Business, Crime

Baltimore County retailers sentenced to prison for food stamp fraud

FraudTwo Baltimore-area men have been sentenced to prison in connection with food stamp fraud.

In August 2016, a federal grand jury returned nine indictments charging 14 retail store operators in the greater Baltimore area with food stamp fraud and wire fraud in connection with obtaining over $16 million from the United States Department of Agriculture by illegally trading food stamp benefits for cash.

Twelve of the fourteen charged defendants have pleaded guilty, and two defendants were sentenced this week to federal prison.

On Friday, a judge sentenced Mohammad Shafiq, 51, of Baltimore, to 46 months in prison, followed by three years of supervised release. The judge also ordered Shafiq to pay restitution in the amount of $3,712,353.00.

In a separate sentencing hearing held on Thursday, the same judge sentenced Mohammad Irfan, 59, of Baltimore County, 51 months in prison, followed by three years of supervised release. The judge also ordered Irfan to pay restitution in the amount of $3,550,662.00.

The Supplemental Nutrition Assistance Program (SNAP), previously known as the Food Stamp Program, is administered by the Food and Nutrition Service (FNS) of the United States Department of Agriculture (USDA), together with state agencies. The program funds low-income individuals to allow them to obtain a more nutritious diet. In Maryland, the program provides eligible individuals with an electronic benefit transfer (EBT) card called the Independence Card, which operates like a debit card. Recipients obtain EBT cards through the state Department of Human Resources, then use the EBT card to purchase approved food items from participating retailers.

Retailers must apply to and be approved by FNS to participate in the program. Authorized retailers use a point-of-sale terminal that checks the EBT card information and deducts the cash value of the purchase from the customer’s SNAP benefit balance. SNAP reimbursements are paid to retailers through electronic funds transfers. Retailers must bill the government only in return for providing approved food items.

Although charged in separate and unrelated schemes, Shafiq and Irfan engaged in similar conduct to defraud the SNAP program.

According to two separate plea agreements, from October 2010 through at least July 2016, Shafiq, Irfan and co-conspirators exchanged EBT benefits for cash, in violation of the food stamp program rules. They typically paid half the value of the EBT benefits in cash. To avoid detection, they often debited the funds from the card in multiple transactions over a period of hours or days, or called a different store where the transaction was processed manually.

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Shafiq and Irfan owned and/or operated stores in the Baltimore area that were authorized to accept SNAP. The defendants received instruction regarding the requirements and regulations of the food stamp program and were aware that only eligible food items could be exchanged for EBT benefits and that a retailer may never exchange EBT benefits for cash or non-food items.

Shafiq and his family members owned and operated four stores: Quick Stop Convenience Store, 237 N. Patterson Park Avenue; New York Food Mart, 1201 N. Patterson Park Avenue; and Barclay Food Mart, 2454 Barclay Street, all in Baltimore; and Shafiq Corporation, 6929 Holabird Avenue, in Dundalk, Maryland. From October 2010 through July 2016, Shafiq himself, and by and through his family members obtained more than $3.7 million in payments for food sales that never occurred or were substantially inflated.

Irfan and his family members also owned and/or operated four stores: New Sherwood Market, 6324 Sherwood Road in Northwood, Maryland; Martin Mart, 1504 Martin Boulevard in Middle River, Maryland; Rosedale Mart, 6326 Kenwood Avenue in Rosedale, Maryland; and M&A Mart 7400-A Belair Road in Baltimore. From October 2010 through August 2016, Irfan and his co-conspirators obtained more than $3.5 million in payments for food sales that never occurred or were substantially inflated.

Two retail store operators have previously been sentenced to federal prison. On March 27, 2017, Muhammad Sarmad was sentenced to 18 months in prison, followed by three years of supervised release, and ordered to pay restitution in the amount of $3,550,662. On April 27, 2017, Shaheen Tasewar Hussain was sentenced to 30 months in prison, followed by three years of supervised release, and ordered to pay restitution in the amount of $778,183.00.

The defendants listed below have all pleaded guilty and are awaiting sentencing:

Walayat Khan, 37, of Reisterstown, Maryland;
Barbara Ann Duke, 51, of Owings Mills, Maryland;
Kelym Novas Perez, 35, of Baltimore;
Jose Remedio Gonzalez Reyes, 51, of Baltimore;
Mulazam Hussain, 55, of Windsor Mill, Maryland;
Alia Shaheen, 25, of Baltimore;
Mahmood Hussain Shah, 58, of Catonsville, Maryland;
Muhammad Rafiq, 32, of Reisterstown;
Rizwan Pervez, 39, of Essex, Maryland; and
Kassem Mohammad Hafeed, a/k/a Kassam Mohammad Hafeed, 51, Baltimore

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