

benefits to recipients use the same electronic funds transfer technology

that many grocery stores use for their debit card payment systems. A food

stamp recipient receives an EBT card and a personal identification number,

and the recipient authorizes transfer of the food stamp benefits from a

federal account to a retailer account to pay for the food received. At the

grocery checkout counter, the recipient’s card is run through an electronic

5

There may be more than one owner or clerk in a single case, and each may receive multiple penalties.

Page 3 GAO/RCED-98-77 Trafficking Food Stamp Benefits
B-279120 

reader and the recipient enters the secret personal identification number

to access the food stamp account.

The Personal Responsibility and Work Opportunity Reconciliation Act of

1996 mandates that all states implement EBT systems before October 1,

2002, unless USDA waives the requirement. As of March 1998, 16 states had

implemented EBT systems statewide. Twelve of these states deliver

multiple program benefits with their EBT systems, including other federal

and state programs. Additionally, 14 states use EBT systems in selected

counties, and most of these states are in the process of expanding these

systems statewide. All the remaining states are in the process of

implementing EBT systems. Collectively, EBT systems supply about

40 percent of all food stamp benefits.

Trafficking Accounts

for a Relatively Small

Percentage of the

Total Program and

Occurs Mostly in

Small Stores

According to a 1995 FNS study, about $815 million, or about 4 percent of

the food stamps issued, was trafficked—exchanged for cash—by about

9 percent of the authorized retailers during fiscal year 1993. Supermarkets

and large grocery stores redeemed 82.5 percent of all food stamp benefits

and had an average trafficking rate of 1.9 percent of the benefits

redeemed. In contrast, smaller stores redeemed 17.5 percent of the

benefits and had an average trafficking rate of 13.0 percent of the benefits

redeemed. Table 1 shows the percentage of benefits redeemed and

trafficking rates by type of store.

Page 4 GAO/RCED-98-77 Trafficking Food Stamp Benefits
B-279120 

Table 1: Benefit Redemptions and

Trafficking Rates for Stores in the

Food Stamp Program

Percentage Trafficking rates (percent)

Type of store

All stores in

program

All benefits

redeemed

All stores in

program

All benefits

redeemed

Supermarketsa 15.3 76.5 4.2 1.7

Large groceriesb 6.9 6.0 6.7 3.7

Subtotal 22.2 82.5 5.0 1.9

Small groceriesc 18.8 5.4 12.8 15.7

Convenienced 27.7 3.8 8.1 9.6

Specialtyd 8.7 3.9 17.6 14.2

Gas and

groceriesd 10.3 1.2 8.7 10.4

Other typese 12.3 3.2 10.2 12.4

Subtotal 77.8 17.5 10.7 13.0

Total 100.0 100.0 9.4 3.8

Note: The study cited several factors that could result in underestimating or overestimating the

extent of trafficking and assumed that these factors tend to counterbalance one another. The

study presented no information on how changes in these factors affect the estimates.

aStores with gross sales over $2,000,000.

bStores with gross sales from $500,000 to $2,000,000.

cStores with gross sales under $500,000.

dThese stores placed themselves in this category regardless of gross revenues.

eThese stores include produce stands and health or natural food stores.

Source: The Extent of Trafficking in the Food Stamp Program, FNS (Aug. 1995).

In addition, this study found that privately owned stores had much higher

trafficking rates than publicly owned stores (i.e., retailers whose stock is

traded publicly). For example, publicly owned stores had an average

trafficking rate of .2 percent of redemptions. In comparison, privately

owned stores had an average trafficking rate of 5.3 percent of

redemptions. Like FNS, we found, in our analysis of the 432 cases of food

stamp trafficking, that most trafficking occurred in small privately owned

retail stores. About 98 percent of the stores engaged in trafficking were

small groceries. Only seven stores, about 2 percent, were supermarkets

with over $2 million in gross sales.

The amount of trafficking may have changed since FNS conducted its 1995

study, which did not consider the effect of EBT. Since then, about

40 percent of food stamp benefits nationwide are supplied electronically,

Page 5 GAO/RCED-98-77 Trafficking Food Stamp Benefits
B-279120 

which allows easier identification of food stamp trafficking. Therefore, an

analysis of the extent of trafficking using electronic data may indicate that

violations are now occurring at a greater or lesser rate.

USDA and Justice Are

Primarily Responsible

for Minimizing Food

Stamp Trafficking

USDA is primarily responsible for monitoring the Food Stamp Program to

detect trafficking and for imposing administrative sanctions. Justice is

responsible for prosecuting cases referred to it by federal agencies. Each

agency’s responsibilities are summarized below.

USDA Identifies Food

Stamp Traffickers and

Imposes Administrative

Sanctions

Within USDA, FNS and the Office of Inspector General (OIG) are responsible

for monitoring program compliance by the approximately 185,000 stores

currently authorized to redeem food stamps. While both agencies identify

and investigate possible food stamp trafficking, FNS has the sole authority

to impose administrative sanctions on violators, and the OIG concentrates

on potential criminal investigations.

FNS and OIG identify possible violators through several sources: allegations

from USDA’s hotline and analyses of data in FNS’ Store Tracking and

Redemption System (STARS) and EBT systems. Of these sources, STARS

provides the most comprehensive information. FNS and the OIG use this

system to monitor stores’ redemptions of food stamps and to identify

retailers for investigation. STARS has a profile of each store, including sales

volume, and tracks monthly food stamp redemptions. FNS uses this system

to ensure that store owners caught trafficking and disqualified from the

Food Stamp Program do not reenter the program. However, FNS officials

told us that they do not currently track clerks caught trafficking to keep

them out of the program or to help prosecute repeat offenders. They said

that FNS plans to implement a system later this year to track these clerks.

More recently, FNS and the OIG have begun using data from state EBT

systems to identify possible cases of food stamp trafficking. More

specifically, all states using EBT systems must provide their data on food

stamp transactions to FNS for analysis. These data include the date, time,

and amount of the sale; the store authorization number and cashier

number; and the recipient’s identification number. Both FNS and OIG

personnel analyze the EBT data using a computer program that identifies

individual transactions or transaction patterns that indicate trafficking

may be occurring. The use of EBT data has a particular advantage: Under

the Personal Responsibility and Work Opportunity Reconciliation Act of

Page 6 GAO/RCED-98-77 Trafficking Food Stamp Benefits
B-279120 

1996, federal agencies may use EBT data alone, without the expense of

conducting an undercover investigation, to take action against retailers

violating the requirements of the Food Stamp Program. USDA has cited the

implementation of EBT systems as a significant step forward in identifying

and combating food stamp trafficking.

Once retail stores are identified as possible violators, FNS’ Compliance

Branch, the OIG, or both conduct an investigation. Violations of the Food

Stamp Act include trading food stamp benefits for cash (at a discount,

such as 70 cents on the dollar) or for nonfood items. FNS takes

administrative action against identified violators, such as disqualifying

them from the program permanently or temporarily and/or imposing civil

fines up to $40,000. FNS also refers cases to the OIG when it believes that a

significant amount of trafficking has been occurring at a store and that a

more complex case needs to be developed for prosecution.

FNS investigated over 38,700 retail stores during fiscal years 1990 through

1997 and found violations of the Food Stamp Program in about 17,600

stores. Table 2 shows that FNS identified over 5,700 trafficking cases during

this period. It also shows that for the same period, the OIG accepted only

about one-fifth of those cases for investigation, primarily because it did

not have the resources to investigate a larger number of cases. The FNS

cases not investigated by the OIG were returned to FNS, which can take

administrative action against the violators.

Table 2: Number of FNS Trafficking

Cases Referred to and Accepted by the

OIG for Investigation, Fiscal Years

1990-97

Number of food stamp trafficking cases

Fiscal year Identified by FNS

FNS referred

to OIG

OIG accepted for

investigation

1990 358 288 156

1991 531 377 230

1992 763 582 188

1993 841 588 129

1994 902 543 121

1995 877 563 154

1996 743 355 94

1997 712 436 137

Total 5,727 3,732 1,209

Sources: FNS’ Compliance Branch and USDA’s OIG.

Page 7 GAO/RCED-98-77 Trafficking Food Stamp Benefits
B-279120 

Within USDA, the OIG is responsible for all criminal investigations and for

coordinating the trafficking cases with the Department of Justice and

other federal, state, and local agencies. The OIG investigates cases referred

from FNS and initiates its own investigations using sources similar to FNS’.

Table 3 shows that during fiscal years 1990 through 1997, the OIG reported

on 5,551 investigations.

Table 3: Number of Food Stamp

Trafficking Cases Received and

Reported on by USDA’s OIG, Fiscal

Years 1990-97

Fiscal year

New cases

receiveda

Cases with

reports issued

1990 917 642

1991 1,133 750

1992 1,236 850

1993 1,291 761

1994 1,162 677

1995 1,216 627

1996 1,003 670

1997 868 574

Total 8,826 5,551

Note: Actions relating to some trafficking cases carry over into the following fiscal year.

aIndicates trafficking cases referred to the OIG, including those opened and those declined.

Source: USDA’s OIG.

In addition to the investigations conducted by FNS and the OIG, the states

sometimes work with these federal agencies to investigate retailers’ fraud

or abuse in the program. For example, under agreements with states’ law

enforcement agencies, FNS provides the states with food stamp coupons to

use in conducting their own trafficking investigations. According to FNS,

although it has established agreements with 32 states, only 10 have

conducted sustained efforts against food stamp trafficking.

Department of Justice Is

Involved With Significant

Food Stamp Trafficking

Cases

The OIG has the sole authority for referring trafficking cases to federal,

state, or local authorities for prosecution under criminal statutes. Criminal

penalties can include fines of up to $250,000 and/or jail sentences of up to

20 years. According to USDA data, during fiscal years 1990 through 1997,

Justice and state and local governments prosecuted about 2,650 trafficking

cases that had been investigated by the OIG, resulting in about 4,800

indictments, 4,300 convictions, and over $70 million in fines, restitutions,

and recoveries. Justice can prosecute traffickers criminally and may

Page 8 GAO/RCED-98-77 Trafficking Food Stamp Benefits
B-279120 

pursue civil recovery under the False Claims Act. Justice has 93 U.S.

attorneys, one in each federal judicial district, who decide whether to

prosecute individual cases of food stamp trafficking. In addition, Justice’s

Civil Division also has the authority to prosecute traffickers. According to

Justice officials, U.S. attorneys have wide discretion to establish priorities

based on the needs of their local jurisdictions and the guidelines set forth

in The Principles of Federal Prosecution, as well as various national

initiatives and priorities. Therefore, U.S. attorneys prosecute some food

stamp trafficking cases while referring others to state or local prosecutors.

However, we noted that many food stamp trafficking cases are not

prosecuted by federal, state, or local prosecutors.

In the absence of criminal prosecution, both the OIG and FNS refer

significant trafficking cases to the Department of Justice for action under

civil statutes. Civil money penalties, which come under the False Claims

Act, can include fines of between $5,000 to $10,000 plus damages of three

times the amount of food stamps involved in the trafficking. During fiscal

year 1997, 82 settlements of false claims, which USDA had referred to

Justice, amounted to civil money penalties of about $1.2 million. Since

1992, when USDA began referring cases to Justice, 566 false claims totaling

over $5.9 million have been settled.

Clerks Are Involved in

Trafficking Food

Stamps More Often

Than Store Owners,

and Penalties Vary

Our analysis of the 432 cases of food stamp trafficking shows that store

owners alone were involved in 40 percent of the cases, clerks alone were

involved in 47 percent of the cases, and store owners and clerks together

were involved in 13 percent of the cases.6

 In every case, FNS disqualified

the store owner from participating in the Food Stamp Program or assessed

a monetary penalty against the store owner. Additionally, federal, state

and local courts took action against store owners in 92 cases and store

clerks in 43 cases. Court-ordered penalties ranged from fines to jail

sentences.

FNS took administrative action against the store owners in all 432 cases we

reviewed. The large number of actions against store owners reflects the

fact that, under the Food Stamp Program, store owners are legally

responsible for any trafficking occurring in their stores, regardless of who

was involved. Specifically, store owners in 410 cases were permanently

6

To determine who—the store owner and/or clerk—was caught and who was disciplined for

trafficking in selected states, we examined the files from FNS’ field offices that related to the 432 food

stamp trafficking cases in which the store owners were disqualified from the Food Stamp Program or

paid a civil money penalty in lieu of being disqualified between July 1, 1996, and June 30, 1997, in six

states—California, Florida, Georgia, New York, South Carolina, and Texas.

Page 9 GAO/RCED-98-77 Trafficking Food Stamp Benefits
B-279120 

disqualified from the program, owners in 18 cases were temporarily

disqualified, and owners in 4 cases paid civil money penalties to FNS in lieu

of being disqualified.7

 In addition, FNS assessed administrative financial

penalties totaling $1,077,062 against store owners in 175 cases. (See app. I

for more information on the administrative actions FNS took against the

432 store owners.)

In addition to FNS’ administrative penalties, federal, state, or local courts

took action against store owners in 92 of the 432 cases we reviewed. In 16

cases, store owners were sentenced to jail. Most of these store owners

were sentenced to less than 1 year in jail, although sentences ranged from

1 day to 2,310 days. Store owners were fined by courts in 53 cases, and in

30 cases owners were assessed fines of less than $1,000. Owners in 18

cases were assessed fines ranging from $1,001 to $10,000, and owners in 5

cases were assessed fines of over $10,000. The two largest fines were

$240,745 and $24,040. According to FNS and OIG officials, the lack of

resources at the OIG to conduct investigations to develop sufficient

information necessary for prosecution and conviction has limited the

number of court actions taken. (See app. II for more details of the court

actions taken against the 432 store owners.)

The following examples illustrate the court actions taken against store

owners for trafficking:

• One store owner redeemed $4,145 in food stamp benefits for $2,050 in cash

and was sentenced to 1 day in jail;

• another store owner redeemed $4,639 in food stamps for $2,783 in cash

and received no punishment other than permanent disqualification; and

• another store owner redeemed $8,620 in food stamps for $4,310 in cash

and received no punishment.

Unlike store owners, store clerks who violate food stamp trafficking laws

are not subject to FNS’ administrative actions.8

 Clerks, however, can be

prosecuted in federal, state, or local courts. Store clerks were caught

trafficking by USDA investigators in 260 cases.

However, clerks received court-ordered actions in 43 cases, or about

17 percent of those cases. Financial penalties for 33 cases totaled $36,541,

ranging from $50 to $2,793. Jail sentences in nine cases ranged from 1 day

7

See app. I for a definition of civil money penalty and fiscal claim.

8

FNS lacks the authority to take administrative action against clerks because it has no direct

agreement with them.

Page 10 GAO/RCED-98-77 Trafficking Food Stamp Benefits
B-279120 

to 3-1/2 years, although most sentences were for less than 1 year. (See app.

III for more information on the court actions taken against the store

clerks.)

The following examples illustrate the court actions taken against clerks for

trafficking:

• One store clerk redeemed $390 in food stamp benefits for $200 in cash and

was sentenced to 1 day in jail;

• three clerks in one store redeemed $5,600 in food stamp benefits for $3,440

in cash, and none were punished; and

• one clerk redeemed $885 in food stamp benefits for $532 in cash and was

not punished.

Agency Comments We provided a draft of this report to the U.S. Department of Agriculture

for its review and comment. We met with Food and Nutrition Service

officials, including the Director, Benefits Redemption Division, and

officials from the Office of Inspector General, including the Director,

Program Investigations Division. The Department concurred with the

report’s findings. We also provided Department of Justice officials an

opportunity to comment on the sections of the report dealing with Justice.

The officials of both departments provided a number of editorial and

technical comments, which we have incorporated into the report where

appropriate.

Scope and

Methodology

To identify information on the extent of retailer trafficking and the

characteristics of the stores engaged in such trafficking, we obtained and

used USDA’s 1995 report on the extent of trafficking in the Food Stamp

Program and interviewed the USDA personnel responsible for that study.

This study was a one-time study to estimate the extent of trafficking. We

also collected information on the impact EBT has had on identifying food

stamp trafficking by contacting USDA officials in eight states that had

statewide EBT systems at the time we began our review.

To determine the roles and efforts of various federal agencies in

minimizing food stamp trafficking by retailers, we interviewed and

obtained information from officials of the departments of Agriculture and

Justice. Specifically, we gathered information on their responsibilities

relating to food stamp trafficking and obtained data on the number of

trafficking cases the two agencies have identified and for which the store

Page 11 GAO/RCED-98-77 Trafficking Food Stamp Benefits
B-279120 

owners and clerks were punished, either administratively or through the

courts over the last 8 years.

To determine whether store owners or clerks were generally caught for

trafficking food stamps and the extent of discipline for the trafficking, we

reviewed USDA’s files in six states—California, Florida, Georgia, New York,

South Carolina, and Texas—to identify who committed the trafficking,

who was disciplined, and what disciplinary action they received. We

selected these states because they currently distribute about 40 percent of

the total food stamp benefits and because some of these states delivered

benefits by statewide EBT systems while others did not. We obtained a

computer printout from FNS headquarters of all trafficking cases in those

six states in which a store owner was disqualified from the Food Stamp

Program between July 1, 1996, and June 30, 1997. We then worked with

personnel in FNS’ regional and state offices to identify additional cases in

which store owners paid a civil money penalty in lieu of being disqualified

from the program. We also worked with these officials to verify the

accuracy and completeness of the data.

We conducted our review from April 1997 through March 1998 in

accordance with generally accepted government auditing standards.

As arranged with your office, unless you publicly announce its content

earlier, we plan no further distribution of this report until 30 days from the

date of this letter. At that time, we will make copies available to

appropriate congressional committees; the Secretary of Agriculture; the

Attorney General of the United States; and other interested parties. We

will also make copies available to others on request.

Please contact me at (202) 512-5138 if you or your staff have any questions

concerning this report. Major contributors to this report are listed in

appendix IV.

Sincerely yours,

Robert A. Robinson

Director, Food and

 Agriculture Issues

Page 12 GAO/RCED-98-77 Trafficking Food Stamp Benefits
Page 13 GAO/RCED-98-77 Trafficking Food Stamp Benefits
Contents

Letter 1

Appendix I 

FNS’ Administrative

Actions Taken Against

Store Owners in the

432 Trafficking Cases

Reviewed

16

Appendix II 

Court Actions Taken

Against Store Owners

in 92 of the 432

Trafficking Cases

Reviewed

17

Appendix III 

Court Actions Taken

Against Store Clerks

in 43 of the 432

Trafficking Cases

Reviewed

18

Appendix IV 

Major Contributors to

This Report

19

Tables Table 1: Benefit Redemptions and Trafficking Rates for Stores in

the Food Stamp Program

5

Table 2: Number of FNS Trafficking Cases Referred to and

Accepted by the OIG for Investigation, Fiscal Years 1990-97

7

Table 3: Number of Food Stamp Trafficking Cases Received and

Reported on by USDA’s OIG, Fiscal Years 1990-97

8

Page 14 GAO/RCED-98-77 Trafficking Food Stamp Benefits
Contents

Abbreviations

EBT electronic benefit transfer

FNS Food and Nutrition Service

GAO General Accounting Office

OIG Office of Inspector General

STARS Store Tracking and Redemption System

USDA U.S. Department of Agriculture

Page 15 GAO/RCED-98-77 Trafficking Food Stamp Benefits
Appendix I 

FNS’ Administrative Actions Taken Against

Store Owners in the 432 Trafficking Cases

Reviewed

Type of

punishment

Number of

cases

Total claims

or penalties

Average claim

or penalty

Range of

claims or

penalties

Permanent

disqualification

410

Less than

permanent

disqualification

18

Fiscal claima 149 $122,885 $825 $100 to

$14,082

Civil money

penaltyb

36 $954,177 $26,505 $1,500 to

$80,000

Note: Many of the store owners in the 432 cases received multiple sanctions—428 were

disqualified and 4 received only financial penalties.

aA fiscal claim for the full value of the food stamp benefits misused is established when a store

has been involved in the misuse of food stamp benefits.

bA civil money penalty is imposed against an authorized store in lieu of disqualification or against

a disqualified owner who sells the store before the expiration of the disqualified period.

Source: GAO’s analysis of 432 FNS cases of food stamp trafficking in six states.

Page 16 GAO/RCED-98-77 Trafficking Food Stamp Benefits
Appendix II 

Court Actions Taken Against Store Owners

in 92 of the 432 Trafficking Cases Reviewed

Type of

punishment

Number of

cases

Total claims or

penalties Average Range

Fine 53 $368,732 $6,957 $100 to

$240,745

Restitution 37 $671,206 $18,141 $155 to

$333,255

Court cost 15 $3,141 $209 $100 to

$621

False claim 26 $327,800 $12,608 $103 to

$80,000

Special

assessment

12 $2,545 $212 $45 to

$1,700

Jail time 16 6,388 days 399 days 1 to

2,310 days

Probation 46 1,542 months 34 months 6 to

60 months

Community

service

5 1,440 hours 288 hours 50 to

1,100 hours

Criminal action

pending

16 a a a

Note: Many store owners received multiple sanctions.

aNot applicable.

Source: GAO’s analysis of 432 FNS cases of food stamp trafficking in six states.

Page 17 GAO/RCED-98-77 Trafficking Food Stamp Benefits
Appendix III 

Court Actions Taken Against Store Clerks in

43 of the 432 Trafficking Cases Reviewed

Type of

punishment

Number of

cases

Total claims

or penalties

Average

per clerk Range

Fine 32 $20,128 $530 $50 to

$1,500

Restitution 19 $13,300 $578 $50 to

$2,793

Court cost 11 $ 2,313 $154 $87 to

$207

Special

assessment

6 $ 800 $114 $50 to

$200

Jail 9 3,277 days 328 days 1 to

1,290 days

Probation 33 1,254 months 30 months 6 to

60 months

Home detention 2 120 days 60 days 60 days

Community

service

3 450 hours 150 hours 100 to

200 hours

Criminal action

pending

8 a a a

Note: Some clerks received multiple penalties, and some cases involved more than one clerk.

aNot applicable.

Source: GAO’s analysis of 432 FNS cases of food stamp trafficking in six states.

Page 18 GAO/RCED-98-77 Trafficking Food Stamp Benefits
Appendix IV 

Major Contributors to This Report

Resources,

Community, and

Economic

Development

Division, Washington,

D.C.

Ron E. Wood, Assistant Director

Richard B. Shargots

John K. Boyle

Jacqueline A. Cook

Dennis P. Dunphy

William F. Mayo

Carol Herrnstadt Shulman

(150274) Page 19 GAO/RCED-98-77 Trafficking Food Stamp Benefits
Ordering Information

The first copy of each GAO report and testimony is free.

Additional copies are $2 each. Orders should be sent to the

following address, accompanied by a check or money order

made out to the Superintendent of Documents, when

necessary. VISA and MasterCard credit cards are accepted, also.

Orders for 100 or more copies to be mailed to a single address

are discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 37050

Washington, DC 20013

or visit:

Room 1100

700 4th St. NW (corner of 4th and G Sts. NW)

U.S. General Accounting Office

Washington, DC

Orders may also be placed by calling (202) 512-6000 

or by using fax number (202) 512-6061, or TDD (202) 512-2537.

Each day, GAO issues a list of newly available reports and

testimony. To receive facsimile copies of the daily list or any

list from the past 30 days, please call (202) 512-6000 using a

touchtone phone. A recorded menu will provide information on

how to obtain these lists.

For information on how to access GAO reports on the INTERNET,

send an e-mail message with "info" in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web Home Page at:

http://www.gao.gov

PRINTED ON RECYCLED PAPER
United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Bulk Rate

Postage & Fees Paid

GAO

Permit No. G100