Three East Bay Defendants Indicted For Conspiring To Defraud The United States

OAKLAND –A federal grand jury handed down a superseding indictment charging Ali Mugalli Hassan, Mugalli Ahmed Hassan, and Ahmed Ahmed Hasan Dharahan with conspiracy to defraud the United States, benefits fraud, conspiracy to commit wire fraud, and wire fraud, announced United States Attorney David L. Anderson and United States Department of Agriculture Office of Inspector General (USDA-OIG) Western Region Special Agent-in-Charge Lori Chan.

According to the superseding indictment issued on March 14, 2019, and unsealed this morning, defendant Ali Mugalli Hassan, 29, of Alameda, Calif., owned and operated a convenience store on International Boulevard in Oakland.  Members of Ali Mugalli Hassan’s family served as cashiers at the store, including co-defendants Mugalli Ahmed Hassan, 48, and Ahmed Ahmed Hasan Dharahan, 38, both of Oakland.  The superseding indictment alleges the defendants defrauded the USDA by unlawfully trafficking federal benefits.  

The convenience store was an authorized vendor for the USDA’s Supplemental Nutritional Assistance Program (SNAP) (formerly known as the Food Stamp Program).  SNAP helps economically disadvantaged persons pay for essential food items for themselves and their families.  Program recipients receive their benefits via an electronic benefits transaction (EBT) card, which operates much like a debit card but limits purchases to program-eligible items.  The store conducted a high-volume of SNAP transactions, including redeeming over $2.3 million in SNAP benefits between August 2014 and November 2017.  According to the superseding indictment, the defendants purchased benefits from store customers for 50 cents on the dollar, thus enabling the customers to use the cash they received for any purpose.  The defendants then conducted fraudulent SNAP transactions through the convenience store and redeemed the full dollar value of the benefits from the USDA.  As part of the scheme, the defendants and others also kept customers’ EBT cards and used these cards at other stores to purchase items for themselves using the federal benefits.  

Each defendant was charged with one count of conspiracy to commit benefits fraud and to defraud the United States, in violation of 18 U.S.C. § 371; one count of benefits fraud, in violation of 7 U.S.C. § 2024(b); one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; and twelve counts of wire fraud and aiding and abetting, in violation of 18 U.S.C. § 1343 and 18 U.S.C. § 2.  

Defendants were arrested and made their initial appearance this morning in federal court in Oakland before U.S. Magistrate Judge Kandis A. Westmore.  Magistrate Judge Westmore arraigned the defendants and released them on bond.  The Court also scheduled appearances tomorrow for identification of counsel for Ahmed Ahmed Dharahan and Ali Mugalli Hassan, as well as further bond hearings for all three defendants.            

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, the defendants face the following maximum statutory sentences:

In addition, the court may order up to three years of supervised release (for each count), additional assessments, and restitution, if appropriate.  However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  

Assistant U.S. Attorney Katie Burroughs Medearis is prosecuting the case with the assistance of Jessica Rodriguez Gonzalez.  The prosecution is the result of an investigation led by the USDA-OIG with the assistance of the Oakland Police Department, U.S. Marshals Service, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.