THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, September 2, 1995 TAG: 9509020436
SECTION: FRONT PAGE: A3 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Medium: 53 lines
Because of lax oversight, liquor stores with no food on the shelves, video outlets, a pizza restaurant and even an out-of-business coin-operated laundry are trafficking in millions of dollars worth of food stamps, investigators found in a recent nationwide sweep.
The black market for food stamps is thriving in part because federal regulators authorize questionable businesses to accept food stamps and redeem them for cash from the U.S. Treasury without checking whether the store is a legitimate grocery, investigators found.
The investigators, with the Agriculture Department's office of inspector general, based their findings on inspections of 5,162 authorized stores in seven urban areas in July and August.
They targeted stores that tend to be involved in trafficking - small, independently owned businesses - and found 858 that were obviously not eligible to redeem food stamps and another 450 whose eligibility was questionable.
Those stores had redeemed more than $42 million in food stamps between April 1994 and March 1995, according to the investigators' report, obtained this week under the Freedom of Information Act.
``Hundreds of millions of dollars are trafficked through these types of marginal stores,'' said Craig Beauchamp, the assistant inspector general for investigations at USDA, which runs food stamps.
The department said it has begun disqualifying some of the stores identified by investigators and will take action against others as information becomes available.
Food stamps, the government's largest welfare program, provided nearly $23 billion in benefits to more than 27 million Americans last year. The USDA estimates that trafficking by recipients and stores totalled $815 million in 1993.
A sampling of the findings:
A pizza restaurant redeeming $3,500 a month in food stamps.
A health food store approved to accept food stamps that was empty except for some vitamins.
A ``store'' that offered a cooler containing an open carton of buttermilk and an open package of bologna, a couple of boxes of cereal and a few other items.
An out-of-business coin-operated laundry that redeemed $16,500 in food stamps between April 1994 and March 1995.
KEYWORDS: FOOD STAMP FRAUD by CNB