The shuttering of supermarkets in San Francisco is nothing new but in this particular case some markets might have a new reason to close. SF District Attorney Brooke Jenkins has charged owners and employees at five separate markets with welfare fraud. Here’s how it worked.
The City of San Francisco, State of California, and federal government provide SNAP benefits to qualified recipients in the form of electronic benefits transfer cards (commonly referred to as “EBT” cards), which can be used to purchase eligible food items. In these criminal cases, the defendants are alleged to have conspired together to obtain EBT cards from program recipients, and then process fraudulent transactions at various retail stores…
In a typical transaction, a “runner” would go to the mid-Market / Tenderloin area of San Francisco and call out “EBT” until the runner made contact with a person willing to sell their EBT benefits. The “runner” would then take the EBT card to co-conspirators at one of the involved stores, where an employee or owner would process transactions of between $100-$300 as if the EBT card were being used to purchase food items. Instead, the conspirators paid the EBT card holder 50% of the transaction, and kept the remaining 50% for themselves. Although each transaction was typically for a small amount of money, the stores involved in these cases fraudulently obtained hundreds of thousands of dollars in improper benefits.
In fact, the total fraud is alleged to be as high as $4 million. Nearly all of the fraud targeted in these three cases announced today appears to have happened at businesses in Chinatown. For instance, here’s the largest case:
The complaint in this matter alleges that these crimes were committed in connection with three San Francisco businesses located in Chinatown: Changyi Trading (1050 Stockton Street), Fu Yuan Food Market (1251 Stockton Street), and Da Chang Yuan (860 Washington Street). The total loss of the welfare fraud scheme is alleged to be in excess of $3 million dollars.
Assuming each transaction was no more than $300, we’re talking about at least 10,000 fraudulent transactions. It’s hard to see how the workers at these stores had time to do anything else. The other cases are somewhat smaller.
The complaint in this matter alleges that these crimes were committed in connection with H+L Market, a business located at 669 Geary Street in the Tenderloin. The complaint further alleges that the total loss amount is in excess of $500,000.
This market was not in Chinatown but all of the people being charged have Chinese names. Also, the report notes that this market is already padlocked and has apparently been shut down for at least six months. The other stores appear to still be operating at least for now.
When approached, cashiers at Changyi Trading said they could not discuss the allegations. At Fu Yuan Food Market, cashier Jonas Zhen denied the allegations.
Given the number of legitimate grocery stores that have failed in San Francisco in the last two years you have to wonder if the stores being charged survived because of the (alleged) fraud. Having an extra stream of off the books money coming in probably didn’t hurt. I’m not saying that to excuse welfare fraud obviously but it might help explain it.
If these cases proceed to trial and the owners are forced to offer the government some restitution (in addition to jail time) I wonder if the businesses will survive. As mentioned above, one of them has already closed.
But the bigger question is how many other retail stores in SF and other big cities have engaged in similar behavior. Something tells me DA Jenkins is only scratching the surface of the total amount of welfare fraud taking place in the city.
Read the full article here
