Michigan catches $4M of food stamp fraud; mum on fraud scope

Jun 26, 2023

(The Center Square) – Standing in the checkout lines or in virtual lines at Sam's Clubs in metro Detroit, criminals are spending government benefits stolen from people more than 2,000 miles away in California.

On May 24, three people – Travis Newby, 39, of Detroit, Derriun Williams, 23, of Detroit, and Vanessa Williams, 47, of Highland Park – were arrested and arraigned on felony charges.

The three are charged in connection to $4 million of interstate food stamp fraud wherein they allegedly obtained electronic benefit card data from 8,000 cardholders mostly residing in California.

 The trio allegedly reproduced EBT cards in Michigan and then spent funds on fraudulent purchases from metro Detroit Sam's Club stores.  

The amount of SNAP fraud known by Michigan is unclear. The Center Square's record request seeking that number from The Michigan Department of Health and Human Services has been pending for two months. That request was approved but hasn't been fulfilled as of Wednesday, May 31.

The state health department plans to fight SNAP fraud by blocking common PINS, restricting card functionality in high-fraud areas, and giving more access to a fraud interface system, according to documents obtained through the Freedom of Information Act.

MDHHS submitted a plan to reduce SNAP fraud to the United States Department of Agriculture's Food and Nutrition Services, which doesn't appear to be approved yet.

Haywood Talcove, the CEO of LexisNexis Risk Solutions' Government Group, which provides fraud prevention tools to 26 state unemployment programs and the 50 top US banks, told The Center Square that state government should take additional steps to prevent fraud.

"The needed resources to investigate each of these claims is significant, it goes well beyond a signature and requires access to third-party tools, law enforcement databases, etc.," Talcove wrote in an email. "These investigations many of which will center around criminal groups need to be conducted by trained law enforcement personal with arrest authority."

Talcove recommended Michigan eliminate SNAP card functionality outside of the state. He suggested state government file police reports to help investigators crack organized criminal groups.

"Their report is like moving deck chairs around the Titanic – it does nothing to prevent fraud, it does nothing help the food insecure whose benefits are stolen and it hasn't even been approved by USDA," Talcove wrote in an email.

The federal government must approve Michigan's plan before the state can enact solutions to save taxpayer money.

For example, Ohio submitted its plan to reduce SNAP fraud in late February. USDA didn't approve the plan until May, which will be enacted in late July, according to documents obtained by The Center Square.

Michigan's plan included restricting EBT usage in areas of high fraud, which Talcove said does nothing to stop identity fraudsters from stealing SNAP benefits from vulnerable citizens.

"Worse, it only creates a barrier to access for legitimate SNAP recipients, especially those living in ‘high fraud’ areas," Talcove wrote. "Worse yet, this policy can disproportionately impact minorities. This goes against common sense administration."

Nessel says more arrests are expected as Michigan works with seven other retailers to investigate millions of dollars of taxpayer fraud.