New Immigrants Masters at Food Stamp Fraud

After he’d gone 90 days without payment, my law firm informed Shihad that we could do no more on his case until he made a payment. He pulled a wad of food stamps our of his wallet and said, "Give me some time to sell these."

Shihad, who’d won his asylum case a few months earlier, might have been eligible for food stamps, but he wasn't eligible to sell them. No one is. It's a crime. "Shihad," I said, "I'm withdrawing. You're trying to pay me with the proceeds of a crime."

The commonness of food stamp fraud among America's new immigrants is staggering. Many recent immigrants do not even understand that selling food stamps is a crime, representing, as they do, a form of individualized assistance. Most look at food stamps as just one more thing to barter, so for between 10 and 80 cents on the dollar, they are converted to cash. Never mind that the food stamp was invented to prevent public assistance, formerly given in cash, from being frittered away on non-food items.

How much money is lost each year to food stamp fraud? About $30 million, according to the best estimate provided by the Washington Department of Social and Health Services. But recent immigrants are not just selling the food stamps they receive, they profit from it, too.

Large scale food stamp fraud came to light in an explosive way in 1996, when authorities in Ohio discovered that a Jordanian man and his uncle had deposited $24 million in purchased food stamps in the bank accounts associated with their chain of food and video stores. Just before authorities descended on them with arrest warrants, they deeded their property over to their wives, which included $300,000 homes, and fled to Jordan.

More recently, food stamp fraud has been refined by "asylees" -- asylum seekers -- fleeing Somalia, where rampant starvation serves as the basis of those asylum claims. Asylees are one of a very small number of immigrant groups who are normally eligible for food stamps. Last year, according to documents filed by the U.S. Attorney's Office with the District Court in Seattle, Wash., a ring of Somali couples based in Washington leveraged their skills into a multi-layered public assistance fraud that even involved cash payments from the government. One of the couples netted $40,000 in food stamp fraud alone. Be comforted that the United States was not their only victim. The ring claimed residences on both sides of the border, and Canada, too, was taken for many tens of thousands of dollars.

Food stamp fraud has taken on more sinister dimensions within the last year and a half. Last autumn, the FBI determined that the Somali asylee community in Seattle, set with food stamps and other forms of public assistance, was targeted by the Al-Barakaat Wire Transfer company, a wire transfer and hawala banking outfit with known connections to Al Qaeda. Al-Barakaat set up a storefront in Seattle and immediately went to work selling Qat, a mild narcotic popular with Somalis, and converting food stamps to money for Somalis to send back to their relatives in Somalia. The FBI believes Al-Barakaat skimmed tens of millions of dollars off of the proceeds of these two activities, and funneled it directly to Al Qaeda.

According to the testimony provided by New York City detectives to a U.S. Senate subcommittee in connection with the 1993 World Trade Center bombing, corporate America has been victimized by precisely the same dynamic with coupon fraud, unwittingly funding terrorism by as much as $125 million annually.

Financial relationships of trust -- applications for public assistance that require the truthful disclosure of income information, a store's capacity to deposit for payment only those food stamps that have actually been exchanged for food or coupons that have been presented in connection with the actual sale of a consumer item -- are often completely alien to new immigrants. Many new immigrants have told me that they simply cannot believe that the government trusts them to honestly provide their income information on a food stamp application.

America is entirely too loose with its money, and its new immigrants know it. As recent raids and prosecutions have shown, greater oversight of programs like the one that makes food stamps readily available to new immigrants is crucial. A week after I told Shihad that I'd filed to withdraw from his case, he returned to get a copy of his file. He'd been able to sell the food stamps, he told me, and had received enough to retain a new lawyer.

Matt Hayes began practicing immigration law shortly after graduating from Pace University School of Law in 1994, representing new immigrants in civil and criminal matters. He recently left the New York City law practice he founded in 1997 for the "more normal life" of insurance defense, and is co-author of The New Immigration Law and Practice, a textbook to be pubished by West Legal Publications in October, 2003.

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