Food stamp fraud probe targets Modesto-area market | News

EMPIRE, CA - A run-down market outside Modesto rang up more than $2 million in food stamp sales by illegally offering cash back to customers, fraud investigators claim.

According to a civil complaint filed on behalf of the U.S. Secret Service, the Santa Fe Dollar Discount Store sold non-food items to food stamp customers while overcharging their Electronic Benefit Transfer (EBT) cards and taking a large cut of the cash proceeds.

Food stamp redemptions totalled $2.1 million between 2009 and the first quarter of 2011, the complaint said.

The Secret Service said fraud detection software put the store in the government's crosshairs, which led to an undercover agent conducting multiple EBT cash transactions totalling hundreds of dollars.

The complaint claims the store's owner, Mark Powell, would typically take a $50 fee for providing a food stamp customer with $100 in cash.

A woman who lives next door to the market said it was obvious something strange was going on.

"There were just lots of people from all over the place there," Tina Gibbons said.  "It was like a circus."

Rick Kessie, who owns a lawn mower repair shop that shares the same building with the market, said customers would often come to him with EBT cards by mistake.

"Everybody in town knew what was going on," he said.

Kessie said the store closed last summer at about the same time the government froze multiple bank accounts belonging to Powell.

The U.S. Attorney in Sacramento filed the civil complaint Feb. 14, seeking to liquidate the banks accounts worth $231,353.

Among the bank accounts seized by the government is one worth $12,820 held in the name of Northern Tire & Wheel Specialties in Modesto.

The owner of Northern Tire is Powell's son, who shares the same name and said the seizure was a mistake.

"I'm a junior.  They've taken my money," said Mark Powell, Jr.  "My father has no connection to my business."

Mark Powell, Sr. did not return a phone call from News10.  He has not been criminally charged in the fraud probe.

A spokeswoman for the U.S. Attorney said she could not confirm or deny that a criminal investigation is taking place.

"This is a civil action at present, and the investigation is ongoing," said Lauren Horwood.

by George Warren, GWarren@news10.net