EBT Cards Used in Illegal Drug Trade

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Not only can EBT cards be used to purchase food, they can also be used to purchase illegal drugs in the alley behind the grocery store.

To Maine:

When state drug agents arrested Paul Robinson in January 2014 for selling crack cocaine from his Bartlett Street apartment, they seized guns, drugs and cash, a typical evidence haul for a suspected drug dealer.

But also in Robinson’s possession that day were six state-issued electronic benefit transfer cards — essentially debit cards loaded with welfare benefits, with some benefits available as cash — from state and federal programs meant to help poor families and children.

Those cards had been reported lost or stolen by their owners 114 times and re-issued by the state, meaning the cards and benefits were most likely being traded for illegal drugs, officials said.

Attorneys in the case say that the EBT cards are “a common currency for drugs.” The problem according to Sam Adolphsen, chief operating officer for the Maine Department of Health and Human Services, is that “the state cannot deactivate benefits regardless of how many times recipients lose their cards or say they are stolen.”

At FGA we have cataloged plenty of examples of the fraud that plagues America’s welfare system. The use of taxpayer assistance for the purchase of illegal drugs is possibly one of the worst abuses we’ve seen. Unfortunately, “the two crimes increasingly intersect.”

Adolphsen mentioned that “the presence of EBT cards in drug busts has become so commonplace that welfare fraud investigators at DHHS now regularly check the arrest logs in local newspapers for drug crimes and cross-reference suspects to see if they are also receiving state welfare benefits.” When agents from the Maine Drug Enforcement Agency find these cards, “they report that fact back to DHHS so the fraud unit can investigate.”

Matt Cashman, an investigative supervisor for the Maine Drug Enforcement Agency, said that “From interviews of defendants and others with knowledge of ongoing activity, MDEA has learned that it is common practice for drug dealers to take custody of a drug user’s EBT card either as direct payment or in lieu of immediate payment,” and that “In those instances where a dealer takes the card in payment, the EBT cardholder will give the dealer their PIN.”

Once government benefits are reloaded to the card, drug dealers “extract their payment and frequently an “interest” fee.”

Maine’s EBT fraud is even taking place outside of the Pine Tree State accounting for “more than $10 million a year in benefits.” These out-of-state transactions come from New York, Massachusetts and Alabama, just to name a few.

Of course this isn’t the only case of EBT card abuse. In Chicago, Wael Ghosheh purchased massive amounts of candy and energy drinks at members-only wholesale stores using multiple food stamp cards. He later sold the goods to local businesses for a profit. His scam cost taxpayers nearly $1 million.

The good news is that Maine is on track to making serious reforms that could curb much of this abuse.

In June the state began implementation of a rule that requires photo identification on each of the roughly 223,000 active state-issued welfare benefit cards.

“Placing photos on the Maine EBT [Electronic Benefit Transfer] card is one additional way to strengthen the integrity of our public assistance programs,’’ wrote DHHS Commissioner Mary Mayhew. “The photo will also help our staff to verify the identity of the benefit recipient and will be helpful in EBT trafficking cases where cards are sold for cash or drugs, or when multiple cards are in the possession of an individual.”

Maine’s Governor Paul LePage said, “Adding a photo to the EBT card will help to deter fraud and protect benefits for those who are legally and legitimately receiving them.” Time will tell if this has a significant impact on reducing fraud and abuse on these EBT cards, but the required photo ID is a good first step.

Follow Kristina and the FGA on Twitter for the latest on combatting welfare fraud.

Photo courtesy of wmtv.