A new kind of welfare fraud

This will blow your mind:

Corner groceries — the ones tagged with graffiti and plastered with advertisements like “Chorizo $2.89″ and “Eggs 89¢ a dozen” — dot Chicago’s neighborhoods. But some of these stores aren’t making their money on sausage and eggs.

More and more of these tiny pantries claim to sell millions in merchandise a year through the food-stamp program. Federal investigators are after dozens of them for ringing up phony sales and illegally handing customers cash — and pocketing a sizable cut — all courtesy of U.S. taxpayers.

This fraud puts money in the hands of the poor to buy drugs and might even be helping to fund terrorism. Phyllis Fong, the watchdog for the U.S. Department of Agriculture, says anti-terrorism investigators across the country are focused on some of these crooked grocers, who authorities say reap a staggering amount of cash.

In recent years, federal prosecutors in Chicago have charged 22 store owners and employees with ripping off at least $16 million from the food-stamp program, court records show. Three went to prison. Three more got probation. One case was dismissed; the rest await trial.

This electronic food-stamp program — called Link — was launched in Illinois in 1997 to combat rampant fraud in the paper food-stamp program. The stamps were often used illegally, as black-market currency, to buy drugs. But cheaters quickly found a way to steal from the new, electronic food-stamp system, too.

The latest scam works like this:

A welfare recipient goes to a store with a Link card credited by the government with a dollar amount for groceries — say, $100. The store clerk swipes the card through a government computer and takes credit for $100 in phony food sales. Then, the clerk hands $70 to the welfare recipient, keeping the rest as profit.

Typically, a Link participant receives $200 to $500 a month on his or her card, depending on household size. The program does not allow a participant to use a Link card to get cash.

Here’s how this fraud is being discovered:

Such Link fraud is being rooted out by the USDA — the administrator of the program — along with the U.S. attorney’s office here, the Secret Service, the Internal Revenue Service, the Chicago Police Department and the Illinois Health and Human Services Department.

More power to ‘em.

Hat tip: Stephen