Hagerstown Convenience Store Owner Pleads Guilty To Food Stamp Fraud
Fraudulently Obtained Over $319,000 for Food Sales That Never Occurred
Baltimore, Maryland - Mohammad T. Khan, age 40, of Hagerstown, Maryland, pleaded guilty today to food stamp fraud, announced United States Attorney for the District of Maryland Rod J. Rosenstein.
According to the plea agreement, Khan owned and operated Nadia’s Convenience Store (Nadia’s), located at 200 West Franklin Street in Hagerstown, Maryland, a licensed retail participant in the federal food stamp program. Khan received training from the U.S. Department of Agriculture’s Food and Nutrition Service (FNS) regarding the requirements of the food stamp program, including instruction that only eligible food items could be purchased using a customer’s electronic benefits card (EBT) and that a retailer may never exchange EBT benefits for cash or other non-food items.
In 2004, the FNS investigated Nadia’s and discovered that the store had sold non-eligible items in exchange for EBT benefits. Khan paid a fine for the violations. In addition, an FNS officer reminded Khan that he and his employees were only permitted to sell eligible food items in EBT transactions.
In March of 2006, the FNS received information that Nadia’s was engaging in food stamp trafficking, by exchanging EBT benefits for cash. On July 19, at the direction of law enforcement, a cooperating individual presented an EBT card to the cashier at Nadia’s. The individual asked the cashier for one-half of the balance on the EBT card in cash. The cashier gave the individual $50 in cash, swiped the card in the store’s point of sale terminal and deducted $100 from the EBT card balance. The individual then left the store without making a purchase. At the end of the day and in accordance with the administration of the food stamp program, Nadia’s bank account was automatically credited with the total amount of EBT benefit transactions completed by the store, including $100 for this transaction.
On three occasions from September, 2006 to November, 2007, the individual requested cash in exchange for deductions from the EBT card. On each occasion, the employee at the register deducted roughly twice the cash amount given to the individual from the EBT card. For example, in the September, 2006 transaction, the individual received $144 in cash from the store employee and the employee deducted $286 from the EBT card for that transaction. Khan was fully aware that the store employees were conducting the cash transactions in violation of the food stamp program rules, and he was often in the store when such transactions took place.
From at least January 1, 2005 until September 30, 2007, Khan and employees of Nadia’s routinely exchanged cash for EBT benefits in violation of the food stamp program. As a result of this scheme, Khan obtained more than $319,000 in EBT deposits for food sales that never occurred.
Khan faces a maximum sentence of five years in prison followed by three years of supervised release. U.S. District Judge Andre M. Davis has scheduled sentencing for March 6, 2009 at 10:00 a.m.
United States Attorney Rod J. Rosenstein thanked the U.S. Department of Agriculture - Office of Inspector General and the Hagerstown Police Department for their investigative work. Mr. Rosenstein commended Assistant United States Attorney Kathleen O. Gavin, who is prosecuting the case.