Two North Jersey grocery store employees charged in $1.4 million food stamp fraud

NEWARK — Two Passaic County men were arrested by federal agents Friday morning for allegedly conspiring to steal more than $1.4 million dollars from the U.S. Government through a fraudulent food stamps scheme, U.S. Attorney Paul Fishman announced.

Jacques Gary Doghram Apelian, 61, of Haledon, and Wael Rabee, 32, of Paterson, were charged by complaint with one count of conspiring to steal monies from the United States. Apelian and Rabee were arrested by agents of the Department of Agriculture, Office of Inspector General and were scheduled to appear Friday afternoon before U.S. Magistrate Judge James Clark III in Newark federal court.

According to the complaint: Apelian and Rabee, employees of Broadway Deli & Grocery in Paterson, are charged in connection with a scheme in which they unlawfully redeemed Supplemental Nutrition Assistance Program benefits — formerly known as food stamps — in exchange for cash or for the purchase of non-food items. The program is administered by the U.S. Department of Agriculture.

Retail food stores approved for participation in SNAP may sell food in exchange for food stamp benefits. They may not exchange food stamp benefits for cash.

SNAP benefits are loaded onto Electronic Benefits Transfer cards. The EBT cards are automatically credited with the appropriate level of food stamp benefits for each SNAP recipient. Benefits are electronically transferred from the U.S. Treasury into a bank account designated by the authorized retailer.

Authorized retailers receive training material relating to the rules and regulations of SNAP prior to receiving authorization and are responsible for training employees on the proper acceptance and handling of SNAP benefits.

To complete a purchase, a SNAP recipient swipes an EBT card through a point of sale terminal at the authorized retailer and enters a personal identification number. If approved, the recipient’s account is debited for the amount of the purchase and the funds are credited to the authorized retailer’s account.

From October 2011 through December 2014, Broadway was authorized to accept SNAP benefits. Rabee and Apelian allegedly entered fictitious dollar amounts for SNAP EBT transactions, gave recipients a percentage of the transaction’s value in cash and kept the remainder.

For example, a recipient might purchase eligible food items worth $5. The defendants would swipe the recipient’s EBT card for $95.00, which would be debited from the recipient’s EBT account and credited to Broadway’s bank account. The defendants would then give the recipient a portion of the cash and keep a portion of the proceeds, typically 33 percent of the total amount of SNAP benefits debited from the EBT card, not including the costs of store items that were purchased.

SNAP EBT benefit purchases over $50 are rare in small groceries like Broadway and usually indicate fraud. From January 2013 through December 2013, the total dollar amount of Broadway EBT transactions exceeding $50 was $533,452. From January 2014 through December 2014, the total dollar amount of EBT transactions exceeding $50 was $556,310.

Law enforcement agents uncovered the scheme using a cooperating witness. From October 2012 to December 2014, the witness engaged in approximately fifteen “purchases” at Broadway. During each of these transactions, the witness exchanged SNAP EBT benefits for cash with the defendants, in violation of SNAP rules and regulations.

Based on an analysis EBT transactions, purchases over $50 made at Broadway from October 2011 through December 2014 totaled $1,493,294.

The charge of conspiracy is punishable by a maximum potential penalty of five years in prison and a fine of $250,000.