USE of government food stamps has reached an all-time high. Some
27 million Americans put bread and milk on the kitchen table with
food stamps. But according to the government, under-the-table
trafficking in food stamps reached $1 billion last year, also an
"Trafficking is the exchange of food stamps for cash or
goods," says Paul Shanholtzer, a spokesman for Food and Nutrition
Service (FNS) of the United States Department of Agriculture.
"Someone buys stamps from a recipient for less than face value,"
he explains, "and sells them to an unscrupulous retailer who in
turn cashes them in to the government for full value. Everybody
takes a profit at each step."
Fraud in the food stamp program has increased slowly since the
program was launched in 1968, when 2.2 million Americans received
$173 million worth of stamps.
The program gained little in numbers during the 1980s. Rapid
increases began in 1990 as unemployment benefits ran out for
laid-off workers, more and more poor working families stayed below
the poverty line because of inflation, and the number of single
mothers with babies began to increase.
Today, with the US still feeling effects from the last
recession, the food stamp program costs a staggering $30 billion a
year. Nearly 11 percent of the US population receives food stamps.
The program is regulated by the US government, but administered by
Of equal concern to officials, indicating the depth of poverty
in the country, are government studies concluding that only 60
percent of those who qualify for stamps participate in the program.
"Many people are unaware they could qualify, or they choose not to
participate because of pride," says Mr. Shanholtzer.
But pride is not a factor for thousands who engage in food stamp
fraud. Typically, the big supermarkets in cities have well-run food
stamp programs. Nearly 75 percent of all food stamps are redeemed
More than likely, it is a small number of independent grocers
who engage in trafficking. State officials in California say that
for nearly three years, two small grocery-store owners in Los
Angeles bought food stamps for cash below face value. One store
averaged nearly $19,000 a day in redemptions. Over three years, the
two stores paid cash for stamps worth $20 million.
Another well-publicized case involved a wholesale meat company
in Brooklyn, N.Y. The company operated illegally for nine years by
trading meat for stamps, and then deposited the stamps as cash into
a bank account of a non-existent meat market. When state
authorities cracked the case, over $82 million worth of stamps had
been redeemed over the nine years.
"The difficulty is the storage of food stamps," says Sheri
Steisel, director of the Human Services Committee for the National
Conference of State Legislatures. …