The Welfare-Fraud Link

Frank Main and Natasha Korecki, Chicago Sun-Times, April 9, 2006

Corner groceries—the ones tagged with graffiti and plastered with advertisements like “Chorizo $2.89” and “Eggs 89¢ a dozen”—dot Chicago’s neighborhoods. But some of these stores aren’t making their money on sausage and eggs.

More and more of these tiny pantries claim to sell millions in merchandise a year through the food-stamp program. Federal investigators are after dozens of them for ringing up phony sales and illegally handing customers cash—and pocketing a sizable cut—all courtesy of U.S. taxpayers.

This fraud puts money in the hands of the poor to buy drugs and might even be helping to fund terrorism. Phyllis Fong, the watchdog for the U.S. Department of Agriculture, says anti-terrorism investigators across the country are focused on some of these crooked grocers, who authorities say reap a staggering amount of cash.

In recent years, federal prosecutors in Chicago have charged 22 store owners and employees with ripping off at least $16 million from the food-stamp program, court records show. Three went to prison. Three more got probation. One case was dismissed; the rest await trial.

This electronic food-stamp program—called Link—was launched in Illinois in 1997 to combat rampant fraud in the paper food-stamp program. The stamps were often used illegally, as black-market currency, to buy drugs. But cheaters quickly found a way to steal from the new, electronic food-stamp system, too.

The latest scam works like this:

A welfare recipient goes to a store with a Link card credited by the government with a dollar amount for groceries—say, $100. The store clerk swipes the card through a government computer and takes credit for $100 in phony food sales. Then, the clerk hands $70 to the welfare recipient, keeping the rest as profit.

Typically, a Link participant receives $200 to $500 a month on his or her card, depending on household size. The program does not allow a participant to use a Link card to get cash.

Such Link fraud is being rooted out by the USDA—the administrator of the program—along with the U.S. attorney’s office here, the Secret Service, the Internal Revenue Service, the Chicago Police Department and the Illinois Health and Human Services Department.

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Amar Abu Siessi is among the latest store owners charged in Chicago. After a mix-up with his bail a week ago, Abu Siessi was accidentally let out of a federal lockup. Now, he’s a fugitive. Abu Siessi, a Jordanian, is accused of running a scam dating to the late 1990s, making millions from a half dozen small grocery stores he’s owned.

He’s charged in two separate Link-fraud cases. In one, Abu Siessi’s corner store at 3000 W. Addison didn’t have scanners to ring up food quickly, shopping carts or a large inventory. Yet the store claimed to do hundreds of dollars in sales a minute, court records show.

One figure jumped out at investigators: From May through October 2000, Abu Siessi’s store redeemed $383,000 in Link-card benefits—82 percent of what a Dominick’s in the same neighborhood redeemed.

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Blue Bird Food Market on the Southwest Side is another store targeted by the government. The bodega sits on the corner of 24th and Hamlin in Little Village. Federal investigators suspect most of the money the store earned last year was from welfare fraud.

Blue Bird representatives are accused of paying an inspector to exaggerate the grocery’s inventory to qualify for the food-stamp program, court records show.

Blue Bird allegedly redeemed $139,000 in benefits over the last five months of 2005—20 times the monthly sales estimate the store gave the government to get into the program, according to a federal affidavit for a warrant to seize money from a bank account Blue Bird held.

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A store employee came outside to say everyone would be let in one at a time, according to a federal agent’s affidavit to back up fraud charges brought against the store’s owner, Anwar Haddad.

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Sylvester Baker, a former sheriff’s sergeant who unsuccessfully ran in the Democratic primary for Cook County sheriff this year, said he would have cracked down on Link fraud if he had won.

“It’s rampant in the black community,” Baker said. “They do this in Englewood, Auburn Gresham, Chicago Lawn, just to name a few neighborhoods. It’s common knowledge in our community.”

Baker said the fraud is especially insidious because the family members of Link cardholders often wind up having to stand in line at food pantries for handouts because the Link benefits have been squandered on drugs.

Meanwhile, investigators have watched some shopkeepers send their illegal windfalls overseas.

In a detention hearing last year for Munthir Hamad, who faces charges related to food-stamp fraud, prosecutors alleged that he sent thousands of dollars a month to his girlfriend in Palestine.

Experts stress such money transfers can simply involve a shopkeeper feathering the nest for retirement in his native country. But investigators are looking at the possibility that some of the fraud is financing terrorists.

Tracking terror

Chicago Police officers going through a five-day training session on terrorism have been taught that Link fraud is one of the ways terrorists are suspected of raising money, along with sales of counterfeit cigarettes and baby formula. No one, however, has been charged with financing terrorism through Link fraud in Chicago.

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