Definitely Not USDA Approved

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Food stamps are the new funny money for criminal fat cats

"The coupons are a second currency," says Brian Heintzelman, chief inspector for the U.S. Department of Agriculture in San Francisco. "Anything you can buy with money, from electronics to houses to sex, you can buy with food stamps." Says his colleague, Jeffrey Rush, in the department's Chicago office: "We used to think food-stamp abuse was just done in small amounts by little old ladies, but now we've grown up."

More than 22 million Americans are expected to receive $11.3 billion worth of food stamps this year alone. The vast majority use them properly: in exchange for food products at grocery stores. But in recent years, illegal trafficking in the stamps has spawned such a sizable underground economy that Government officials are clearly worried. Says John Graziano, inspector general for the Department of Agriculture: "There is so much fraud we don't catch that it's mind-boggling."

The catch to date suggests what is at stake. Indictments for food-stamp fraud last year totaled 799, nearly double the number in 1980; the tally this year, involving 40 states, Guam and Puerto Rico, has already topped 800. In the largest theft uncovered so far, four employees of the Government Development Bank in Puerto Rico stole $100,000 worth of stamps a day for four years, for a total take of $100 million. They were finally caught last May by Agriculture Department agents.

Many scams involve the purchase of glittering nonfood items with stamps. Agents have bought a motorboat and used cars in Illinois, a gun complete with silencer in Wisconsin and marijuana in Kentucky. At the Hennepin Hotel in Minneapolis, the U.S. agency investigators discovered that the owner gladly accepted the coupons instead of cash when it came to settle the room bill. In an investigation in Las Vegas headed by Lamond Mills, U.S. Attorney for Nevada, federal agents used the stamps this year to purchase, among other items, four guns, two diamond rings, a handsaw, cocaine, a macaw from Mexico, the proffered services (not accepted, of course) of two prostitutes, even a three-room house on Tamalpias Avenue (price tag: $35,520 in coupons).

This year alone, 88 people have been arrested in Las Vegas on federal charges of food-stamp trafficking. In Chicago, some 25 high-level dealers are under investigation. And in Baltimore last week, twelve people were arrested for trying to buy heroin with the coupons. In many cases, defendants are charged with purchasing stamps at a discount, whether from counterfeiters or suppliers with access to stockpiles at state-run issuing offices, then using them to buy just about anything but food. In the larger scams, dealers sell thousands of dollars worth of coupons directly to dishonest food-store owners, who act as food-stamp fences and pay 500 on the dollar before redeeming them for full value at the bank. But there is also a smaller scale, mom-and-pop black market. Some sell their coupons for cash (as little as 100 on the dollar). The stamps are then resold several times, moving from one middleman to the next before being turned in at a bank by a grocery store. All such transactions violate the U.S. Criminal Code and carry penalties of up to five years in jail and a $10,000 fine.

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