A grand jury has indicted a Quincy store owner over allegations he bought food stamp benefits from customers at half their value, Attorney General Martha Coakley’s office said Tuesday.
The store owner, Pat Lu, was charged Monday with larceny over $250, procurement fraud, and access device fraud.
Authorities say his business, Pat’s Mini Mart, registered transactions as if customers had bought groceries using the Supplemental Nutrition Assistance Program, commonly called food stamps.
Instead of providing groceries, the store allegedly paid the customers in cash at a rate of half the value of the SNAP benefits charged.
Lu was indicted amid national and state efforts to root out public benefit fraud.
Emalie Gainey, a spokeswoman for the attorney general, said fraud schemes involving public benefits rob taxpayers and particularly hurt vulnerable residents.
Police arrested Lu, 48, on April 19 after a five-month investigation. The same day, police also charged 21 people with larceny over $250 in allegedly selling their benefits.
Pat’s Mini Mart processed roughly $800,000 in fraudulent transactions between October 2010 and this April, the attorney general’s office said. Lu allegedly made about $30,000 each month from the scheme.
Lu’s attorney, Daniel Tracy, declined to comment on his client’s indictment; Lu could not be reached for comment.
If convicted on all charges, Lu would face up to 25 years in prison and up to $45,000 in fines.
SNAP, which is federally funded, provides benefits to more than 466,000 households across the state, according to a report commissioned by the state. It pays an average monthly benefit of $238 per household, which recipients are restricted to spending on groceries.
The vast majority of SNAP recipients use the allowance as intended, and officials are working to hold the rest accountable, said Alec Loftus, spokesman for the state Department of Transitional Assistance.
“Rooting out instances of fraud is critical to ensuring that benefits go to help families who need food assistance to meet their basic nutritional needs,” Loftus wrote in an e-mail.
In May, the White House proposed a rule that would let state authorities contact households that made frequent requests for new cards, which can be a sign that a recipient is selling his or her card for cash.
The rule would also explicitly ban selling SNAP benefits, and the White House announced it had asked social media sites such as Craigslist and eBay to help prevent such sales. The proposal remains posted for public comment until July 30.
A spokeswoman for the US Department of Agriculture’s Food and Nutrition Service, which administers SNAP, said the agency takes an aggressive approach to fighting fraud.
“No level of fraud is acceptable,” said spokeswoman Regan Hopper. “USDA is always looking for ways to strengthen our antifraud tactics and provide states the tools and resources needed to identify fraud and quickly take action to remove bad actors from the program.”
In Massachusetts, a commission released a report April 1 suggesting additional ways to fight public benefit fraud.
The recommendations of the commission, which was created by law last year, focused not on SNAP benefits, but on how to restrict inappropriate use of two other programs: Transitional Aid to Families with Dependent Children and Emergency Aid to the Elderly, Disabled, and Children.
Like SNAP, those programs also use electronic benefit transfer cards, but unlike SNAP, they let users withdraw cash.
Representative Shaunna O’Connell, a Republican from Taunton who served on the commission, welcomed news of Lu’s indictment.
“I’m glad to see that we’re cracking down on abuse and fraud in this taxpayer-funded benefit system,” O’Connell said. “And I think it is vital that right now we show that Massachusetts is going to be tough on fraud in the EBT system.”