Man Pleads Guilty to Lucrative Federal Benefit Fraud Scheme
Memphis, TN – A man responsible for executing a federal benefit fraud scheme that cost the government an estimated $400,000 pled guilty to conspiracy charges this week.
According to the indictment, Ray Chism III defrauded the government by purchasing Supplemental Nutrition Assistance Program (SNAP) benefits from recipients for cash in amounts less than the face value of the benefits, and then redeemed the benefits at full monetary value.
From October 2011 to December 2013, Chism recruited multiple SNAP recipients willing to sell their allotted benefits for amounts less than face value. Chism subsequently redeemed the benefits through Maxi Foods, a grocery store owned by Chism’s relative, for full monetary value.
SNAP (formerly known as Food Stamps) is a program designed to help low- and middle-income families purchase food. A SNAP beneficiary is provided a designated amount of funding each month via a rechargeable Electronic Benefits Transfer (EBT) card. Cardholders are able to use the allotted funding to purchase eligible food items at authorized retailers. Maxi Foods possessed a SNAP EBT card system, enabling SNAP beneficiaries to pay for eligible food items with their EBT card.
Chism also masterminded a scheme to defraud the Child Care Certificate Program, which provides federal funding to assist underprivileged families with child care costs, from October 2011 to December 2013. Chism paid cash to parents who qualified for Certificate Program benefits in exchange for use of their child care certificates. After acquiring the information, Chism would falsely report the children’s attendance to his daycare center, Helping Hands Enrichment Center, and receive reimbursement for care. Chism also provided non-qualifying parents with false employment verification, which qualified them for the Certificate Program.
On Tuesday, July 28th, Chism pled guilty to conspiracy to commit SNAP benefit fraud and conspiracy to commit child care benefit fraud. Chism faces a maximum sentence of 10 years and a maximum fine of $500,000.
Chism is scheduled to be sentenced on Friday, October 23, 2015 at 9:30 a.m. by U.S. District Judge John T. Fowlkes Jr.
This investigation was conducted by the United States Department of Agriculture Office of the Inspector General; United States Secret Service; United States Marshals Service; Memphis Police Department Organized Crime Unit; and the Tennessee Department of Human Services.
This case is being prosecuted for the government by Assistant U.S. Attorneys Larry Laurenzi and Debra Ireland.