SNAP benefit money laundering scheme under investigation in Fort Smith

New York State Department Of Financial Services
New York State Department Of Financial Services

An alleged food-stamp money laundering scheme has seen no movement in the U.S. District Court of Western Arkansas since early July when a stay order was placed to prevent information from being disclosed in the course of a criminal investigation.

Three vehicles were seized in mid-May from the owners of three Fort Smith convenience stores in connection with the alleged SNAP (Supplemental Nutrition Assistance Program) benefits scheme. Cards were allegedly being sold for cash less than value to the owners of three local convenience stores. The owners then allegedly used the cards to purchase goods like soft drinks at Walmart and Sam’s Club and then sell them at the convenience stores.

On May 18, the Internal Revenue Service seized two Acura cars and a Dodge Ram from the store owners for having been used in violation of “money laundering,” a court document states. Chief U.S. District Judge P.K. Holmes III issued a stay order July 7 for 90 days, “or until the related criminal case investigation is resolved.” The stay can be extended. The court ordered a status report on the criminal investigation by Aug. 7 as part of the stay order.

Lee Stovall, a special investigator with IRS Criminal Investigation for 11 years, testified in an affidavit filed in May that he conducted research on the convenience store owners with the Fort Smith Police Department and the Federal Bureau of Investigation.

Two people admitted to selling their EBT cards to the convenience store owners, and a former employee further supported evidence of the scheme. According to Stovall’s affidavit, one of the store’s owners “admitted to helping ‘poor people’ that come in and ask to sell some of their SNAP benefits.”

According to Stovall’s testimony, a U.S. Department of Agriculture special agent determined “the store owners and their associates have used SNAP EBT cards belonging to 94 different recipients of SNAP benefits to make purchases at Sam’s and Walmart stores in Fort Smith.”

Aaron Jennen, assistant U.S. Attorney for the Western District, said Tuesday no criminal charges have been filed against the owners of Fenny’s on Towson Avenue, Grand Convenience on Grand Avenue and Park Mini Mart on Park Avenue. Jennen, the lead prosecuting attorney on the case, could make no further comment on whether enough information had been gathered to file criminal charges.

“SNAP benefits cannot be redeemed for cash, nor can they be used to purchase alcoholic beverages, tobacco, hot foods ready to eat, lunch counter items, pet foods, or fuel,” the court document states.

According to the Arkansas Department of Human Services, which regulates SNAP benefits, a person found to have violated the rules faces permanent disqualification of benefits. A person found to have committed an intentional program violation faces one year suspension for the first violation, two years for the second, three years for the third and permanent disqualification for the second violation involving the sale of a controlled substance, ammunition, firearms or explosives. Permanent disqualification is also faced if the person is convicted in a federal, state or local court of having trafficked benefits for an amount of $500 or more. And a 10-year disqualification is faced for those making fraudulent statements or representation with respect to identity or residence in order to receive multiple benefits simultaneously.

In 2009, the Arkansas Legislature also passed a law that permanently disqualifies a person convicted of manufacturing or distribution of a controlled substance, unless their record is expunged. DHS “actively reviews and closes cases monthly,” DHS spokeswoman Amy Webb wrote in an email.

Leave a Reply

Your email address will not be published. Required fields are marked *