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Justice News

Department of Justice
U.S. Attorney’s Office
Western District of North Carolina

Thursday, January 24, 2013

Ladybug Family Restaurant And Restaurant Employee Agree To Pay $62,000 To Resolve False Claims Act Allegations Of Food Stamp Fraud

United States Attorney Anne M. Tompkins Western District Of North Carolina

CHARLOTTE, N.C. – Ladybug Family Restaurant, Inc. and Retha Kendall Lindsey (“Defendants”) have agreed to pay $62,000 in damages and civil penalties to resolve allegations of food stamp fraud, announced Anne M. Tompkins, United States Attorney for the Western District of North Carolina.

U.S. Attorney Tompkins is joined in making today’s announcement by Karen Citizen-Wilcox, Special Agent in Charge, Office of the Inspector General, Office of Investigation of the U.S. Department of Agriculture (USDA-OIG).

On October 10, 2012, the United States filed a civil complaint against the Ladybug restaurant and Lindsey, who was employed by the restaurant, for violation of the United States False Claims Act. According to the filed complaint, the Defendants used other people’s Electronic Benefit Transaction (“EBT”) cards, formerly known as food stamps, to purchase food and other items for the Ladybug restaurants. The complaint alleged that from about August 2011 to about June 2012, the Defendants and others used EBT cards belonging to other people in at least 49 transactions to make bulk purchases of meat and other items for use at the Ladybug restaurants.

Today, the United States and Defendants submitted to the U.S. District Court a consent motion for a final order pursuant to which Defendants will pay $21,116.01 in damages and $40,883.99 in civil penalties under the False Claims Act. The proposed final judgment is subject to approval by a United States District Court Judge.

The Supplemental Nutrition Assistance Program (“SNAP”) provides assistance to low or no income individuals to allow them to purchase qualified food and nutrition items. Benefits are issued in the form of EBT cards similar to debit cards that can be swiped in a merchant’s credit card machine.

The civil action arose out of an investigation by the Inspector General’s Office of the U.S. Department of Agriculture, which administers the SNAP program. The False Claims Act allows the United States to recover triple the amount paid in fraudulent claims plus civil penalties of $5,000 to $11,000 per false claim. Each time an unauthorized party uses an EBT card constitutes a false claim to the United States subjecting the party to treble damages and civil penalties. The complaint in this case alleges that Defendants engaged in at least 49 fraudulent transactions. Each transaction is a false claim against the United States.

In making today’s announcement, U.S. Attorney Tompkins stated, “The SNAP program is in place to ensure that low income families and individuals are able to buy food staples to combat hunger and prevent malnutrition. Fraud on this program harms not only every American taxpayer but the vulnerable recipients who need it the most. My office will continue to use the False Claims Act to vigorously investigate and prosecute allegations of fraud on important government programs such as SNAP.”

Special Agent in Charge Citizen-Wilcox stated, “USDA-OIG aggressively investigates allegations of Supplemental Nutrition Assistance Program (SNAP) fraud with the goal of rooting out such activity to ensure that taxpayers’ funds are reserved for those who are truly in need. We would like to thank U.S. Attorney’s Office for their efforts in helping to combat SNAP fraud.”

The case was investigated by USDA-OIG. The prosecution was handled by Assistant United States Attorneys Paul B. Taylor and Jonathan H. Ferry of the U.S. Attorney’s Office for the Western District of North Carolina.

Updated March 19, 2015