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Raids target EBT card scams

Chinatown, Quincy sweeps target use of cards to get cash, not food

JOSH REYNOLDS FOR THE BOSTON GLOBE

A police officer asked employees to move away from the door of a market in Chinatown.

Police raided businesses in Boston’s Chinatown and in Quincy on Thursday and charged 53 people in connection with alleged scams involving electronic benefit transfer cards, a system meant to help poor people buy food.

Boston police fanned out across Chinatown late Thursday morning and raided five businesses, including a bakery, a sandwich shop, and a seafood market. In Quincy, State and local police arrested the owner of a small corner store who officials said had defrauded the government of more than $700,000.

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The raids followed at least a year of investigation by federal, state, and local authorities and fueled an ongoing debate around what critics say are lax rules governing the EBT system.

The charges could lead to prison sentences of up to five years.

“What we saw here was abuse of a system intended to protect society’s poorest and most vulnerable,’’ said Suffolk District Attorney Daniel F. Conley. “This isn’t what the EBT program was intended for. It amounts to theft from the Commonwealth and its residents, and that’s how we’re going to prosecute it.’’

Boston Police said officers had served 18 arrest warrants on Thursday and planned to issue 13 summonses to court but declined to provide specific details about the alleged scams. State Attorney General Martha Coakley said her office has issued arrest warrants or court summonses for 21 people who had used their cards to get cash.

Daniel J. Curley, commissioner of the state Department of Transitional Assistance, gave a description of how the alleged scheme often works: An EBT recipient will take the card to a store licensed to accept the cards to pay for food under the federal Supplemental Nutrition Assistance Program.

Businesses committing fraud typically ring up a sale for food, but instead of groceries, give the recipient cash and pocket a percentage themselves, usually half of what they charge.

That was the scheme Coakley said unfolded in Quincy, where 48-year-old Pat Lu allegedly used his Water Street shop, Lotto Lock, to take $350,000 for himself through the EBT programs.

State Police began investigating the store in September after Quincy police told a trooper that people were receiving cash back with their EBT cards. The cards works like debit cards, are overseen by the state, and allow recipients to get cash assistance. But under the federal program, it is illegal to accept or provide cash instead of food benefits.

After watching the store for several months, authorities noticed that people never left Lotto Luck with groceries, according to a police report filed in Quincy District Court. The store sold mostly cigarettes, bottled water, and lottery tickets, Coakley said.

“It certainly was not consistent with a store that was legitimately selling food,’’ she said.

In February, an undercover State Police investigator entered the store, brought an item to the cash register, and pulled out an EBT card, according to the report.

The investigator asked Lu for $100. Lu swiped the card, gave him the cash, and charged the card $199.92 in food stamp benefits, according to the report.

Lu’s lawyer, Robert Tutino, said his client, a father of three who became a US citizen in the 1980s, is innocent.

“This is a gentleman that worked very hard at a number of jobs saving up his money so he could purchase the business,’’ Tutino said, as Lu stood next to him in Quincy District Court, his wrists and ankles in cuffs. Lu was ordered held on $100,000 cash bail.

Coakley said her office is investigating other places where similar fraud has been reported.

“This is not a question of the law around EBT, but the abuse of the law around EBT,’’ she said. “This is an enforcement issue.’’

State Representative Bradley H. Jones Jr., the House Republican leader, said the raids, which come less than four months after a similar alleged fraud scheme was broken up in Lynn, show the need for tighter regulations.

“We need to tighten up eligibility, tighten up what the cards can be used for,’’ he said.

Representative Shaunna O’Connell, a Taunton Republican, has filed legislation that would end cash withdrawals and require recipients to pay a fee for lost cards.

“It really goes to show that there is way more fraud out there than we can even imagine,’’ she said.

Curley said the agency tracks abuse of the cards, which are used by 850,000 people across the state. Since 2008, the agency has recovered $28 million in overpayments, he said.

Curley said the agency tipped off authorities that there appeared to be an abuse of the federal program, but he declined to elaborate, citing the ongoing investigation.

“Today’s events really demonstrate that the system is working,’’ he said. “I just really want to be sure that people understand that this is a vital program and it really is part of a safety net of our most vulnerable families within the state of Massachusetts. Most people are really doing the right thing, ultimately.’’

Maria Cramer can be reached at mcramer@globe.com.
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