Penalties for Food Stamp Fraud

By Vicki A. Benge

A description of the penalties and fines that can result from food stamp fraud with examples involving benefit recipients, retailers and state program workers.

Since 2008, the U.S. food stamp program has been referred to as the Supplemental Nutrition Assistance Program, or SNAP, for short. SNAP fraud is a federal crime. Penalties for food stamp fraud range from 12 months of disqualification for benefits to years in prison and steep fines. How severe the punishment is typically depends on the seriousness of the crime and the dollar value of the fraud.

Reporting Income

The law requires full disclosure of household income when applying for or renewing SNAP benefits. Failure to do so can result in the applicant being banned from receiving food stamps. For a first offense, this is typically one year. If caught being untruthful a second time, the disqualification is for two years, and three times can result in a permanent bar to benefits.

Trafficking

Food stamp trafficking is one of the most common types of fraud involving food stamps, according to the USDA. Trafficking is the buying or selling of SNAP benefits by individuals or retailers. A criminal act is committed when someone trades food stamps for other items, typically cash or drugs. The buyer, who takes unlawful possession of food stamps valued at more than $100, is committing a felony. When the amount is less than $100, the crime is a misdemeanor.

Penalties vary by jurisdiction for the SNAP beneficiary. For example, in Pennsylvania trading food stamps for illegal drugs can result in a two-year ban from the program. If caught a second time, the recipient can be banned permanently. Both state and federal agencies can prosecute individuals for food stamp fraud. The federal government typically focuses on retailers, and state authorities monitor individual beneficiaries.

Retailers

Retailers that participate in food stamp crimes can quickly defraud the government of large amounts of money. Penalties are not consistent across the board, but can be severe. For example, in September 2012, KPLC-TV reported that a Lake Charles, Louisiana, man was sentenced to 51 months in prison and ordered to pay restitution totaling close to $1.3 million to the USDA for food stamp fraud. He operated a convenience store and gave certain customers 60 cents on the dollar for their food stamp benefits.

The U.S. Attorney's Office in Maryland reported that 10 store owners or managers who were indicted for food stamp fraud in 2013 in separate scams to redeem food stamp benefits in exchange for cash were sentenced to prison terms of 18 months to 38 months with restitution fines ranging from $95,000 to $1.4 million.

Program Workers

State employees who work in food stamp programs can face stiff penalties for committing food stamp crimes. In January 2015, Dana Ferguson of the Associated Press reported on an employee of the Wisconsin Food Share program who created and renewed fraudulent accounts. She defrauded the government of more than $150,000 and was sentenced to 10 years in prison.