Report: Businesses Illegally Profiting From Food Stamps

46 Million People In US Rely On Food Stamp Program

An undercover investigation by the 10News I-Team and Scripps Howard News Service has revealed a large number of retailers possibly taking advantage of the federal government and federal investigators stumbling to figure out what happened.

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Nationwide, more than 230,000 retailers take part in the Food Stamp program, and each year the U.S. Department of Agriculture kicks out about 1,000 retailers for cheating the system.

In San Diego, a source told the I-Team merchants accept food stamps when they shouldn't be -- trading booze for taxpayer money.

"I've been there; I watch everything," said the source, who preferred to remain anonymous. "They ring you up like you bought merchandise for $100, but they put $120 and give you the cash back."

The source added, "You can buy liquor, cigarettes, anything you want to with the EBT (Electronic Benefit Transfer) card with the food stamp … You're not supposed to be able to. It's against the law."

Such infractions get a store blacklisted, and the I-Team learned more than a dozen stores in San Diego County currently make the blacklist.

The owner at Horseshoe Liquor and Market in Spring Valley admitted to talking food stamps despite being blacklisted.

"I got approved," the owner said.

An I-Team investigation found Horseshoe Liquor and Market, along with hundreds of other stores across the county, is approved to accept food stamps. However, these same stores are also banned from accepting them.

The USDA makes two lists: the blacklist and the approved list.

The I-Team learned there are at least 1,500 stores across the country on both of them.

"What your investigation shows is exactly what bureaucrats don't get," said Rep. Darrell Issa (R-Calif.).

The Vista congressman told 10News he was not happy to see the government agency charged with policing the food stamp program allowing some stores to slip through the cracks. He promised action.

"We expect to give the USDA a very short leash to bringing real reform to this failed policy," Issa said.

In response to the I-Team investigation, USDA Undersecretary Kevin Concannon said, "Rogue stores and their owners should be punished ... and prosecuted criminally where possible."

The USDA looked into the status of Horseshoe Liquor and Market and said, "Anomalies have been discovered. We appreciate the information you have provided. We are carefully reviewing and will be taking appropriate next steps."

Nationally, more than 46 million people rely on food stamps. The USDA only has about 100 investigators to police more than a 200,000 stores.

The USDA estimates illegal food stamp transactions cost about $330 million every year.

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