I-Team Exclusive: Sweeping food stamp fraud investigation

Rhode Island taxpayers are being "bilked" out of more than $3 million in food stamp fraud, Peter Neronha, the U.S. Attorney for Rhode Island, said Thursday.

Neronha, along with the IRS, the Rhode Island State Police, the U.S. Agriculture Department and the Rhode Island Attorney General's Office, announced the result of a two-year investigation into food stamp fraud in the Providence area.

Neronha said his investigators found convenience store owners in five separate stores in Providence either buying food stamp Electronic Benefit Cards (EBT) for cash, or allowing food stamp recipients to make "nominal" purchases of legitimate food stamp items for a few dollars and then have the store owner inflate the price charged to the EBT card and split the cash with the recipient.

Both practices, according to Neronha, are illegal.

"In nearly every transaction, the amount of cash received by the food stamp recipient and the amount of cash effectively stolen by the retailer was vastly greater than the nominal first transaction," Neronha said.

Two years ago, the NBC 10 I-Team conducted a months-long hidden camera investigation into food stamp fraud and found the same illegal activity found by the federal and state investigators in the probe announced Thursday.

Neronha said nine men have been charged, with three already agreeing to plead guilty.

The U.S. Department of Agriculture licenses the convenience stores to accept food stamp cards, and the Rhode Island Department of Human Services qualifies recipients.

Neronha said the federal investigation should "not be taken as an indictment" of the food stamp program. He said the program is worthwhile and that most people using food stamps are using them properly.

Neronha said the food stamp fraud investigation is ongoing.