Quincy Store Owner Pleads Guilty, Sentenced to Two-and-a-Half Years in Jail in Connection with EBT Fraud
Defendant Ordered to Pay $285,000 in Restitution; Guilty Plea Part of AG’s Extensive Investigation into EBT Fraud
DEDHAM – A Quincy store owner has pleaded guilty and been sentenced to two-and-a-half years in jail in connection with the unlawful use of EBT cards and defrauding the Supplemental Nutrition Assistance Program (SNAP), known commonly as “food stamps,” Attorney General Martha Coakley’s Office announced today. He was also ordered to pay restitution in the amount of $285,000.
“This defendant unlawfully exchanged food stamps for cash, defrauding taxpayers for his own personal profit,” said AG Coakley. “We will continue to actively and aggressively investigate and prosecute these cases to hold accountable those who undermine the integrity of a system intended to assist those in need. We thank our federal, state, and local partners for their assistance in this case and for their dedication to this ongoing collaborative effort to address this serious issue.”
Pat Lu, age 49, of Quincy, pleaded guilty today in Norfolk Superior Court on charges of Larceny over $250, Procurement Fraud, and Access Device Fraud. After the plea was entered, Superior Court Judge Kenneth J. Fishman sentenced Lu to two-and-a-half years in the House of Correction, with ten years of probation to serve upon completion of his sentence. Judge Fishman also ordered Lu to pay $285,000 in restitution. Lu has forfeited $60,000 that was seized from his bank account during the investigation, which will go toward the restitution he was ordered to pay.
“SNAP was created to provide food and nutrition to those who need assistance,” said Special Agent-in-Charge William G. Squires Jr. of the United States Department of Agriculture – Office of Inspector General (USDA-OIG). “Those who are involved in abusing SNAP and other USDA programs will be aggressively pursued by our office. The USDA-OIG will continue to dedicate resources and work with our Federal, state and local law enforcement partners in order to protect the integrity of these programs and to prosecute those who commit fraud.”
“This case, which was investigated through a collaboration of state, local and federal agencies, highlights our joint efforts to protect the integrity of the federal SNAP program,” said Department of Transitional Assistance (DTA) Commissioner Stacey Monahan. “DTA recently signed an agreement with the USDA that allows us to work with local law enforcement to investigate and pursue more SNAP fraud and abuse cases like this one. We are working with the Attorney General and law enforcement across the Commonwealth to hold retailers accountable and ensure that taxpayer resources are being used as intended to help low-income residents meet their basic needs.”
The investigation into the fraudulent use of Electronic Benefit Transfer (EBT) SNAP cards began in November 2011 after a referral from the Quincy Police Department. As a result of that investigation, State Police assigned to AG Coakley’s Office, in conjunction with federal agents from the USDA-OIG and Quincy Police, executed a search warrant at Lotto Luck (D.B.A Pat’s Mini Mart) located in Quincy.
Pat’s Mini Mart was a convenience store that primarily sold cigarettes, beverages, candy and other convenience items. The store was authorized by the USDA to accept SNAP benefits from customers for eligible items.
Lu engaged in a scheme to traffic SNAP benefits in exchange for cash. As part of the scheme, customers presented their EBT card to Lu and another store clerk. Lu or the clerk would swipe the customer’s EBT card and enter fraudulent information on a dedicated EBT terminal indicating that a customer purchased groceries. Lu or the clerk would furnish cash to the customer for a half of what was charged to their EBT card account. For example, if an EBT card customer wanted $50 in cash, Lu would provide the customer with $50 cash and enter a $100 grocery sale. Lu’s account would subsequently be credited with $100 from the customer’s EBT SNAP account, providing Lu with a $50 profit on the transaction.
Lu also made an illegal profit by allowing customers to use their SNAP benefits to purchase cigarettes.
In the months before his arrest, Pat’s Mini Mart was transacting about $70,000 per month in mostly fraudulent SNAP sales. It is estimated that Lu’s cut each month resulted in roughly $30,000. Between October 2010 and April 2012, Pat’s Mini Mart processed approximately $800,000 worth of fraudulent SNAP transactions.
The SNAP program does not allow cash to be exchanged in lieu of benefits.
In August, a Medford couple pleaded guilty in connection with EBT fraud and other related charges of state and federal benefits fraud totaling more than $161,000. Stacie Coviello-Hickey and Ronald Hickey were ordered to pay restitution in the full amount and each serve five years of probation.
In October 2012, Waltham convenience store manager Hassan Mounajed, 30, of Fall River, was also indicted in a similar but separate scheme totaling more than $34,000 in fraudulent transactions. Mounajed is due back in court on October 29.
The case was prosecuted by Assistant Attorney General Michael Pine of AG Coakley’s Public Integrity Division and Gabe Thornton from AG Coakley’s Insurance and Unemployment Fraud Division, with assistance from Financial Investigator Brian Bukuras of the AG’s Financial Investigations Division and Victim Witness Advocate Shannon Legrice. Examiners from AG Coakley’s Computer Forensics Laboratory also assisted in this case. The investigation was handled by Massachusetts State Police assigned to the Attorney General’s Office. Investigators from the Quincy Police Department, Department of Transitional Assistance, and the U.S. Department of Agriculture – Office of Inspector General assisted in the investigation.