Court Opinion

ID: 4321245
Source: CourtListenerOpinion
Date Created: 2018-10-16 15:42:41.916824+00
Date Added: 2024-06-11T14:46:02.174716
License: Public Domain

FILED
                                                                   OCTOBER 16, 2018
                                                               In the Office of the Clerk of Court
                                                              WA State Court of Appeals, Division III

           IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
                              DIVISION THREE

STATE OF WASHINGTON,                         )
                                             )         No. 35357-5-III
                      Appellant,             )
                                             )
      v.                                     )
                                             )
DUANE EDWARD GRAY,                           )         PUBLISHED OPINION
                                             )
                      Respondent.            )

      KORSMO, J. — A jury found Duane Gray guilty of “redeeming” food stamp

benefits after he improperly used another person’s benefits to purchase food at a grocery

store. Concluding that the redemption statute applied only to merchants and others who

seek reimbursement by the government for food stamp benefits previously used by a

consumer, the trial court arrested judgment because the information did not charge a

crime. We agree and affirm.

                                          FACTS

      Mr. Gray was captured on video camera using a food stamps EBT1 card at

Anderson’s Grocery Store in Republic on four occasions over a four day period. The

card belonged to a couple from Moses Lake. Upon noticing that their card was gone, the

      1
          Electronic benefits transfer.
No. 35357-5-III
State v. Gray

couple obtained a new card. When they attempted to use the new card, however, they

discovered that no benefits remained in their account. An investigation of computer

records revealed when and where the EBT card had been used. That information allowed

Andersons to identify Mr. Gray on its video records as the person who used the card on

each occasion.

       The case was tried in the Ferry County Superior Court on four counts of unlawful

redemption of food stamp benefits in violation of RCW 9.91.144.2 Although the crime is

a class C felony, the amended charging document identified three of the offenses as gross

misdemeanors and only one count as a felony.3 At the conclusion of the State’s

thoroughly documented case, the defense moved to dismiss the charges on the basis that

the charging document did not state a crime. The trial court denied the motion and the

case proceeded to jury verdict. The jury found Mr. Gray guilty on all four counts.

       Mr. Gray moved to arrest judgment. The parties briefed and argued the motion.

The trial court granted the motion, deciding that the redemption statute did not apply to

someone who used an EBT card to purchase food and, therefore, that the charging

document did not state a crime against Mr. Gray.

       2
          Additional unrelated charges also were filed, but all of those charges were
resolved prior to jury trial.
        3
          The offenses were classified in this manner at the behest of the trial judge, who
looked at the valuation requirements of 7 U.S.C. § 2024(c) and grafted the federal crime
classifications on to the state redemption statute, RCW 9.91.144. Report of Proceedings
at 71-74. Although not at issue in this appeal, that ruling is dubious.

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      The trial court entered findings of fact and conclusions of law in support of the

ruling. The State timely appealed to this court. A panel heard oral argument on the case.

                                      ANALYSIS

      The State’s appeal raises three contentions, although we need only address one of

the arguments. We conclude from congressional and legislative history that retail

customers do not “redeem” food stamp benefits, as that word is used in federal and state

criminal statutes, when they purchase food. Although undefined in the relevant federal

and state criminal statutes, “redeem” is a term of art under the Food Stamp Act of 1964.

We first address the history of the food stamp program and the anti-fraud statutes adopted

by Congress before turning to related Washington criminal statutes.

      Federal Law

      The food stamp program was enacted by Congress in 1964. Pub. L. No. 88-525, §

15, 78 Stat. 708. Throughout the past half-century, the act’s purpose has remained the

same—the promotion of nutrition among low-income households. E.g., Food Stamp Act

of 1977, Pub. L. No. 95-113, § 1301, 91 Stat. 958; Moses v. Dep’t of Soc. & Health

Servs., 90 Wn.2d 271, 273, 581 P.2d 152 (1978). The program is administered through

the United States Department of Agriculture (USDA). In grossly oversimplified terms,

the program works as follows: the federal government approves and pays merchants for

accepting food stamp benefits and provides some financial support for administrative

expense to the States, which must administer the program in accordance with federal

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State v. Gray

guidelines, determine the eligibility of recipients, and provide benefits to them.4 7 U.S.C.

§§ 2014, 2018, 2020, 2025.5

       As the government that both authorizes merchants to accept food stamp benefits

and reimburses them for doing so, the federal government from the beginning was

authorized to combat fraud using both civil and criminal statutes. Pub. L. No. 88-525, §§

9, 11, 13-14. From that beginning in 1964, the term “redeem” had a specific meaning,

even if it did not have a definitional statute:

                               REDEMPTION OF COUPONS

       SEC. 9. Regulations issued pursuant to this Act shall provide for the
       redemption of coupons accepted by retail food stores through approved
       wholesale food concerns or through banks, with the cooperation of the
       Treasury Department.

Pub. L. No. 88-525.

       The provisions of that section today are found in 7 U.S.C. § 2019, which provides,

in heavily edited part, methods by which benefits may be redeemed:

       Regulations issued pursuant to this chapter shall provide for the redemption
       of benefits accepted by retail food stores . . . except that retail food stores . . .
       shall be authorized to redeem their members’ food benefits prior to receipt
       by the members of the food so purchased, retail food stores authorized to
       accept and redeem benefits through on-line transactions . . . and public or
       private nonprofit group living arrangements that serve meals to disabled or

       4
          Washington’s current authorization to participate in the food stamp program is
found in RCW 74.04.500 et seq.
        5
          For a detailed, although relatively concise, history of the program, visit the
USDA website: A Short History of SNAP, U.S. DEP’T AGRIC. FOOD & NUTRITION SERV.,
https://www.fns.usda.gov/snap/short-history-snap (last visited Oct. 12, 2018).

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State v. Gray

       blind residents shall not be authorized to redeem benefits . . . .
       Notwithstanding the [described groups] . . . may be authorized to redeem
       benefits. . . . No financial institution may impose on or collect from a retail
       food store a fee or other charge for the redemption of benefits.

Consistent throughout this statute is the fact that “redemption” is the process by which

retailers receive reimbursement from the government.

       The program includes a civil administrative enforcement provision that leads to

the disqualification of businesses that violate provisions of the act. 7 U.S.C. § 2021.

Criminal enforcement provisions of the food stamp program are found in 7 U.S.C. §

2024(b) and (c).6 Those provisions currently provide, in relevant part:

       (b) Unauthorized use, transfer, acquisition, alteration, or possession of
       benefits

       (1) Subject to the provisions of paragraph (2) of this subsection, whoever
       knowingly uses, transfers, acquires, alters, or possesses benefits in any
       manner contrary to this chapter or the regulations issued pursuant to this
       chapter shall, . . . be guilty of a felony . . . or, if such benefits are of a value
       of less than $100, or if the item used, transferred, acquired, altered, or
       processed is a benefit that has a value of less than $100, shall be guilty of a
       misdemeanor . . . . In addition . . . any person convicted . . . under this
       subsection may be suspended by the court from participation in the
       supplemental nutrition assistance program.
       (2) In the case of any individual convicted of an offense under paragraph (1)
       of this subsection, the court may permit such individual to perform work . . .
       for the purpose of providing restitution for losses incurred by the United
       States and the State agency.

       6
         The statute also contains a criminal forfeiture provision, 7 U.S.C. § 2024(f).
Property used to facilitate the crime may be forfeited and the proceeds used to reimburse
the costs of investigation and prosecution by federal or state authorities and to carry out
investigation of retail stores. 7 U.S.C. § 2024(f)(2), (4).

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State v. Gray

       (c) Presentation for payment or redemption of benefits that have been
       illegally received, transferred, or used

                Whoever presents, or causes to be presented, benefits for payment or
       redemption of the value of $100 or more, knowing the same to have been
       received, transferred, or used in any manner in violation of the provisions
       of this chapter or the regulations issued pursuant to this chapter, shall be
       guilty of a felony . . . or, if such benefits are of a value of less than $100,
       shall be guilty of a misdemeanor . . . . In addition . . . any person convicted
       . . . under this subsection may be suspended by the court from participation
       in the supplemental nutrition assistance program.

(Footnote omitted.) Current subsections (b) and (c) are derived from section 14 of the

1964 Food Stamp Act. See Pub. L. No. 88-525, § 14(b), (c).7

       The purpose of these provisions, which have largely been untouched since 1964

except to account for the modern format for delivering benefits, is to fight fraud.

Multiple congressional reports over the decades reflect this focus. The 1996 House of

Representatives Committee on the Budget provides one of the more concise explanations.

H.R. REP. NO. 104-651, at 67-70 (1996), reprinted in 1996 U.S.C.C.A.N. 2183, 2200-04.

In this bill report, the committee details three categories of fraud in the Food Stamp

Program: recipient fraud, street trafficking, and retail food store trafficking:

              Recipient fraud varies from the intentional under-reporting of
       income or inflation of household expenses to elaborate schemes involving
       the creation of false documents and fictitious identities. The committee

       7
         The operative language of both original provisions is virtually identical to the
modern statutes. Subsection 14(b) made it a crime for anyone who “knowingly uses,
transfers, acquires, or possesses coupons in any manner not authorized by this Act or the
regulations issued,” while subsection 14(c) addressed “whoever presents, or causes to be
presented, coupons for payment or redemption.”

                                              6
No. 35357-5-III
State v. Gray

      heard testimony describing a recent incident in the State of Washington in
      which two State welfare caseworkers and a refugee counselor were engaged
      in a scheme to fraudulently obtain social security and food stamp benefits
      for at least 300 refugees. The false food stamp applications were prompted
      by the refugee counselor and the caseworkers, who took kickbacks from the
      refugees in return for their being certified to receive benefits.
              The second method of fraud is street trafficking in food stamp
      coupons. Street trafficking involves a person who sells, purchases, or
      barters food stamps for cash or other nonfood items. In many communities,
      food stamps have become a second currency. The committee heard reports
      and witnessed undercover video footage of food stamps being traded for
      cash, drugs, guns, and a stolen car.
              ....
              The third method of fraud is retail food store and wholesale food
      concern trafficking. USDA is responsible for authorizing retail food stores
      and wholesale food concerns to redeem food stamps. Currently, over
      207,000 retail food stores and wholesale food concerns are authorized to
      redeem food stamps. Each year, about 30,000 new entities apply for
      authorization. Also, each year about 30,000 entities are disqualified or
      become ineligible to redeem food stamps. Approximately 77 percent of all
      food stamps are redeemed by supermarkets which comprise only about 15
      percent of all authorized entities. USDA has found that most retail
      trafficking occurs in smaller food stores and in other retail entities whose
      business is not primarily food sales. During fiscal year 1994, USDA
      compliance investigators reviewed 4,300 entities authorized to redeem food
      stamps. Of these entities, 1,300 were found to have committed violations
      serious enough to warrant sanctions, including 902 entities which were
      trafficking in food stamps.
              While neither USDA, OIG, nor GAO can provide an estimate with
      any certainty as to the amount of food stamp trafficking that occurs each
      year, trafficking in food stamps is believed by OIG to exceed $1 billion
      each year. Clearly, the number of trafficking investigations involving
      multi-million dollar food stamp trafficking operations and the organization
      with which such operations are operating is on the rise. The committee
      heard testimony of a case in Brooklyn, New York, in which investigators
      found an individual who had obtained authorization to redeem food stamps
      from USDA for a fictitious retail store. In a 22-month period, this fictitious
      store illegally accepted more than $40 million in food stamps from over
      600 restaurants, retail stores, and other businesses. In 1 month alone, this

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No. 35357-5-III
State v. Gray

       fictitious store illegally redeemed over $4.7 million in food stamps, nearly
       5 percent of all food stamps redeemed that month in New York City.

Id. at 68-69.

       Under federal food stamp law, “redemption” is the process of obtaining

reimbursement from the federal government.

       Washington Law

       As may be expected by the original distribution of duties between the states and

the federal government, Washington’s initial foray into criminal enforcement of the food

stamp law focused on misuse of the benefit by recipients. That offense, codified at

former RCW 9.91.120 (1974), made it a crime to misuse food stamps by any “person

who resells food stamps . . . or food purchased therewith, and any person who knowingly

purchases such resold stamps or food.” See LAWS OF 1973, 2d Ex. Sess., ch. 6, § 1.

       In 1988, Washington expanded its criminal code provisions related to the food

stamp program. Former RCW 9.91.120 was recodified as RCW 9.91.140, while two new

crimes copied from 7 U.S.C. § 2024(b) and (c) were added to new section 140. See

LAWS OF 1988, ch. 62, § 1. The new provisions were recodified in 2003 as RCW

9.91.142 and RCW 9.91.144. See LAWS OF 2003, ch. 53, §§ 50, 51. RCW 9.91.140

addresses the unlawful sale of benefits; it currently provides that “A person who sells

food stamps . . . or food stamp benefits transferred electronically, or food purchased

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No. 35357-5-III
State v. Gray

therewith” is guilty of a gross misdemeanor if the value of the benefit is over $100 and is

a misdemeanor if less than that amount.

       RCW 9.91.142 defines the offense of food stamp trafficking as:

       A person who purchases, or who otherwise acquires and sells, or who
       traffics in, food stamps as defined by the federal food stamp act, . . . or food
       stamp benefits transferred electronically.

The crime is a class C felony if the value exceeds $100, or a gross misdemeanor if the

value is less than $100. RCW 9.91.142(1), (2).

       The “unlawful redemption” of food stamps is declared a crime by RCW 9.91.144.

It provides:

       A person who, in violation of 7 U.S.C. Sec. 2024(c), obtains and presents
       food stamps as defined by the federal food stamp act, as amended, 7 U.S.C.
       Sec. 2011 et seq., or food stamp benefits transferred electronically, for
       redemption or causes such stamps or benefits to be presented for
       redemption through the program established under RCW 74.04.500 is
       guilty of a class C felony punishable according to chapter 9A.20 RCW.

It was this provision that Mr. Gray was charged under.

       Washington’s redemption statute is lifted nearly verbatim from the federal

redemption statute. 8 Accordingly, federal case law interpreting § 2024(c) is persuasive

authority concerning the meaning of Washington’s statute. Peoples State Bank v. Hickey,

       8
         The scant legislative history materials from 1988 do not shed any light on this
statute. Three committee hearings are still extant in the Washington State Archives, but
nearly all of the limited discussion therein involved section 140 except for a couple of
remarks concerning trafficking in food stamps (section 142).

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No. 35357-5-III
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55 Wn. App. 367, 371, 777 P.2d 1056 (1989). The federal administrative scheme also

clearly suggests that “redeem” only applies to approved vendors—typically merchants

and their agents, as well as specified nonprofit groups providing services to food stamp

recipients—who are directed by 7 U.S.C. § 2019 how to “redeem” the food stamps/EBT

benefits that they “accepted” from recipients at their respective establishments.

       Treating “redeem” as synonymous with “exchange,”9 the prosecutor argues that

Mr. Gray “redeemed” the EBT benefit when he used it to purchase food. Although that is

a colorable argument, we conclude that it fails in light of the prevailing understanding of

“redeem” and existing federal practice.

       9
         The dictionary definition of “redeem” suggests that “exchange” is, at best, a
secondary meaning for the word. Webster’s Dictionary provides the following edited
definition for the word:

       Redeem: (vt) 1 a: To buy back : repurchase, b: to get or win back, 2 a: to
       liberate by paying a price : ransom, b (1): to free by force : liberate, (2) to
       extricate from or help to surmount, c: to release from blame or debt: clear,
       justify, d: to absolve from the bondage of sin, e: to change from worse to
       better : purify, f: to put back into proper condition : repair, restore, g: to
       recover from a state of submersion, 3 a: to repossess upon fulfillment of an
       obligation : to free from a lien or encumbrance and regain absolute title by
       payment of an amount secured thereby or by performing the condition
       securing the same, b (1): to remove the obligation of by payment, (2) to
       convert into something of value, c (1): to make good : fulfill, (2) to convert
       into actuality : realize, 4 a: to atone for or cleanse, b (1): to cancel out the
       detrimental effect of, (2) to make worth while, c: to be accepted in
       exchange for, 5: to make profitable use of (time), (vi) 1: Deliver, Save, 2: to
       buy back property : regain title by purchase.

WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 1902 (1993) (formatting omitted).

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No. 35357-5-III
State v. Gray

       As noted in footnote 9, the primary meaning of “redeem” is “to buy back;

repurchase.” WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 1902 (1993). The

subsequent definitions are variations on that theme—the lawful recovery of possession of

property, or the restoration of property to a former condition. Id. Even where the

definition (at 4 c) includes the concept of “exchange,” it does so in the context of

canceling a debt or otherwise restoring property to value. Id. The concept of “redeem”

typically does not connote the idea of “exchange.” We do not believe that either

Congress or the Washington Legislature intended to apply their respective redemption

statutes to customers who used improperly obtained food stamp benefits to purchase food

from a retail establishment.10

       Federal criminal cases are in accord with the view that § 2024(b) applies to those

who illegally traffic in food stamp benefits, while § 2024(c) applies to those who then

seek reimbursement for the food stamp benefits from the government or its agents. See,

e.g., United States v. Hassan, 211 F.3d 380 (7th Cir. 2000) (defendant purchased food

       10
         The only Washington case to address this statute at all appears to be an
unpublished decision, State v. Spurgeon, No. 39426-0-III (Wash. Ct. App. Jan 21, 2011)
(unpublished) http://www.courts.wa.gov/opinions/pdf/394260.pdf. There the appellant
argued that her prosecution for possession of stolen property (an access device) violated
equal protection principles because the more specific statute governing her conduct was
RCW 9.91.144. Division Two did not construe the meaning of “redeem” in section 144,
but addressed the case solely on an equal protection analysis.

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No. 35357-5-III
State v. Gray

stamp benefits at a cash discount from stores that were unauthorized to accept food

stamps, in violation of 7 U.S.C. § 2024(b) and then redeemed those benefits to the

USDA, in violation of 7 U.S.C. § 2024(c)); United States v. Hebeka, 89 F.3d 279 (6th

Cir. 1996) (defendant redeemed fraudulently received food stamp benefits to the USDA

in violation of 7 U.S.C. § 2024(c)); United States v. Marshall, 683 F.2d 1212 (8th Cir.

1982) (defendant purchased food stamp benefits from a beneficiary in violation of 7

U.S.C. § 2024(b) and separately presented the benefits for redemption, knowing them to

have been received in a manner not authorized by the Food Stamps Act in violation of 7

U.S.C. § 2024(c)).

      These cases reflect the apparent intent of Congress to target different types of

fraud in accordance with the type of criminal activity at issue. Those who improperly use

food stamps or who traffic in them are punished under § 2024(b). Those who illegally

redeem the stamps for cash from the government, typically merchants and their agents,

are subject to prosecution under § 2024(c). We believe Washington’s statutes largely

evidence the same approach.

      RCW 9.91.140, as it has since its predecessor statute was enacted in 1973,

prohibits benefit recipients from reselling their benefits or food derived therefrom. RCW

9.91.142 addresses anyone who traffics in food stamp benefits by purchasing or acquiring

                                            12
No. 35357-5-III
State v. Gray

the benefits.11 RCW 9.91.144 expressly incorporates 7 U.S.C. § 2024(c) and must,

therefore, give "redeem" the same meaning as used in the federal statute. Only those

people who seek reimbursement from the government for accepting benefits from food

stamp recipients "redeem" the benefits.

      We hold that RCW 9.91.144 does not apply to a person who illegally uses food

stamp benefits to purchase food at a store. It does not appear that any of the food stamp

crimes found in chapter 9.91 RCW would apply to Mr. Gray's behavior. It may

originally have been possible to file some type of theft-related charges, although now that

possibility is probably precluded by CrR 4.3.l(b).

      The judgment is affirmed.

WE CONCUR:

      Pennell, A.CJ.

      11
         This statute is narrower than its federal counterpart, 7 U.S.C. § 2024(b). The
federal provision also punishes any person who "knowingly uses" food stamp benefits
contrary to the program's rules, a provision that has no state counterpart.

                                            13