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Government cracks down on food stamp fraud

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Posted: Tuesday, December 6, 2011 12:00 am

BROWNSVILLE — Retailers and fraudulent recipients of food stamps will face stricter penalties for the misuse of food stamps, the federal government announced Tuesday.

State agencies administer the Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps, but the U.S. Department of Agriculture is the federal agency the program falls under. Despite the crackdown, the government reports there is limited fraud and waste within SNAP, but a difficult economy has prompted a huge need, Kevin Concannon said USDA Under Secretary for Food, Nutrition and Consumer Services Kevin Concannon.

He said “aggressive” tactics would be used in its crackdown on food stamp fraud.

“Every dollar that is misspent or abused is a dollar that is not there to help families in need,” Concannon said. “Many people who are now relying upon the SNAP programs are individuals and families that never thought they would find themselves with this need. They are what we often call the new faces of SNAP.”

According to the Texas Health and Human Services Commission, 122,665 Cameron County residents received food benefits in November.

SNAP now serves a record number 46.3 million Americans and more than half of those recipients are children, he said.

Fraud rates are not broken down by state, he said, nor is there the capability to see what recipients buy.

The USDA has taken measures to combat a new form of fraud showing up on social media networks like Facebook and websites like Craigslist, he said. Now, showing intent to sell SNAP benefits for cash is fraud that disqualifies a recipient, he said.

Cameron County recipients accounted for $14 million in benefit payments, with the average payment being $311 per case in September 2011, according to Texas Health and Human Services Commission data. Statewide there were almost 3.7 million SNAP recipients, with more than $450 million in benefit payments.

Concannon said fraudulent trafficking, from either retailers or recipients, diverts about 1 cent for every benefit dollar spent, a rate that has fallen over the past several years. He emphasized that the majority of recipients and retailers that process SNAP are honest, but said a small group tries to make a quick buck off of taxpayers.

“While 1 percent is a relatively low number, because the overall scale of the program is large, even 1 percent is very, very significant,” he said of SNAP fraud.

SNAP recipients who commit fraud will also receive claims from the federal government for improperly used SNAP benefits. In 2010, Concannon said more than 44,000 individuals were disqualified from SNAP.

The USDA partners with the state and expects them to pursue SNAP recipients who sell their benefits for cash, he said.

“I’ve always said it takes two to tango,” he said. “Not enough states have been pursuing the individual recipients in this case.”

In regard to waste, which means either overpaying or underpaying of benefits, 2010 had the highest payment accuracy rate in SNAP history when it hit less than 4 percent, he said.

In 1995, Texas went to an electronic benefits transfer (EBT) program statewide, which utilizes the familiar Lone Star Card debit card seen today. The state contracts with three different companies for call center services, data processing and software maintenance related to SNAP.

Over the past 10 years more than 8,300 retail stores have been permanently disqualified because of their involvement in SNAP fraud, Concannon said. However, he said, the government found 99.5 percent of retailers don’t knowingly participate in fraud.

This April, a Brownsville grocery store owner and two employees were indicted on federal charges of food stamp fraud that net them a profit of almost $4 million. Concannon said small stores are often found to host SNAP fraud. Technology, like a highly advanced algorithm and other software, can track fraud down to specific sections of a city or to a particular town.

“In many instances we find that the fines that are levied against retailers are just not enough,” he said. “It ends up being what I consider to be a slap on the wrist. I want to make sure that penalties are sufficient so that the pain is felt and the word gets out in those communities.”

Though Concannon said the USDA initiative has bipartisan support and is a response to the difficult economy, in his remarks to the media, he was careful to note it fits with the Obama Administration’s “Campaign to Cut Waste.”

SNAP benefits allow recipients to purchase household food items like bread and vegetables, but it has garnered controversy in the past. The USDA noted that any action to places limits on the types of food that are SNAP eligible would take action from Congress.

SNAP can’t be used to purchase alcohol, tobacco, hot food or food sold for on-premises consumption. But seafood, steak, soft drinks, candy, cookies, snack crackers and ice cream are considered eligible food items. So are bakery cakes, energy drinks with nutrition fact labels and gift baskets with food items in which the non-food items add up to no more than 50 percent of the purchase price.

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