Federal agencies investigating food stamp fraud have begun bringing cases -- and convictions -- in a push that is likely to mean charges against more retailers that trade the federal benefit for cigarettes or cash.
Last week, a federal grand jury indicted Waqar A. Malik, 56, of Cheswick for alleged food stamp fraud and theft of government funds, following an investigation by Pittsburgh's Internal Revenue Service Criminal Investigations unit. That came just days after a brother-sister shopkeeping team was sentenced to probation on similar charges.
Special Agent Grant Friday of the U.S. Department of Agriculture Office of Inspector General said the cases are in part the result of the opening of an office of his agency in Pittsburgh in 2010. Food stamps are "one of our main program areas that we investigate," he said.
The latest person charged, Mr. Malik, ran Natrona Mart in Natrona Heights, according to the indictment.
He sold thousands of dollars worth of cigarettes for payment in Supplemental Nutritional Assistance Program benefits -- commonly known as food stamps -- then disguised the transactions as food sales to get government reimbursement, according to the indictment. The charges listed sales of more than $300 worth of cigarettes for food stamps in just two days in April.
Mr. Malik could not be reached for comment.
Stanley Saxton and Nicole Gordon, a brother and sister who emigrated from Jamaica and became citizens, were ordered last week to pay back $119,871 in food stamp benefits that they illegally converted into cash. U.S. District Judge Maurice B. Cohill sentenced both to two years of probation including five months of home detention.
Saxton, 44, and Gordon, 34, both of Verona, ran the Wilkinsburg store known as Nicky's Corner. They allowed customers to sell food stamp credits for roughly 50 cents on the dollar, then got government reimbursement for the full amount of the benefit. Both pleaded guilty to conspiracy.
Defense attorney Samuel Reich, who represented Saxton and Gordon, said that the new USDA office "sent undercover agents out and they got evidence against a number of stores."
He added that Nicky's Corner will continue to operate, though it is barred from accepting food stamps.
According to the USDA, 47.6 million Americans get around $75 billion a year in food stamps, and an estimated $858 million is "trafficked" into improper uses.
That translates to around 1.3 percent of the program's funds misspent annually. That's down from estimated 4 percent loss rates in the 1990s, but up from historically low rates of 1 percent before 2009. The USDA attributes the uptick to an increase in the number of small- and mid-sized retailers who are accepting food stamps.
The first food stamp fraud cases in recent memory in Western Pennsylvania were filed in March.
Two Brentwood men who ran separate small grocery stores in the South Hills were indicted for wire fraud and food stamp fraud.
Samson Dweh, then 30, who ran Mariama African Store in Carrick, is scheduled to plead guilty in February. He started accepting food stamps in February 2009, and in August 2010 started paying customers around 50 cents on each dollar of benefit they sought to cash in, according to the indictment against him.
He then billed the USDA as if all of the benefits were redeemed for food, obtaining more than $200,000, "a substantial portion of such benefits having been unlawfully purchased for cash," according to the indictment.
Emile Bizimungu, then 31, ran the Dollar Grocery Center in Mount Oliver, according to the indictment against him. Starting in 2011, he began trading benefits for cash, and the total reached more than $40,000, according to the charges.
He has pleaded not guilty, and the assistant federal public defender representing him could not be reached for comment.
Rich Lord: firstname.lastname@example.org, 412-263-1542 or on Twitter @richelord.