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GRAND RAPIDS STORE OWNER SENTENCED TO 7 YEARS IN PRISON AND MORE THAN $650,000 IN RESTITUTION FOR FOOD STAMP AND WELFARE FRAUD

FOR IMMEDIATE RELEASE
February 08, 2012

GRAND RAPIDS, MICHIGAN — Ahmed Sheikh Mohamed, 47, was sentenced to 84 months’ imprisonment for conspiracy, food stamp fraud, and theft of public money from various welfare programs, announced U.S. Attorney Donald A. Davis. U.S. District Court Judge Robert Holmes Bell also ordered Mohamed to pay restitution of $658,636.17 to the U.S. Departments of Agriculture, Housing and Urban Development, Health and Human Services and Education. Ahmed’s son Mohamed Isse and nephew Abdulrahman Hassan Mohamed also pled guilty to conspiracy, and are scheduled for sentencing on February 8 and 9, 2012.

From 2006 to 2009, Ahmed Sheikh Mohamed operated Rayan Phone Card & Grocery (“Rayan”), a small grocery store in Grand Rapids catering to the Somali immigrant community. The defendant applied for and obtained authorization to redeem food stamps at the store, which meant he could accept “Bridge Cards” as payment for approved food products. Retailers participating in the program are strictly forbidden from exchanging food stamp benefits for cash and ineligible items, or accepting them as payment on credit accounts.

The U.S. Department of Agriculture began investigating the case after noting that Rayan was redeeming food stamps at a higher rate than comparable stores in the neighborhood. Using cooperating customers, USDA made 9 exchanges of food stamp benefits for cash, phone cards and other ineligible items. In each instance, the defendants charged the card more than the value of the cash or other items, and deposited the excess directly into Mohamed’s bank account. On November 18, 2009, federal agents executed a search warrant at Rayan, and seized hundreds of ledger pages showing the defendant had also been extending revolving lines of credit to his clientele. The defendant admitted that he had been extending between $10,000 and $14,000 per month in credit to up to 200 customers at a time. Records established the borrowers paid their credit tabs with food stamps, thereby transferring their debts to the taxpayers. Evidence at sentencing established the defendant obtained more than $474,000 in fraud proceeds from his food stamp trafficking operation.

The defendant also convinced his nephew Abdulrahman to put the store and its bank account in his name as a straw owner. This allowed Mohamed to conceal his income, so he could defraud various welfare agencies of more than $180,000. Mohamed told agency case workers that he had little or no income, no assets, and nine children to care for. He supported his claims of poverty with statements from an empty bank account he maintained for this purpose, as well as fabricated minimum wage paychecks and employment verifications. The defendant repeatedly represented himself as a “meat cutter” making $7.50 an hour at the store he actually owned. As a result of the defendant’s fraudulent applications, the taxpayers paid approximately $1,000 per month to provide Mohamed’s family with $45,000 worth of free housing. The defendant also fraudulently obtained more than $46,000 in food stamps, almost $58,000 in Medicaid, $5,300 in cash assistance, and $4,300 in Women, Infants and Children (WIC) benefits. The defendant also submitted false applications for Pell Grants, resulting in the taxpayers paying in excess of $24,000 for college tuition for his adult son and daughter. On several occasions, Mohamed deliberately failed to pay his heating bills in order to receive shutoff notices, which he presented for payment under the Low Income Heating Assistance Program.

At the time of his arrest, Mohamed confessed that he sent some of his own food stamp benefits to Somalia, and that while collecting welfare benefits, he used money from the Rayan business account for personal spending and vacations, including a $15,000 family vacation to Mecca, Saudi Arabia.

The Court noted the seriousness and sophistication of the offenses, and the need for the sentence to promote respect for the law. “These taxpayer-supported programs are intended to assist the deserving needy. When they are abused and subverted by undeserving, greedy criminals our entire community suffers” said U.S. Attorney Davis. Special Agents of the U.S. Departments of Agriculture, Housing and Urban Development, Health and Human Services and Education investigated the case. Assistant U.S. Attorney Nils R. Kessler handled the prosecution.

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