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Flipping Food Stamps Into Millions

Flipping Food Stamps Into Millions

There is nothing glamorous about receiving food stamps. The food stamp program, administered by the Department of Agriculture and funds by taxpayers, provides low-income citizens with government funds to buy cold food items, by way of debit cards loaded with hundreds o thousands of dollars. Stores that accept food stamps are prohibited from exchanging food stamps for cash, hot foods, booze tobacco or non-food items. Tessema Lulseged, owner of the Big T Supermarket in Decatur, GA, disregarded those restrictions. By exchanging food stamps for cash, he made millions by taking a sizable cut of the transactions. Last month, he was sentenced to four years and three months in jail.

Between 2009 and 2014, Lulseged made $6.5 million off the fraud scheme. The way Lulseged’s lick worked was, he allowed customers to exchange food stamps for cash, so long as they bought groceries valued at 10% of the cash they wanted. For instance, if a customer wanted $200 in cash, he/she would be required to buy $20 worth of groceries. Lulseged would deduct $350 from the food stamp card, keeping $150 for himself. “If you were shopping at a big-box grocery store and spent $800, you would be pushing five big carts out to the parking lot,” said Special Agent Will Filson of the FBI’s Atlanta Division. “At the Big T Supermarket, people allegedly spent that amount and were walking out with their items in a single plastic bag.”

The investigation began in 2013, and the feds sent sources and undercovers into the store to make controlled exchanges. Investigators also compared the amounts of products Lulseged got from vendors versus the amount of food stamps being redeemed. “When we compared actual vendor purchases against submitted food stamp redemption amounts, it was outrageous,” Filson observed. “It was something like $500,000 worth of products purchased and $8 million reported in food stamp redemptions. The figures were completely skewed.”

Warrants were executed against Lulseged in 2014. The feds seized ore than $700,000 from his various bank accounts, as well as the Big T Supermarket building and Lulseged’s home. The food stamp kingpin pleaded guilty to trafficking food stamps the following year.

The amounts of cash given to each of the food stamp recipients that participated were not substantial enough to charge any of them criminally.

“Food stamp fraud can be a significant drain on the federal budget,” explained Filson. “This $6.5 million case was just one store. If you add up all the fraud across the country, it would likely run into the hundreds of millions.”

According to the FBI website:

Earlier this month, another Atlanta convenience store owner pled guilty to eight counts of wire fraud for illegally exchanging food stamp benefits for cash over a nearly five-year period. The scheme allegedly netted the man nearly $2 million.

Read here about how 30 people were arrested for misusing food stamps.

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