USDA Employee And Five Others Charged In Multimillion-Dollar Food Stamp Fraud And Bribery Scheme

Perry Carbone, Attorney for the United States, Acting under Authority Conferred by 28 U.S.C. § 515; Charmeka Parker, the Special Agent in Charge of the U.S. Department of Agriculture, Office of Inspector General (“USDA-OIG”); and Christopher G. Raia, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of a Superseding Indictment charging six individuals in connection with a sprawling fraud and bribery scheme that generated over $66 million in unauthorized transactions under the Supplemental Nutrition Assistance Program (“SNAP”)—colloquially known as food stamps.  This is one of the largest food stamp frauds in U.S. history. The defendants—MICHAEL KEHOE, MOHAMAD NAWAFLEH, OMAR ALRAWASHDEH, GAMAL OBAID, EMAD ALRAWASHDEH, and ARLASA DAVIS—are charged with conspiracy to steal government funds and to misappropriate U.S. Department of Agriculture (“USDA”) benefits, among other charges.  DAVIS, a USDA employee, is additionally charged with bribery and honest services fraud.  The case is assigned to U.S. District Judge Jed S. Rakoff.

“Michael Kehoe and his co-conspirators misappropriated tens of millions of dollars in taxpayer funds meant to help low-income families put food on the table,” said U.S. Attorney Perry Carbone.  “This fraud was made possible when USDA employee Arlasa Davis betrayed the public trust by selling confidential government information to the very criminals she was supposed to catch.  Their actions undermined a program that vulnerable New Yorkers depend on for basic nutrition.  These charges should be a reminder that those who exploit anti-poverty programs for personal gain will be held accountable for their crimes.”

USDA-OIG Special Agent in Charge Charmeka Parker said: “We appreciate the collaboration with our law enforcement partners in pursuing allegations regarding government employees, who use their positions to participate in schemes that exploit taxpayer funded programs.”

FBI Assistant Director in Charge Christopher G. Raia said: “Arlasa Davis, a USDA employee, is alleged to have abused her position and privileged access to confidential government databases to assist her co-conspirators in exploiting the SNAP program, driving tens of millions of dollars in fraudulent transactions.  This alleged scheme benefited the defendants while undermining critical safeguards designed to ensure that SNAP assistance reaches only eligible families in need.  The FBI will never tolerate any individual who exploits federal financial assistance for personal reward.”

According to the Indictment, statements made in public court proceedings and filings, and the evidence at trial: ^[1]

The SNAP program uses federal tax dollars to help low-income households purchase food.  SNAP recipients use Electronic Benefit Transfer (“EBT”) cards—similar to debit cards—to buy food at participating stores. Those stores, which get license numbers from the USDA, use special EBT terminals to swipe the EBT cards.  When a SNAP recipient swipes their EBT card, the system verifies the transaction and electronically deducts the purchase amount from the recipient’s account.  The corresponding federal funds are then transferred to the store’s bank account.

Starting in 2019, KEHOE orchestrated a network that supplied approximately 160 unauthorized EBT terminals to stores across the New York area to illegally process more than $30 million in EBT transactions.  Working with his codefendants NAWAFLEH, OMAR ALRAWASHDEH, OBAID, and EMAD ALRAWASHDEH, KEHOE submitted approximately 200 fraudulent USDA applications, misappropriating USDA license numbers and, in some cases, doctoring application documents, to obtain EBT terminals for unauthorized stores—including smoke shops and other ineligible businesses.

Critical to the scheme was ARLASA DAVIS, a longtime USDA employee who worked within the very division of the USDA responsible for identifying SNAP fraud.  DAVIS abused her privileged access to federal systems to sell hundreds of EBT license numbers enabling over $36 million in fraudulent SNAP redemptions at unauthorized stores.  DAVIS photographed handwritten lists of license numbers intended for qualifying stores with her personal cellphone and funneled them to an intermediary who sold them to co-conspirators, including NAWAFLEH, OMAR ALRAWASHDEH, EMAD ALRAWASHDEH, and OBAID, who then used those license numbers to fraudulently obtain EBT terminals for stores that were not authorized by the USDA to process SNAP transactions.  In return, DAVIS received substantial bribes that were disguised in communications as, among other things, “birthday gifts” and “flowers.”

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KEHOE, 46, of Long Island, New York; NAWAFLEH, 34, of the Bronx, New York; OMAR ALRAWASHDEH, 37, of the Bronx, New York; OBAID, 39, of the Bronx, New York; EMAD ALRAWASHDEH, 37, of the Bronx, New York; and DAVIS, 56, of Gardiner, New York, are each charged with one count of conspiracy to steal government funds and misappropriate USDA benefits, which carries a maximum sentence of five years in prison, one count of theft of government funds, which carries a maximum sentence of 10 years in prison, and one count of misappropriation of USDA benefits, which carries a maximum sentence of 20 years in prison.  DAVIS is additionally charged with one count of conspiracy to commit bribery, which carries a maximum sentence of five years in prison, one count of bribery, which carries a maximum sentence of 15 years in prison, and one count of conspiracy to commit honest services wire fraud, which carries a maximum sentence of 20 years in prison.  NAWAFLEH is additionally charged with one count of failure to appear, which carries a maximum sentence of 10 years in prison.

The maximum sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Carbone praised the outstanding work of the USDA and FBI, which is also assisting in the investigation.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Georgia V. Kostopoulos and Joe Zabel are in charge of the prosecution.

The charges contained in the Superseding Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.