Banned stores 15 V.I. stores accused of defrauding millions from SNAP food program

ST. THOMAS - The federal government has permanently banned 15 V.I. businesses from participating in its Supplemental Nutrition Assistance Program after discovering the stores fraudulently cashed benefits worth a combined $400,000 to $500,000 a month.

The announcement Tuesday morning came on the heels of an investigation by the V.I. Human Services Department, the U.S. Agriculture Department and the FBI that first began two years ago, according to Lennox Zamore, an administrator in the Division of Family Assistance with the V.I. Human Services Department.

"It may have appeared for quite a while as though we were doing nothing to combat fraud," Zamore said. "That's not the case."

Eric Ratchford, USDA Field Operations Mid-Atlantic Region Director, said 114 businesses in the territory are authorized to participate in the Supplemental Nutrition Assistance Program, which provides financial assistance for groceries to needy families. Ratchford said all transactions through the program are computerized, which allows program monitors to track spending trends at every location. In the V.I., 25 stores raised red flags, and 15 of those were determined to be trafficking benefits, Ratchford said.

"It may be a little eye-opener with what we found," Ratchford said.

Ratchford said a typical trafficking scheme involves a person with a Supplemental Nutrition Assistance Program card convincing a retailer to distribute cash for swipes on the program card.

"It's a combination of both," Ratchford said. "It takes two. Typically, once a retailer agrees to traffic, they will build up a clientele."

For instance, a retailer could charge a false $100 purchase onto a program card and split the $100 in cash with the customer.

"Typically, it's half," Ratchford said. "Fifty-fifty."

From there, the routine often snowballs, Ratchford said.

"The customer says, 'Help me out, I've got a bill to pay or medicine to buy,' " Ratchford said. "And there's no retribution right away, so they see it as a sort of help, something that profits their business."

The trafficked benefits on a large scale can put a drain on the economy, Ratchford said, siphoning off revenues that should be going to the food-producers that participate in the Supplemental Nutrition Assistance Program.

Ratchford emphasized some of the 15 stores in question still have appeal rights, though he said the government built "solid cases" against all 15 stores. Criminal charges are possible through the U.S. Justice Department, he said.

The USDA implemented a new screening process in February aimed at preventing delinquent retailers from getting back into the program by selling their business to a family member or opening under a new name, Ratchford said. Because of the 15 stores targeted in the investigation, the territory now is considered a high-risk area, meaning this tougher screening process - which requires more thorough documentation from program participants - will be in place, according to Ratchford.

"We're not going to see the retailers get back in with front-people," Ratchford said.

SNAP in the Virgin Islands

V.I. Human Services Department Commissioner Christopher Finch said 25,000 Virgin Islanders receive Supplemental Nutrition Assistance Program assistance every month. The territory received $20 million in assistance in fiscal year 2007 compared with an estimated $52 million in fiscal year 2012, Finch said.

Finch said the announcement of the investigation results coincides with a new Human Services Department public-relations campaign to inform the public about program fraud and a new outreach program to train retailers in how to use the program properly.

"A vast majority are following the rules," Finch said. "It's the small portion we are stamping out."

- Contact Lou Mattei at 714-9124 or email lmattei@dailynews.vi.

Barring successful appeal, the following stores have been permanently banned from participating in the federal government's Supplemental Nutrition Assistance Program after an investigation found they engaged in benefit trafficking.

St. Thomas

- Broadway Food Mart, Fort Mylner Shopping Center

- Dana Market, C-2 Mariendal

- Fruit Plus, 4392 Four Winds Plaza

- Gabby No. 2, 2331 Commandant Gade

- Hana Mini Mart, 4 General Gade

- In and Out Mini Mart, 33 Frydendal

- Max Mart, 8000 Nisky Center

- Yanes Supermarket, 38 Kronprindsens Gade

St. Croix

- Covert Grocery

- Carlton Goods Shop No. 1, 2 Estate Carlton, Frederiksted

- Headline Market, 49 Queen Street, Frederiksted

- Choice Minimart, 4 Estate Mountain, Frederiksted

- Super Dollar, 1C Little Princesse, Christiansted

- Superior Service Station, 350 Estate Mount Pleasant

- Supreme Service Station, 245 Estate Glynn

Sign up for Text Alerts

Sign up for e-mail newsletters