USDA targets fraud in Minnesota's food stamp program

Minnesota ranks fourth in the nation for a key indicator of food stamp fraud, federal statistics show, and the government wants to make it harder to carry out the scheme.

The U.S. Department of Agriculture proposed rules Thursday that would allow states to better hold accountable citizens who make an excessive number of claims that their benefit cards have been lost or stolen. Such activity is considered a red flag for a type of food stamp "trafficking" that entails a recipient selling their food debit card to a buyer at a discount in exchange for cash. After the buyer uses it at the grocery store, the original owner of the benefits card calls to have it canceled and requests a new one.

Nearly 3 percent of the 535,520 low-income Minnesotans receiving those benefits have sought four or more replacement benefit cards, behind only South Dakota, Oklahoma and Washington, D.C.

"Americans continue to support helping struggling families put food on the table, but they want to know that taxpayer dollars are being spent wisely," Agriculture Undersecretary Kevin Concannon said in a statement.

The proposed rules give states the option to require recipients of the benefit known as Supplemental Nutrition Assistance Program, or SNAP, to contact them with an explanation when they have made excessive requests for replacement cards.

The Agriculture Department would require state agencies to protect vulnerable citizens, including the elderly, who may lose their cards frequently and are not committing fraud. But in suspicious cases, states could withhold the granting of a new card and refer the case to fraud investigators.

A spokesman for the Minnesota Department of Human Services said no one was available Thursday to say whether it intends to institute the tougher requirement. The agency oversees the county-run, federally-funded program.

The proposed rules also would broaden the definition of trafficking to include the intent to sell food stamps in person or online. The Department of Agriculture has worked with eBay, Craigslist, Facebook and Twitter to try to prevent people from peddling benefits on those websites.

Some food stamp recipients suffer from dementia, have mental disabilities or are homeless, and there are legitimate reasons for losing cards, said Regan Hopper, a spokesman for the USDA's Food and Nutritional Service division. Some even mistakenly think they are gift cards and toss them from time to time, she said.

A Food and Nutrition Service analysis of transaction data found that when a client reaches the fourth replacement card in a year, it is three times more likely to be flagged as potential trafficking, compared with those with three or fewer cards.

Even the $750 billion program's 1 percent fraud rate "is not acceptable, and that's why we're continuing to strengthen our tactics to combat fraud," Hopper said.

A federal report shows that in 2010, 118 food stamp recipients were disqualified in Minnesota due to state prosecutions that uncovered a total of $238,101 in fraud.

In one recent case, the former owner of a corner store in St. Paul was sentenced in March to 3 1/2 years in prison for illegally redeeming food stamps for cash and ineligible products. The federal government said Khaffak Ansari of Arden Hills trafficked more than $3 million in food stamps from 2006 to 2010.

In south Minneapolis, several men were recently spotted openly exchanging food benefits for cash in the parking lot of Kmart. Because they accompanied the buyer to the store to buy the food -- another common type of food stamp fraud -- they never needed to seek a replacement card that would trigger regulators' suspicions.