Violations don’t deter food stamp vendors’ hunger for misuse

Kenilworth Market, a bulletproof junk-food emporium just inside Washington, D.C.’s eastern border, sells ski masks in the dead of summer. Its clerks steadily hawk “loosies,” or illegal single-sale cigarettes.

In 2006, the federal government permanently banned its owner from accepting food stamps after it proved that the store was engaging in large-scale food stamp laundering — yet the store still does much of its business in food stamps.

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Stores that trade food stamps for cash at 50 cents on the dollar, claiming federal reimbursement while allowing program recipients to use their benefits for drugs and other illegal activity, commit the most egregious of violations and their owners face permanent bans from the food stamp program.

Yet more than 1 in 3 stores known to the government as sites of major trafficking in recent years are still accepting food stamps, The Washington Times found.

Under the Freedom of Information Act, The Times obtained a list of stores sanctioned from 2005 to March 2012 and compared it by address to the Agriculture Department’s inventory of stores currently accepting food stamps.

A quarter-million stores, ranging from inner-city bodegas to Wal-Marts and including gas stations, seafood and steak markets, and liquor stores, are authorized to accept the Supplemental Nutrition Assistance Program, the $80 billion-a-year program popularly known as food stamps.

Over the seven-year span, nearly 12,000 retailers, or 1 in 21, faced disciplinary measures for allowing food stamps to be used for ineligible items; 6,400 were permanently banned for flagrantly converting large amounts to cash. But as of last month, food stamp recipients still could go to 2,300 of those same outlets and make purchases. At more than 1 in 4, the store is the same right down to the name.

The Agriculture Department said owners, not the stores, are banned, and a store can continue to accept food stamps if the owner, after being caught, sells the establishment to someone else.

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But The Times found many suspiciously timed sales, seemingly less than arms-length or to a friend or associate, and even cases in which local business records indicated that no ownership change had taken place at all.

D.C. corporate registration papers filed in 2005, the year before Kenilworth Market was permanently banned, show that the establishment at that address — then referred to as the Far East Deli — was registered to the Masawa Corp. and tied to a man named Mussie Ghirmai. Papers filed in 2011 indicate the convenience store at that address is still tied to the same man and company.

“If a bona-fide transfer of ownership occurs, the new owner may apply to become a certified [food stamps] retailer,” the Agriculture Department's Food and Nutrition Service said in a statement to The Times. “The new owner is required to submit documentation proving both that a sale has taken place and that the previously sanctioned owner(s) have no financial interest in the new store. If a bona-fide sale has taken place, the previous disqualified owner is also assessed a transfer of ownership monetary penalty.”

The department recently required stores that were disqualified under previous owners to reapply every year rather than every five years, as most stores do, the statement said.

The Northeast Supermarket on Mount Olivet Road in Northeast Washington was banned permanently from accepting food stamps in August 2006 and again just months later in January 2007. Soonhee Jung, the store’s new owner, said the stores on either side of her sell ineligible items and customers are accustomed to buying them there, plus those who bought them at her store under its previous owner, become enraged when she refuses to do so.

“Next door they sell cat and dog food with [electronic benefit transfer]. Customers come in and show me receipts and say why won’t you do this too. They want to buy everything with food stamps. And when I say no, they get very mad and won’t shop here anymore,” she said.

In the Detroit area alone, food stamps can be used to purchase items at 19 stores containing the words “liquor,” “beer” or “party” in their names and which have been sites of major trafficking.

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