GRAND RAPIDS STORE OWNER SENTENCED TO 5 YEARS IN PRISON AND OVER $400,000 IN RESTITUTION FOR FOOD STAMP FRAUD
GRAND RAPIDS, MICHIGAN – Omar Abukar Sufi, 29, was sentenced to 60 months’ imprisonment for food stamp fraud, running an unlicensed money transmitting business, and structuring financial transactions to evade bank reporting requirements, announced U.S. Attorney Donald A. Davis. U.S. District Court Judge Janet T. Neff also ordered Sufi to pay restitution of $401,670.24 to the U.S. Department of Agriculture, which funds the food stamp program. Omar’s brother Mohamed has also pled guilty, and is scheduled for sentencing on Monday, February 14, 2011.
From 2005 to 2009, Omar Sufi and his brother Mohamed operated “Halal Depot,” a small grocery store in Grand Rapids. The brothers applied for and obtained authorization to redeem food stamps at the store, which meant they could accept food stamp “Bridge Cards” as payment for approved food products. Retailers participating in the program are strictly forbidden from exchanging food stamp benefits for cash and other ineligible items.
The U.S. Department of Agriculture began investigating the case after noting Halal Depot was redeeming food stamps at a higher rate than comparable stores in the neighborhood, and had in fact redeemed more food stamps than the total amount of food they claimed to have sold on their tax returns. Using an undercover operative, USDA made five undercover exchanges of food stamp benefits for cash, phone cards, clothing and other ineligible items. In each instance, the defendants charged the card 20% to 50% more than the value of the cash and other items. The excess money was diverted directly into the defendants’ bank account. Both defendants admitted at their plea hearings that they had deliberately defrauded the food stamp program for their own gain. At sentencing, government witnesses established the defendants obtained more than $400,000 in fraud proceeds through the scheme. Agents testified that the store had a mix of empty shelves and long-expired food, indicating the “grocery” business was little more than window dressing for their food-stamp fraud scheme.
On July 29, 2009, federal agents executed search warrants at Halal Depot and the defendants’ homes. Agents recovered hundreds of pages of ledgers documenting wire transfers to foreign countries, including Somalia, Yemen, Saudi Arabia, Kenya, and the United Arab Emirates. Both defendants admitted they ran a money-transmitting business, and charged their customers a commission to send money overseas. Federal law requires money transfer businesses to obtain state licenses and register with the U.S. Department of the Treasury, so they can be monitored for money laundering and other criminal activity. It is also illegal for even a licensed money transfer business to knowingly transfer crime proceeds. Omar Sufi admitted his business was not licensed with the State of Michigan or registered with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. Moreover, he admitted he knowingly wired food stamp benefits to foreign countries for a commission. FinCEN is presently investigating the Sufi brothers for failure to comply with the money transmitter registration requirements pursuant to the Bank Secrecy Act.
Bank records also established the brothers routinely deposited large amounts of cash from this business, deliberately breaking up the deposits into sums less than $10,000. Omar Sufi, who spent several years working at a bank, admitted “structuring” the transactions in this way because he knew banks are required to report cash transactions over $10,000. By structuring, the defendant hoped to conceal both the food stamp fraud scheme and the unlicensed money transfer business.
The Court noted the seriousness and sophistication of the offenses, and the need for the sentence imposed to promote respect for the law. “This was not a victimless crime,” said U.S. Attorney Davis. “The defendant not only defrauded the taxpayers, but exploited members of his own community for personal profit.” Special Agents of the U.S. Department of Agriculture, Office of the Inspector General investigated the case. Assistant U.S. Attorney Nils R. Kessler handled the prosecution.