Federal Grand Jury Indicts Six, Three Others Set To Plead Guilty, 5 Businesses Identified In Food Stamp Fraud Investigation In Rhode Island

PROVIDENCE, R.I. – A two-year criminal investigation conducted by the United States Attorney’s Office; the U.S. Department of Agriculture, Office of Inspector General; U.S. Department of Agriculture, Food and Nutrition Service, Retailer Investigations Branch; Internal Revenue Service Criminal Investigation; and the Rhode Island State Police has resulted in federal indictments charging six individuals and the filing of federal criminal charges against three others who are set to plead guilty for their alleged roles in various conspiracies and actions to defraud the federally funded Supplemental Nutrition Assistance Program (SNAP), commonly referred to as the food stamp program, of more than $3 million dollars.

At a news conference to announce the findings of the investigation to date and resulting federal charges, United States Attorney Peter F. Neronha identified five Providence area businesses named in court documents where it is alleged that store owners and/or employees allowed SNAP benefit recipients to use their Electronic Benefit Transfer (EBT) cards to exchange their SNAP benefits for cash, a violation of the program’s laws and regulations. It is alleged that in return, the defendants added a surcharge to the recipients’ withdrawal of SNAP benefits, usually an amount equal to that of the amount of cash benefit received by the recipient. SNAP benefit funds are transferred electronically directly to accounts managed by the retailer.  

United States Attorney Peter Neronha announced that over the past two years, a pattern of alleged conspiracies and SNAP benefits abuse was revealed when federal law enforcement undercover investigators visited area convenience stores; examined thousands of documents, bank records and tax filings; and reviewed information and evidence seized during the execution of court authorized search warrants at several businesses on April 1, 2013.

Among the individuals named in federal grand jury indictments returned on Wednesday, and in informations and plea agreements filed with the U.S. District Court on Wednesday, are owners, managers and/or employees of the Corner Store, Regency Mart, Stop & Go, Dugout and Cristina’s Market, all located in Providence.

In addition to the ongoing criminal investigation and resulting criminal charges announced today, over the past two years the USDA Food and Nutrition Service, administrators of SNAP, permanently disqualified 37 Rhode Island retailers from participating in the food stamp program and sanctioned 15 others for violating the program's laws and regulations. Violations ranged from allowing the purchase of unauthorized merchandise to trafficking cash.

United States Attorney Peter F. Neronha commented, “The conduct alleged in the charging documents removed a tremendous amount of money from the food stamp benefit program that could otherwise go to feed a hungry adult or a hungry child.  Such conduct on the part of some food stamp recipients is plainly improper, and subject to administrative action.  Such alleged conduct on the part of retailers, motivated only by greed, is outrageous, and warrants the full attention of this Office and our law enforcement partners.”

USDA Office of Inspector General, Special Agent in Charge William G. Squires Jr.said“The Supplemental Nutrition Assistance Program was created to provide food and nutrition to those who truly need assistance. Those who are involved in fraud and abuse of SNAP and other USDA programs will be aggressively pursued by our office. Our joint investigative effort in Rhode Island has successfully uncovered and brought to justice several individuals and stores who sought to profit from the SNAP program through illegal schemes. The USDA Office of Inspector General will continue to dedicate resources and work with our Federal, State and local law enforcement partners in order to protect the integrity of these programs and to prosecute those who commit fraud.”

John Collins, Acting Special Agent in Charge of IRS Criminal Investigation stated, “The IRS enforces the nation's tax laws, but also takes particular interest in cases where someone, for their own personal benefit, has abused our system of providing for our citizens who have the greatest needs. Supplemental Nutrition Assistance Program benefits are designed to help individuals with the most basic of human necessities.  Fraud in the system takes our limited resources away from those in need and erodes confidence in the system.   With both law enforcement and financial investigation expertise, Special Agents of IRS Criminal Investigation are uniquely qualified to assist state and federal law enforcement agencies with these types of cases by following the money. We are pleased with the developments in these investigations due to the cooperative efforts of our law enforcement partners---the U.S. Attorney’s Office, the U.S. Department of Agriculture, the Rhode Island Attorney General’s Office and the Rhode Island State Police.”

Colonel Steven G. O’Donnell, Superintendent of the Rhode Island State Police added, “EBT Fraud affects the legitimate food stamp process, the economy, and confidence of the public with the proper distribution of funds to those who really need it.”

“I applaud the initiative of the law enforcement agencies present here today to address fraud in the EBT system,” said Rhode Island Attorney General Peter F. Kilmartin. “Since being briefed on this initiative by the United States Attorney many months ago, our goal has been to ensure that there is a coordinated effort to address those who defraud the system, and who therefore deprive our most needy citizens of the benefits they are entitled to.  This case is yet another reminder of the fact that law enforcement functions best when the efforts of federal, state, and local agencies are coordinated towards a common goal, and we will continue to work together in the weeks and months ahead to ensure that those who have attempted to cheat the system are held accountable.”

The cases are being prosecuted in U.S. District Court in Providence by Assistant U.S. Attorneys Sandra R. Hebert and Richard B. Myrus.
An indictment and information are merely allegations and are not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

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Mustafa Al Kabouni, 52
Cranston, RI
Counts 1, 3, 5, 8-30

Mohamad Barbour, 53
North Providence, RI
Counts 1, 5, 11, 13

Mohamad Amir Al Kabouni, 43
North Providence, RI
Counts 1-4, 6, 9, 10, 12, 14

Mohamad Eid Al Kabouni, 22
Cranston, RI
Counts 1, 6, 7, 14-16

 

Count I: Conspiracy to defraud the United States
Max Penalties: 5 years imprisonment; $250,000 fine; 3 years supervised release

Counts II, III, IV, V, VI, VII:  SNAP benefit fraud - $100 or more
Max Penalties:  5 years imprisonment; $250,000 fine; 3 years supervised release

Count VIII:  SNAP benefit fraud - $5,000 or more.
Max Penalties: 20 years imprisonment; $250,000 fine; 3 years supervised release

Counts IX-XVI:  Wire fraud
Max Penalties:  20 years imprisonment; $250,000 fine; 3 years supervised release

Counts XVII-XXII:  Money laundering
Max Penalties:  20 years imprisonment; $500,000 fine; 3 years supervised release

Counts XXIII-XXX:  Structuring
Max Penalties:  5 years imprisonment; $250,000 fine; 3 years supervised release

Amir Rasheed, 33
Flushing, NY
Counts 1-22

Karuna Mehta, 43
North Smithfield
Counts 1-8

Count I: Conspiracy to defraud the United States
Max Penalties: 5 years imprisonment; $250,000 fine; 3 years supervised release

Counts II, III, IV, V, VI, VII:  SNAP benefit fraud - $100 or more
Max Penalties:  5 years imprisonment; $250,000 fine; 3 years supervised release

Counts XVIII-XXII:  Money laundering
Max Penalties:  20 years imprisonment; $500,000 fine; 3 years supervised release

Contact: 401-709-5357
USARI.Media@usdoj.gov