Food stamp fraud cases developed against store owners

Ohio state police are developing criminal cases against eight store owners or employees suspected of crimes including food-stamp and telecommunications fraud, aggravated theft and tampering with records.

Meantime, the five Cleveland stores linked to these suspects continue to accept food stamps -- potentially adding to the hundreds of millions of dollars that taxpayers are thought to lose each year to food-stamp fraud.


INVESTIGATION | This report is Part 3 in a series of 2 | PART 1 | PART 2


The Ohio Department of Public Safety's elite Investigative Unit confirmed the open cases, but officials there wouldn't otherwise comment on them. They generally build such cases through undercover visits to suspect stores.

The criminal investigations came to light during a Scripps Howard News Service investigation into the fraud that is enabled by lax enforcement of federal statutes barring criminals from participating as merchants in the program.
Scripps unearthed the open Ohio cases while indentifying stores nationwide owned by individuals whose criminal histories should, under federal rules, bar them from the $80 billion-a-year benefit.

At the request of the U.S. Attorney's office in northern Ohio and the Ohio Department of Public Safety, Scripps is withholding the names of the suspects, so as not to disrupt the open cases.

Because the investigations are still underway, criminal charges have not yet been brought, and the businesses continue to accept food stamps, according to interviews and federal records.
Food-stamp fraud costs taxpayers an estimated $330 million annually, according to the U.S. Department of Agriculture. Among the provisions to reduce its toll is a rule barring those with certain criminal convictions and civil violations from the food-stamp business.

However, the USDA has long said it does not have authority to conduct the FBI background checks necessary to weed out such criminals, either before they enter the lucrative business or later.

So Scripps set out to find such criminal storeowners, and did so by combining thousands of pages of disciplinary files with state grocery and liquor ownership databases, many obtained through Freedom of Information Act requests.

In addition to the open Ohio cases, Scripps identified 19 stores around the country owned by individuals with criminal convictions that should have disqualified them the food-stamp trade.

Another 27 businesses flagged by Scripps had been reprimanded by state liquor boards for infractions such as selling black-market cigarettes or obstructing investigations. In these cases, the federal food-stamp rules do not clearly allow for the stores' permanent expulsion.

During that search, one of the records Scripps examined was a database of arrests made by the Ohio Investigative Unit, which hunts liquor and food-stamp violations, among other crimes.

When Scripps was unable to locate court records for individuals who -- according the police database -- had been arrested for misusing food stamps and other crimes, the news service asked the state police for an explanation.

That prompted the agency to realize it had mismarked some records, and, as a result, mistakenly released details of open cases.

(Email Scripps Howard News Service reporter Isaac Wolf at wolfi@shns.com.)

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