Black market food stamps

by Thomas J. Cole, Albuquerque Journal

Alfred Perea says he was coming out of the Albertsons grocery near Coors Road and Central Avenue in February when a woman, accompanied by a girl, approached him and offered to sell food stamp benefits for 50 cents on the dollar.

Perea says the girl provided an Albertsons register receipt that showed a balance of more than $4,500 in food stamp benefits on an electronic benefit transfer card, which is similar to a bank debit card. The woman and girl offered to go into the store and purchase items Perea wanted, then come back out and deliver the goods in exchange for cash.

It is illegal under state and federal law to traffic in food stamp benefits, and Perea, a retired utility lineman, says he declined the offer. He contacted the Journal after the encounter because of the high balance on the EBT card.

High food stamp balances

Balance No. of Cases
$9,000 to $9,999 1
$8,000 to $8,999 1
$7,000 to $7,999 3
$6,000 to $6,999 6
$5,000 to $5,999 17
$4,000 to $4,999 33
$3,000 to $3,999 89
$2,000 to $2,999 308
$1,000 to $1,999 1,656

Note: Balances are as of Feb. 25
Source: New Mexico Department of Human Services

About 99 percent of New Mexico’s more than 216,000 food stamp accounts – that includes both individual and family accounts – had balances of less than $1,000 as of Feb. 25, but more than 2,100 accounts had balances of more than $1,000, according to data requested by the Journal and provided by the state Department of Human Services, which administers the federally funded program for low-income people.

The largest balance in food stamp benefits was nearly $9,500 for an account in Santa Fe County, and the second largest was more than $8,000 for a case in Lea County, the data show. Another 238 accounts had balances between $2,500 and $8,000.

The average benefit per food stamp account, including families and individuals, in New Mexico was $264 in March, according to the Department of Human Services. The maximum monthly benefit for a household of four is $649. The average benefit for an individual in March was $122, compared to a maximum benefit of $194.

Federal rules permit food stamp recipients to accrue benefit balances, but unspent benefits are canceled if there is no spending activity in an account for a year, according to the Department of Human Services. In March, the department said, more than $400,000 in benefits were purged.

The department declined to say whether high balances can be a sign of fraud or whether the department looks at balances as part of its fraud-detection efforts.

However, department spokesman Kyler Nerison said, “The New Mexico Human Services Department takes benefit trafficking and food stamp fraud seriously, as all public assistance fraud takes money from those who need it.”

Possible explanations

Sovereign Hager, a lawyer with the New Mexico Center on Law and Poverty, and Veronica Garcia, executive director of New Mexico Voices for Children, say the number of high-balance food stamp accounts is a small fraction of all accounts and that there can be legitimate reasons for high balances.

For example, a family could be awarded a large lump sum of benefits after it was determined the family was wrongly denied food stamps in the past, Hager says. Also, a person could lose their electronic transfer card and be unaware that benefits continue to accumulate, she says.

Garcia says people placed in nursing homes or admitted to medical facilities could continue to amass benefits without their families’ knowledge.

“There’s just multiple reasons why that (high balances) could happen,” Hager says. “Without more information, I can’t say anything is wrong.”

Garcia says the Department of Human Services should review the circumstances of high-balance accounts. “I don’t think it should be ignored by any means,” she says.

Hager says the food stamp program has a low rate of fraud and that the Center on Law and Poverty is more concerned with hunger, the low benefit amount under the program and the mistakes that the Human Services Department makes in denying benefits.

Concern elsewhere

In Congress and some other states, reports of high balances in food stamp accounts have caused concern about benefit abuse, and one state investigation of high balances found potential fraud in the program, which is funded through the U.S. Department of Agriculture.

More than two dozen members of Congress asked the USDA to investigate after reports in Ohio that 55 food stamp cases had balances of more than $7,000, including one case with a balance of nearly $21,000, according to a news report.

Rep. Bob Gibbs, R-Ohio, said last month that he plans to introduce legislation that would cap the time people can grow benefit balances at 60 days.

The state Assembly in Wisconsin passed legislation last month that would require purging of benefits that go unused for six months. A Senate committee approved the bill, but it died on the floor without a vote at the close of the Legislature’s session.

The Pennsylvania Office of Inspector General reported in 2013 that it investigated 20 food stamp cases with balances over $5,000 and found evidence of potential fraud, including under-reporting of income sources, in six of the cases. The inspector general recommended routine state review of food stamp cases with high balances.

The Massachusetts Department of Transitional Assistance says it identifies food stamp accounts that have been inactive for 90 days and contacts recipients about the unused benefits.

Caseloads explode

In New Mexico and nationwide, the number of people enrolled in the Supplemental Nutrition Assistance Program – the official name for the food stamp program – skyrocketed during the Great Recession.

A total of 268,400 New Mexicans – at a cost of $29 million – received food stamp benefits in December 2008. Last month, the numbers were 469,355 and $57.1 million, the Department of Human Services reported.

The amount of benefits is based on federal poverty guidelines. In general, an individual must have a monthly gross income of less than $1,276 and a monthly net income – that’s gross income minus allowable deductions – of less than $981. A family of four needs a gross income of less than $2,628 and a net income of less than $2,021.

Nationwide, the average monthly food stamp caseload was 45.8 million in the 2015 federal fiscal year, compared to less than 30 million in fiscal year 2008, according to the USDA. The program cost was $73.9 billion in fiscal year 2015. The national caseload has declined in the past two federal budget periods as the nation’s economy has improved.

More than 1,500 stores in New Mexico are certified to participate in the food stamp program. Benefit recipients cannot purchase alcoholic beverages, tobacco and other nonfood items, such as paper products and medicines.

The Department of Human Services operates a fraud hotline and says its investigators also monitor social media and websites such as Craigslist for trafficking in food stamps. Investigators are also notified if a person requests more than five electronic benefit cards in a year, which can be an indication of trafficking.

Since January 2015, according to the department, its referrals have led to successful prosecution of more than 40 food stamp cases.

The Human Services Department since 2014 has tried to implement new work and education requirements for able-bodied food stamp recipients without children in their homes. A federal judge last month delayed implementation of the requirements until December.

The New Mexico Center of Law and Poverty had argued that food stamp recipients hadn’t been given proper notice about who is exempt from the requirements or how to comply with them.

Copyright 2016, Albuquerque Journal (http://www.abqjournal.com/758547/news/black-market-food-stamps.html)