The U.S. Attorney’s Office for the District of Maryland announced on January 17, 2014 that Abdulmalik Abdulla, age 37, and Ahmed Mohssen, age 53, both of Baltimore, were arrested on federal charges of conspiracy to commit food stamp fraud and wire fraud in connection with a scheme to illegally redeem food stamp benefits in exchange for cash. The criminal complaint filed alleges that the defendants, who operate Sam’s NY grocery store on North Milton Street in Baltimore, received over $1.5 million in federal payments for transactions in which they did not provide any food, but split the proceeds with food stamp recipients. Federal agents arrested the defendants and executed search warrants at the store and related locations. In separate cases, ten defendants were charged with food stamp fraud in September 2013; four of those defendants have pleaded guilty and the others are awaiting trial.

The Supplemental Nutrition Assistance Program (SNAP), previously known as the Food Stamp Program, is administered by the Food and Nutrition Service (FNS) of the United States Department of Agriculture (USDA), together with state agencies. The program funds low-income individuals to allow them to obtain a more nutritious diet. In Maryland, the program provides eligible individuals with an electronic benefit transfer (EBT) card called the Independence Card, which operates like a debit card. Recipients use the EBT card to purchase approved food items from participating retailers.

Retailers must apply to and be approved by FNS to participate in the program. Authorized retailers use a point-of-sale terminal that checks the EBT card information and deducts the cash value of the purchase from the customer’s SNAP benefit balance. SNAP reimbursements are paid to retailers through electronic funds transfers. Retailers bill the government in return for providing approved food items. SNAP retailers, including the defendants, receive instruction regarding the requirements and regulations of the food stamp program, such as that only eligible food items can be exchanged for EBT benefits and that a retailer may never exchange EBT benefits for cash or non-food items.

The criminal complaint alleges that the defendants exchanged EBT benefits for cash, typically paying half the value of the EBT benefits in cash. As a result of unlawful cash transactions, the defendants allegedly obtained more than $1.5 million in EBT deposits for transactions in which the store did not provide food.

A loss amount of $1.5 million corresponds with a significant recommended term of imprisonment in the federal sentencing guidelines.  Depending on which § 2B1.1 fraud factors and adjustments are applicable in this case, the defendants are facing the realistic prospect of serving 4 to 8 years in prison.  And given the recent publication of last year’s white collar sentencing statistics, sentences for fraud have increased 48% since the Supreme Court’s decision in Booker rendered the guidelines advisory.

This increase is significant, and reflects society’s general lack of sympathy for white collar defendants and the Sentencing Commission’s routine ratcheting up of the severity of fraud sentences through its § 2B1.1 loss table.  As the defendants in this case make their way through the criminal justice process they must have defense counsel that will diligently and zealously protect their rights.  Otherwise they risk becoming victim to a trend that puts physically harmless and highly educated persons, who can be otherwise rehabilitated, into prison for extended periods of time.