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82. Getting too many food stamps because the food stamp office thinks the household committed fraud

If the food stamp office thinks a person has cheated or lied in order to get food stamps, or sold the food stamps, it may accuse that person of fraud. In the Food Stamp Program, these acts are called “intentional program violations” (IPVs).

For more information on food stamp intentional program violations, see generally David Super, Food Stamps and the Criminal Justice System, 25 The Champion (Journal of the National Association of Criminal Defense Lawyers), November 2001, at 20; Evanne O’Donnell, Laurel Blankinship and Jodea Foster, When Cash Aid and Food Stamps Become a Gateway to Prison and What You Can Do About This, Clearinghouse Review, September/October 2003, at 341.

There are two main types of IPVs. The first happens when someone lies to the food stamp office about his or her income, resources, or other household circumstances, or deliberately hides information that he or she is required to report. The food stamp office often investigates these kinds of fraud by checking other government records which show wages, taxes, and unemployment records. [MPP § 20-006.] The county also matches their list of people against bank records. Using these computer matches, often the agency will find out about hidden wages or income.

The second main type of IPV is food stamp trafficking. Food stamp trafficking is selling or trading food stamps for cash or anything that is not food. [7 C.F.R. § 271.2; MPP § 20-300.12 (definition of trafficking).] FNS recently updated the regulatory definition of trafficking to include:  buying, selling, stealing, or otherwise exchanging SNAP benefits, for cash or consideration other than eligible food.  76 Federal Register 35787. To address recent complaints about this issue, the new regulation also prohibits using SNAP benefits to buy products that have container deposits for purposes of subsequently discarding the product and returning the container(s) in exchange for cash refund deposits (i.e. intentionally dumping beverages to get deposit refunds); the re-sale of  products purchased with SNAP benefits (i.e. the “Costco” issue of buying in large quantities and reselling for profit); or reselling the food purchased with SNAP benefits for cash or consideration other than eligible food. Id. Finally, for those that had this urge, it is also trafficking to exchange SNAP benefits for firearms, ammunition, explosives, or controlled substances. Id.

The food stamp office sometimes checks Electronic Benefit Transfer (EBT) records to look for food stamp transactions that it thinks are suspicious. Types of food stamp transactions that might be considered suspicious include transactions that are out-of-state or for high-dollar amounts at small stores, transactions for even-dollar amounts (like $50.00 exactly), and transactions that occur very soon after another transaction. Advocates should check to see if cultural or other factor may explain otherwise suspicious patterns. DSS has issued guidance on the rules governing the use of EBT and EBT administrative data to prevent the misuse of EBT information.  ACL 10-01. The ACL reminds counties that households should be able to access their accounts from anywhere in the country where EBT benefits are redeemed.

If there is a prosecutorial purpose behind the investigation, a home visit should be considered a search within the parameters of the U.S. Constitution’s Fourth Amendment. By its terms, the Fourth Amendment protects individuals from “unreasonable searches and seizures.” The Supreme Court has defined a “search” as any governmental intrusion into an area in which the subject “exhibited an actual (subjective) expectation of privacy” where that “expectation [is] one that society is prepared to recognize as ‘reasonable.'” Katz v. United States, 389 U.S. 347, 361 (1967) (Harlan J., concurring). If the search is conducted without a valid warrant or without proper notice, it is per se unreasonable unless the recipient voluntarily consents to the search. Subject to limited exceptions, a warrantless search of private property is presumptively unreasonable. Camara v. Municipal Court of San Francisco, 387 U.S. 523 (1967); Stoner v. California, 376 U.S. 483 (1964); Marshall v. Barlow’s, Inc., 436 U.S. 307 (1978) (inspection without a warrant violates the Fourth Amendment).

There must be some factual basis for a referral to the special investigations unit (SIU). [MPP § 20-004.1.] The food stamp office must check into the facts before it accuses a person of fraud. [7 C.F.R. § 273.16(a) (1); MPP § 20-300.21.] The food stamp office will send investigators out to a person’s home. When the home visit is combined with proper notice, the search is reasonable unless the food stamp recipient did not voluntarily consent. [Schneckloth v. Bustamonte, 412 U.S. 218, 219 (1973). For example, coercive language in the notice may render consent to an investigative visit involuntary. [But see S.L. v. Whitburn, 67 F.3d 1299 (7th Cir. 1995) (Fourth Amendment’s prohibition against unreasonable searches and seizures did not prohibit county’s home visit and collateral contact verification procedures).]

These fraud investigators will talk to neighbors, children or anyone else that happens to be around. The office will also gather other computer records and compare them against what the household has reported. In addition, the county will bring people into the welfare office and interrogate them. (See the note, below, for a related discussion about how “interviews” by fraud investigators may implicate “Miranda” rights due to investigatory coercion). Advocates might consider advising clients not to go to these interviews, or to make sure they go along to protect clients from signing documents such as an “administrative disqualification consent agreement” in which they admit fraud. (See related information in the sections of this guide explaining the Disqualification Consent Agreement and what happens if the recipient signs such a consent or waiver.

For additional authority on the need for a standard of “clear and convincing” evidence to support allegations of fraud, see Morton v. Ruiz, 415 U.S. 199 (1974); Green v. Department of Pub. Aid, 520 N.E.2d 860 (Ill. App. Ct. 1988); Cozart v. Winfeld, 687 F.2d 1058 (7th Cir. 1982). Green v. Dep’t of Pub. Aid, 520 N.E.2d 860 (2d Cir.1968); Hornsby v. Allen 326 F. 2d 605 (5th Cir. 1964); cf. El Dia, Inc. v. Colon, 783 F. Supp. 15 (P.R. 1991) (stating that lack of explicit and meaningful standards governing denial of access to records violates Due Process and Equal Protection clauses), rev’d and remanded by El Dia, Inc. V. Hernandez Colon, 963 F. 2d 488 (1st Cir. 1992).]

Standards must be set so that applicants and recipients are not at the mercy of eligibility workers who may be hostile to them. Thus, there is a strong policy that counties cannot refer cases for criminal prosecution or administrative action without meeting the standard for referral, namely, “clear and convincing” evidence of fraud. [7 C.F.R. § 273.16(a)(1); MPP § 20- 300.21.]

Once the investigation has begun the food stamp office can: (1) refer the person directly to the local district attorney for criminal prosecution; (2) try to get the person to sign a disqualification consent agreement admitting they committed fraud; or (3) hold an administrative disqualification hearing.

If a person is found guilty of an intentional program violation in court or a fair hearing, or if they sign a disqualification agreement, that person will:

  • lose the right to get food stamps for a specified period of time; and
  • along with the other members of the household, have to pay back any overissuance.

(See related information in the section explaining what happens if the household gets too many food stamps.)

When investigatory coercion occurs: 

Fraud interviews may be little more than attempts to trick recipients into self-incrimination. Generally, investigators do not read “Miranda” warnings at these interviews because the interviews are not considered custodial. Nevertheless, there may be circumstances in which Miranda warnings are not categorically required but in which an individual is in fact coerced by Food Stamp Program officials to make incriminating statements. The proper test for the admissibility of inculpatory statements made in a non-custodial setting is whether the statements were involuntary, thereby offending Fifth and Fourteenth Amendment notions of due process. See Miller v. Fenton, 474 U.S. 104 (1985). One form of coercion that recipients have faced in the investigative process is the eliciting of statements through threat of loss of benefits or disqualification. See Garrity v. New Jersey, 385 U.S. 493 (1967) (statements made were inadmissible, in the face of a “Hobsons’s choice,” i.e., a choice between making a statement and suffering a penalty). The food stamp regulations place a burden on applicants and recipients to cooperate with the agency in the investigation process. This requirement creates the possibility of disqualification of persons refusing to cooperate because of fear of self-incrimination. Thus, Garrity may apply to forbid both the use of incriminating information compelled and termination of benefits for failure to provide information under such circumstances.