KY man charged in $2.1 million food-stamp fraud in one of nation’s poorest counties
The owner of a market in a Kentucky county that is among the poorest in the nation racked up $2.1 million in food-stamp fraud in a little over five years, a federal grand jury has charged.
The jury returned an indictment Thursday against Billy Joe Goe, owner of Joe’s Meat Market in Owsley County, and his son Robert Goe, identified as an employee / operator of the business.
They each face one charge of conspiring to defraud the U.S. and one charge of benefits fraud. The fraud charge carries a top sentence of 20 years in prison and a $250,000 fine.
If the two are convicted, the government wants to seize the business and also wants them to pay $2,130,979. That’s how much the indictment charged that they received directly or indirectly through fraud between October 2010 and December 2015.
The two allegedly bought food stamps from customers for cash at a discounted rate.
The indictment did not mention a drug connection, but drug abusers and addicts sometimes trade food-stamp benefits for cash at stores for less than they are worth.
That might involve the store deducting $100 from someone’s food-stamp card and giving them $50 in cash, for instance, meaning a $50 profit for the store on the transaction.
Those illegal transactions allow people to convert benefits to cash they can spend on other things, and don’t always involve drugs.
The formal name of the food-stamp program is the Supplemental Nutrition Assistance Program, or SNAP. The money to buy groceries is loaded on an electronic benefits card that works like a debit card.
The amount the Goes paid people for their SNAP benefits varied by transaction, the indictment charged.
The two also allegedly broke the law by allowing people to buy items or services with SNAP cards that weren’t eligible for the program, and by loaning people money and taking food-stamp dollars as payment.
The store processed $2.8 million in SNAP transactions from October 2010 through the end of 2015.
Some were for legitimate sales, but Billy Joe and Robert Goe received at least $2.1 million for food sales that didn’t occur or were “substantially inflated,” the indictment said.
The Goes engaged in fraudulent food-stamp transactions and directed others to do so, the indictment said.
That alleged fraud was significant in a county with an estimated population last year of 4,472 and a 2017 median household income of $22,736, compared to $57,652 nationally, according to the U.S. Census.
A comparison by the Appalachian Regional Commission said Owsley County ranks 3,095 out of 3,113 counties in the country on selected economic measures, 18 from the bottom.
Conservative groups often grouse about waste and fraud in the food-stamp program, but government agencies have estimated that fraud taints a relatively small percentage of SNAP benefits.
The Congressional Research Service said in a 2018 report that the most frequently cited measure of fraud in the program is the national retailer trafficking rate.
The U.S. Department of Agriculture estimated that rate at 1.5 percent between fiscal years 2012 and 2014, meaning that’s the amount of SNAP benefits redeemed in that time that were trafficked, the report said.
That still adds up to a big number — around $1 billion — according to a separate report from the U.S. Government Accountability Office, but is a small piece of the overall program because it pays out more than $60 billion annually.
The report said the estimated fraud rate had gone up from 1.34 percent in the 2009-2011 period. It also said the Agriculture Department’s estimates on the fraud rate varied widely for 2012 through 2014, from a low of $960 million up to $4.7 billion.
U.S. Magistrate Judge Hanly A. Ingram issued summonses ordering Billy Joe and Robert Goe to make an initial court appearance in federal court in London on Jan. 7.
Billy Joe Goe was charged in 2009 with selling pain pills in Lee County, where he lived. He pleaded guilty and was sentenced in December 2009 to the time he had already served, which was four months.
His attorneys cited health problems, including diabetes and cardiovascular concerns, in seeking a low sentence for him.
They also said it was unlikely that Goe would be involved in any further criminal activity.
