Food Stamp Use - and Abuse - Reaches All-Time High in US Government Says Trafficking by the Unscrupulous in the $30 Billion Program Reached $1 Billion Last Year

By David Holmstrom, writer of The Christian Science Monitor | The Christian Science Monitor, March 15, 1994 | Go to article overview

Food Stamp Use - and Abuse - Reaches All-Time High in US Government Says Trafficking by the Unscrupulous in the $30 Billion Program Reached $1 Billion Last Year


David Holmstrom, writer of The Christian Science Monitor, The Christian Science Monitor


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 all-time high.

"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 the states.

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 through supermarkets.

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. …

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