Authorities charged a U.S. Department of Agriculture employee and five others in a fraud and bribery scheme that prosecutors say defrauded the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps, of $66 million in unauthorized transactions. The U.S. Attorney’s Office for the Southern District of New York called it “one of the largest food stamp frauds in U.S. history.”
Unauthorized EBT terminals and fake transactions
Prosecutors said Michael Kehoe, who is of no apparent relation to Missouri Gov. Mike Kehoe, led a New York-based network that tricked the government into issuing about 160 electronic benefit transfer (EBT) machines to businesses that were not eligible to have them, “including smoke shops and other ineligible businesses.”
These businesses processed fake or illegal transactions, totaling more than $30 million in EBT activity, which is against federal law.
USDA employee accused of betrayal
Prosecutors also charged Arlasa Davis, a longtime USDA employee who worked in the division responsible for detecting and stopping SNAP fraud. Authorities accuse Davis of using her access to the USDA’s internal systems to steal EBT license numbers. They allegedly used these numbers to conduct more than $36 million in fraudulent SNAP transactions.
Davis allegedly took photos of handwritten lists of valid license numbers, meant only for qualifying stores, on her personal phone and sent them to her co-conspirators. Those co-conspirators then used the stolen credentials to fraudulently obtain EBT terminals for unapproved businesses, including smoke shops and other retailers not authorized to accept SNAP benefits.
In exchange for her role, Davis allegedly received bribes disguised as innocent gifts such as “birthday gifts” or “flowers,” according to the U.S. Department of Justice.
Statement from US attorney
“Michael Kehoe and his co-conspirators misappropriated tens of millions of dollars in taxpayer funds meant to help low-income families put food on the table,” U.S. Attorney Perry Carbone said in a statement. “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. These charges should be a reminder that those who exploit anti-poverty programs for personal gain will be held accountable for their crimes.”
Criminal charges and penalties
Michael Kehoe, Mohamad Nawafleh, Omar Alrawashdeh, Gamal Obaid, Emad Alrawashdeh, and Arlasa Davis are all charged with:
- One count of conspiracy to steal government funds and misappropriate USDA benefits
- One count of theft of government funds
- One count of misappropriation of USDA benefits
If convicted, each faces up to 35 years in prison.
In addition, Davis faces:
- One count of conspiracy to commit bribery
- One count of bribery
- One count of conspiracy to commit honest services (wire fraud)
Those additional charges carry up to 40 more years in prison.
Nawafleh is also charged with one count of failure to appear, which carries a maximum sentence of 10 years in prison.