USDA Employee, 5 Others Charged in Massive Food Stamp Fraud

An employee at the U.S. Department of Agriculture (USDA) and five others are under arrest, accused of what law enforcement says is one of the largest food stamp frauds in U.S. history. 

Prosecutors say the six individuals operated a bribe and fraud scheme that generated more than $66 million in illicit profits by ripping off the Supplemental Nutrition Assistance Program (SNAP), more commonly known as food stamps. 

The employee worked in the SNAP fraud prevention department and was a critical element in the scheme, according to prosecutors.  

EBTs Critical in Fraud

The scheme centered around Electronic Benefit Transfer (EBT) cards and terminals and dates back in 2019. 

SNAP recipients use Electronic Benefit Transfer (EBT) cards to buy food at participating stores. Those stores use special terminals to swipe the cards. The transaction is verified, deducts the purchase from the recipient's account, and then transfers federal money to the store bank account. 

According to prosecutors, lead defendant Michael Kehoe ran a network that supplied about 160 unauthorized EBT terminals to stores across the New York City area, which then processed more than $30 million in illegal EBT transactions. The group then submitted fraudulent USDA applications, lying about license numbers, and in some cases changing application documents to get EBT terminals for unauthorized stores like smoke shops. 

Inside Help

Prosecutors say that longtime USDA employee Arlasa Davis, who worked in the division responsible for identifying SNAP fraud, was a critical enabler of the scheme. 

Davis allegedly used her ability to access federal systems to sell hundreds of EBT license numbers, enabling $36 million in additional SNAP fraud at unauthorized stores. Prosecutors say she took pictures of license numbers of qualifying stores and then funneled them to an intermediary who sold them to the co-conspirators. The group then used the license numbers to obtain the EBT terminals. In return, Davis received bribes that were disguised in communications as birthday gifts and flowers. 

“This fraud was made possible when USDA employee Arlasa Davis betrayed the public trust by selling confidential government information to the very criminals she was supposed to catch.  Their actions undermined a program that vulnerable New Yorkers depend on for basic nutrition,” said Acting U.S. Attorney for the Southern District of New York Perry Carbone. 

Rooting Out Fraud in the USDA and Beyond

The Trump Administration says this case is just one example of its commitment to rooting out fraud, especially fraud perpetrated by those who are supposed to guard the public trust. 

“When you've got employees that basically don't follow the law, then we've got to fix it, and that's what we're doing. There's going to be real consequences for breaking the law across America's federal government with President Trump, but this is just one of many more to come,” said Agriculture Secretary Brooke Rollins to Fox Business.