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State investigators uncover SNAP fraud

SALEM, Oregon – Secretary of State Dennis Richardson released an advisory report on the Supplemental Nutrition Assistance Program in which auditors used data analytics to probe fraud. He said that successful prosecution of both merchants and SNAP beneficiaries has resulted in the criminal convictions of five merchants and the banning of 59 SNAP recipients.

“I am proud of the inroads the Audits Division has made in helping to identify and stop fraud in the SNAP program,” Richardson stated in a prepared release issued yesterday. “With one in four Oregonians relying on this aid, we must ensure these benefits are protected for those who need them.”

Richardson, the only Republican to hold state office, says that fraud in the SNAP program is relatively uncommon but the damage done still translates to a substantial amount of public funds. The U.S. Department of Agriculture estimates that fraud impacts only one to four percent of total expenditures. Richardson points out that translates to anywhere from $10 million to $40 million of misused funds in Oregon.

Analysts used analytic and mapping software to identify red flags that could aid state and federal fraud investigations. They focused on a common fraud scheme involving beneficiaries and merchants conspiring to profit from SNAP. The scheme involves merchants running a benefits card as if food is purchased, but providing the beneficiary with cash (usually 50 cents on the dollar) instead. The merchant is then reimbursed for 100 percent of the charge.

The five merchants prosecuted have been ordered to pay restitution of $525,000 to the state. In addition to the 49 recipients that have been banned for life from SNAP, 40 have been banned for a year. That’s estimated to save the state approximately $1.7 million in future cost avoidance. In addition, the USDA has awarded Oregon a $300,000 grant to apply the analytic methods in their investigations.

“We will continue to partner with the Department of Human Services, the USDA, and the Office of Inspector General to investigate SNAP fraud,” Richardson said.

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