A South Dallas Store Owner Accused of Food-Stamp Fraud Faces 305 Years in Prison

Categories: Crime

Thumbnail image for KSODollarMart.JPG
KSO Dollar Mart "offered very few food and beverage items to its customers," according to the feds.
There's not a lot of what Michael Pollan would call "food" at South Dallas' KSO Dollar Mart. Plenty of beer, wine and hair care products, according to the signs out front, but not much by way of whole grains or fresh produce.

The store nevertheless did a thriving business in the federal government's Supplemental Nutrition Assistance Program.

Nothing wrong there, per se. SNAP is famously lenient on what recipients can buy ("Soft drinks, candy, cookies, snack crackers, and ice cream are food items and are therefore eligible items"), and what stores are allowed to participate (they must offer only "three varieties of qualifying foods" from each staple food category: meat/poultry/fish; bread/cereal; milk/dairy; fruits/vegetables).

The problem, the feds say, is that KSO Dollar Mart isn't accepting food stamps so much as buying them, for $.50 on the dollar.

Store owner Kamardeen Ogunleye, 52, of Arlington, and manager Robert Gordon, 31, of Balch Springs, did this for more than three years and defrauded the SNAP program of at least $1.9 million, according to a federal indictment unsealed on Friday.

The benefit to SNAP recipients was that they could use the cash buy whatever they want, be it alcohol and tobacco or clothes and toiletries. Ogunleye and Gordon, meanwhile, were able to collect full payment from the government for the full dollar amount of benefits they accepted.

It's a win-win for everyone -- except, of course, the government, which Congress has tasked with ensuring that SNAP benefits be used to buy food and food-like products. For bucking the rules, Gordon faces a maximum 285 years in federal prison and a $7.5 million fine (he's charged with five counts of food-stamp fraud, six of wire fraud, one of conspiracy to commit food stamp fraud). Ogunleye, who is also charged with two counts of "structuring financial transactions," faces 305 years in prison and an $8 million fine.

If the penalty seems oddly stiff, it is: Bernie Madoff, by contrast, a man who screwed investors out of billions of dollars and made himself the arch-villain of the Great Recession, faced (and was ultimately sentenced to) 150 years behind bars.

Send your story tips to the author, Eric Nicholson.

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40 comments
moore583
moore583

You can run down all kinds of rabbit trails with this. Bottom line is these guys are apparently guilty of defrauding the feds. Not a good position to be in unless you have lots of money to fight it. People think they won't get caught because it's all just too big and nobody is watching. They might be right because fraud is rampant in everything the federal government gets involved in. If your working and paying taxes you're paying for these freeloaders. Now that tax season is here all the fraudulent tax returns are going to start pouring in. People that do this kind of stuff just flat don't care. They want something for nothing and lot's of 'em get it.

roo_ster
roo_ster

Obviously, we need to spend/print more money for this worthy program.

holmantx
holmantx topcommenter

The food stamp program was piggybacked to the 5-year farm bill in 1977 so we couldn't target the free loaders. But SNAP has grown to consume 79 percent of all spending under the farm bill and the political dynamics in Congress have changed. Food-stamp spending has grown by 86% under President Obama and enrollment is at a record high, while 70% of adults who receive food stamps have been on the program for more than 5 years.

And we just passed a new 1,000-page 5-Year Farm Bill again and they cut food stamps.  The food-stamp cut was just 1 percent of the $80 billion program. That’s after the program quadrupled in cost over the last decade from about $20 billion.

And the government cannot print and borrow fast enough, and the Boomers are retiring en masse.

Something's gotta give.

and will.

raise the debt ceiling, Mamma.

DonkeyHotay
DonkeyHotay topcommenter

So instead of buying the SNAP credits for 50 cents on the dollar -- without any qualifying food purchase --  what if they required the customers to actually purchase qualifying food ... then immediately bought the food back for 50 cents on the dollar?



whocareswhatithink
whocareswhatithink

Should have used some of the funds to donate towards the reelection campaign and instead of prison, he would be an ambassador. Smart criminals trumping the dumb criminals.

dingo
dingo

It's a win-win for everyone -- except, of course, the majority of the people reading this and their born and yet-to-be-born kids and grand-kids saddled with paying off the tab.

annff69
annff69

There is a reason people operate these stores in difficult neighborhoods and it is rarely for charity or good will. Go to any major city, and you will find them selling overpriced groceries and/or ripping off SNAP, WIC, LINK or some other government program.


ruddski
ruddski topcommenter

At prison wages, it'll probably take 300 years of working laundry to pay the fine.

ThePosterFormerlyKnownasPaul
ThePosterFormerlyKnownasPaul topcommenter

Very similar to the IRS -- The income does not support the lifestyle.


Although, why it took 3 years is a different question.


I wonder if the Feds will hit them with the "corrupt organization" statutes and take everything from them.

Guesty
Guesty

The "faces" x number of years is meaningless.  That reflects only the possibility, e.g. if I by a PowerBall Ticket, I might be worth $400 million by the end of the week. The reality is that this guy faces a much smaller sentence than Madoff did and I will be $2 poorer for having bought a PowerBall ticket.  


The actual best guess as to the likely sentence would be calculated using this: http://www.ussc.gov/Guidelines/2013_Guidelines/Manual_PDF/2013_Guidelines_Manual_Full_Optimized.pdf.  I know it is long and complicated, and probably requires more critical thinking that you are interested in investing in a blog post.  But a criminal lawyer probably would have been willing to give you a ballpark estimate based on the sentencing guidelines so that your article would actually be somewhat informative.  


Hope that helps.  

observist
observist topcommenter

@roo_ster We should get rid of this SNAP crap and spend the money on prisons instead.

animas
animas

@holmantx  On the whole one should give credit to the retiring  Oklahoma senator Dr.Coburn for keeping a fraud waste and abuse record, even if he declined to fully identify those in both parties involved with ignoring things like public endangerment from TSA  airport radiation detector manufacturers (no bid contracts and campaign contributions to both parties were involved), Armenian gangs setting up fake Medicare clinics in LA, and Asian and Nigerian  folks involved in metroplex  Medicare and food stamp fraud--because he wanted to retain some "working relationships" in Washington"--(whatever that means)...One has the feeling that the guys in charge of govt. are either co-participants or gutless.  Either way the billions lost in fraud are growing and only the "little guys" seem to get caught by our esteemed DOJ, FBI etc.

DonkeyHotay
DonkeyHotay topcommenter

@holmantx  ... Eliminate ALL subsidies for Free-loading Farmers.


Let the Free Market Capitalism Rule !!

lebowski300
lebowski300

@dingo  The "tab" is unchanged. SNAP payments made were need-based. What this reveals is that the criteria for defining "need" is almost certainly flawed.

observist
observist topcommenter

@dingo It didn't directly cost the government any extra money at all - it just allowed people to use their food stamp benefits on non-food items.  They don't get extra food stamps if they're hungry 2 weeks into the month.  So, if someone wants to smoke, drink and care for their hair instead of eat, they bear the cost of less food.  

There could be a lot of future costs to the government, like delinquency of the kids whose parents used food stamps on their own 40-ouncers, medical costs of lung cancer, alcoholism, things like that, but it's hard to prove a causal relationship and to quantify.   The segment of people inclined to spend food stamps on cigarettes are probably going to end up costing us somehow: food stamps, medicaid, police, prisons, insurance premiums, charity...  I think some dude a long time ago said something to the effect of "the poor you will always have with you"

Guesty
Guesty

@ThePosterFormerlyKnownasPaul  "I wonder if the Feds will hit them with the "corrupt organization" statutes and take everything from them."  


I doubt they need to bring any more charges.  It is very unlikely they still have all the money they defrauded the government out of.  Most likely outcome is a quick plea to one or more of the pending charges with prison time and restitution of more than what the Defendants will ever be able to pay.    

observist
observist topcommenter

@Guesty"But a criminal lawyer probably would have been willing to give you a ballpark estimate...."

 Better call Saul!

holmantx
holmantx topcommenter

@observist @roo_ster  

this guy will be released since he is a non-violent crime and due to overcrowding.  Besides, it's not like he was stealing from you and me (blonde joke alert).

DonkeyHotay
DonkeyHotay topcommenter

@roo_ster ... no overt fraud, since there is no law that says the recipients must actually eat the food they obtain with SNAP.


They are free to throw it out, give it away, or sell it to whomever they desire.


Guesty
Guesty

@observist  We know the government did not get the social benefit it thought it was paying for.  You may not think that there is any social benefit to feeding the poor, but the government does.  

dingo
dingo

@observist  

If I may delve into this irrelevant pedantic peculiarity with a counter-argument,  this sort of fraud constitutes a broken social contract, is therefore a theft and therefore a loss.

James080
James080 topcommenter

@DonkeyHotay @ThePosterFormerlyKnownasPaul 

You spread enough cash around to Congress and to the DNC, and you won't have a RICO problem, just a "fine" and the threat of (but not actually imposed) enhanced regulation.

roo_ster
roo_ster

@DonkeyHotay @ThePosterFormerlyKnownasPaul 

Why would they do that, when they expect to be hired by the robber barons after "servicing the public?"   

Kamardeed will not hire any former congresscritters, staffers, or bureaucrats, so he is just the sort of crook they want.

ruddski
ruddski topcommenter

Let them eat ethanol.

observist
observist topcommenter

@Guesty @observist The government, you and I may think there is social benefit in feeding the poor, but some of the poor would rather have $50 worth of booze, cigarettes and shampoo than $100 worth of food.  To those people I say fine, here's $50 - get bottle of Napa Cab and some shampoo.  By doing that, I give the poor people what they want, I saved $50 that won't go to the arbitrageurs, and saved another $25 I don't have to spend policing all the recipients and arbitrageurs to make sure they're eating instead of drinking wine and washing their hair.

observist
observist topcommenter

@dingo @observist We could start an alternate program to SNAP - one that gives recipients half as much money, but allows them to spend it on anything they want. (Vice Assistance Program In Dallas - VAPID)  Recipients have to choose either SNAP or VAPID,  VAPID recipients can destroy themselves in the manner they see fit, and we keep the money that would otherwise enrich the SNAP money changers.

ruddski
ruddski topcommenter

Like sell the drugs guards smuggle in.

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