State combats food stamp fraud

By Emily LeCoz

By Emily Le Coz
Daily Journal
TUPELO – Mississippi leads the nation in publicly funded food assistance with nearly one quarter of its population receiving benefits – and some of those trying to cheat the system.
In the last fiscal year alone, 1,705 people were disqualified from Mississippi’s Supplemental Nutrition Assistance Program – SNAP – for making false claims and bilking the program out of more than $2.7 million, according to data obtained by the Daily Journal.
Hundreds more routinely report their benefits cards lost or stolen, which the federal government cites as a potential sign of fraud.
Benefits cards, commonly called EBT cards, replaced paper food stamps years ago. They work like debit cards in that users slide them through a merchant’s payment device, and money is transferred from their pre-loaded accounts to the merchant.
“There are many legitimate reasons for replacing cards and the vast majority of recipients follow the rules,” said U.S. Agriculture Under Secretary Kevin Concannon in a May news release. “But we are concerned that a few bad actors are using replacement cards to exchange SNAP benefits for cash, commonly referred to as trafficking.”
The Mississippi Department of Human Services, which administers SNAP, began tracking multiple replacement card requests for the first time ever on July 1, 2011, said agency spokeswoman Julia Bryan.
For the fiscal year ending June 30 of this year, 263 households had reported their EBT cards missing five or more times. The highest number of replacement cards requested by a single cardholder during that fiscal year was 17.
The agency has no data on how many households requested between one to four replacement cards.
For comparison, Renasant Bank spokesman John Oxford said his company typically issues replacement debit cards to 10 percent of its cardholders annually but almost never issues more than one in a single year.
“Twice is an anomaly,” Oxford said. “Five or six times is almost unheard of. It would be very, very rare.”
Although MDHS has an office of fraud investigations that looks into hundreds of cases of potential misconduct each year, multiple card requests don’t automatically trigger an investigation. Instead, the agency sends each household a notice warning them of the penalties for fraud, Bryan said.
That’s due to federal regulations limiting contact between state agencies and SNAP recipients, according to Concannon, who this year proposed new regulations not yet adopted. Among them is a rule allowing states to make replacement card-seekers contact the agency after the fourth request in a year.
Until then, MDHS doesn’t know how many SNAP recipients legitimately lose their cards versus those who are selling them for cash or drugs.
“The way it is now, we can’t require them to come in and let us quiz them about why they lost their card,” said MDHS Director of State Operations David Noble.
Most repeat card-losers likely are elderly people, those with mental issues or families whose unstable lives involve multiple moves during the course of a year, said MDHS Economic Assistance Director Cathy Sykes.
Sykes did say she’s aware some beneficiaries cheat the system. She provided an example of a typical scheme.
“They’ll sell the card for $100 and they have, maybe, $200 on the card,” she said. “Then they immediately report the card stolen and get the card disactivated.”
The person who sold the card then gets a new one with the remaining $200 balance transferred to it while pocketing the $100 swindled from the buyer. The buyer, in turn, loses money with no way to legally reclaim it since it’s unlawful to purchase a benefits card in the first place.
Other times, beneficiaries sell the cards and wait a few days to report it lost to give the buyer time to use it. Although the SNAP recipient loses the balance on that card, he or she now has cash to purchase items they otherwise can’t get using an EBT card.
Federal law restricts EBT card purchases to household food items only, according to the USDA. They cannot be used to get alcohol, tobacco, medicine, hot foods or nonfood items like soap, light bulbs, diapers, pet food, clothes or school supplies.
Hooked on food stamps
Mississippi ranks No. 1 in the nation for its percentage of SNAP recipients. As of June, 22.2 percent of all residents were getting food assistance, according to the most recent data from the Food Research and Action Center, a national anti-hunger organization that tracks those figures.
The numbers have more than doubled from the start of the century, when 10 percent of Mississippians – 276,074 residents – received food stamps. Today, 698,279 people are on the SNAP rolls.
Many are elderly, single women and children, Bryan said.
At the same time, the total value of food assistance distributed statewide has more than tripled, from $225 million in 2000 to nearly $958 million at the end of the most recent fiscal year.
All those funds come from federal sources, but the state kicks in money to administer the program through MDHS.
The average household gets $273 per month – or $123.36 per person.
“These benefits not only support poverty-level households,” Bryan said, “but the local economy as well by purchases which are made at local grocers, stores and farmers markets.”
Mississippi isn’t alone. Nationally, food assistance has risen from a total of about 16.9 million people in 2000 to more than 46.7 million people today.
Unemployment and underemployment largely are to blame, FRAC said in its most recent report. Also responsible for the growth are better efforts to enroll more people in the program.
Not surprisingly, the impoverished Delta region has the state’s highest proportion of food stamp recipients, with its counties averaging a 35.7 percent participation rate. Humphreys County ranked the state’s highest with almost half of its population receiving SNAP benefits.
The more affluent, mostly white, Rankin County had the state’s lowest SNAP participation rate. Roughly 1 in 10 of its residents are on the program.
In Northeast Mississippi, Lafayette County has the lowest SNAP rate with less than 1 in 8 residents getting food assistance while Benton County has the highest with nearly 1 in 3.
Overall, about 1 in 5 Northeast Mississippi residents participate in SNAP.
Among them is Dorothy Hill, a mother of four who relies on food stamps to make ends meet.
“It helps out, especially with the food prices going up,” said Hill, who purchased groceries recently at Tupelo’s Save-A-Lot. She has benefited from the program for about 12 years.
Deanna Martin also gets food assistance.
“I work every day, and I still have to use them,” she said. “The economy is bad and, up until a couple of years ago, I was a single mother with four children. If it wasn’t for them, we would have done without.”
She also said that, as the recession lingers, she has noticed more “nicely dressed” customers swiping EBT cards for their groceries.
“It’s people you wouldn’t think,” she said. “It just goes to show you can’t judge a book by its cover, because you don’t know what’s going on.”
Catching fraud
MDHS does investigate claims of SNAP recipients who drive expensive cars or flaunt high-priced gadgets like the latest iPhone, Sykes said. The agency requires proof of how that person is able to afford such items. Many times, Sykes said, it’s their parents, boyfriends or girlfriends who are footing the bill.
But sometimes these instances point to errors in reporting income – either intentional or accidental. In the past fiscal year alone, the agency discovered 4,008 inaccuracies and ultimately recovered nearly $5 million that had been erroneously paid out through SNAP.
Not all those instances were fraudulent, but many were. During the same year, MDHS disqualified 1,705 people for intentionally bilking the system out of $2.7 million. It requires violators to reimburse the money and can legally seize their tax return checks upon failure to do so, Sykes said.
Among the most high-profile cases of fraud this year were:
* Martha A. Dulaney of Jackson who pleaded guilty and was ordered to pay $11,000 in restitution, fines and fees.
* Jamanelle J. McQueen of Waynesboro who pleaded guilty and was ordered to pay $10,781 in restitution, fines and fees.
* Stacy Fleming of Madison County, who pleaded guilty and was ordered to pay $9,838 in restitution, fines and fees.
The agency also nabbed several merchants for participating in SNAP trafficking. Among them was Lee County store owner Sananjit Nagra and clerk Harmanpreet Nagra, both of Tupelo, who fraudulently obtained $2,409 at their Mooreville store, the Nagra First Stop.
Mississippi’s aggressive stance on stopping fraud and curbing reporting errors consistently has earned it regional and national recognition.
Twelve years ago, MDHS had a food stamp error rate of 4.91 percent, the fifth lowest in the nation and the best in the Southeast. It was recognized nationally for “vast improvements in program stewardship,” according to the agency’s 2000 annual report.
In 2010, the agency won an award by the USDA for its “continuous dedication and commitment to payment accuracy by achieving the lowest combined payment error rate and negative error rate as averaged over the past three years.”
It had completed that year with an error rate of 1.92 percent.
MDHS “is very interested in the integrity of the Supplemental Nutrition Assistance Program and other federal programs administered by the agency,” Bryan said. “SNAP is designed as America’s safety net to ensure food security and provide a food purchase supplement to those with low or no income.”
emily.lecoz@journalinc.com