Feds say Ogden markets' food stamp scam took in nearly $9 million

Federal indictments unsealed Tuesday allege two Ogden markets and individuals associated with them participated in a food stamp fraud scheme that took in nearly $9 million in federal benefit payments.

Federal and state law enforcement officers served warrants on the Westside Valley Market, 873 W. 24th St., and the 9th Street Corner Market, 1390 9th St., Tuesday morning. They also arrested six people in Ogden, one person in Salt Lake City and two individuals in California. One person named in an indictment is already in custody on unrelated state charges, according to the U.S. Attorney's Office. Two additional people have not yet been arrested.

They face multiple counts of conspiracy, wire fraud, benefits program fraud, access device fraud, money laundering and aiding and abetting.

According to the indictments, the markets allowed customers to make minimal purchases with a Supplemental Nutrition Assistance Program (SNAP) electronic benefit card and then run an additional transaction for the remaining balance on the card. A portion of that transaction was given to the customer in cash, while the full value was electronically deposited in the market's bank account.

In its 2008 application to be a SNAP retailer, the Westside Valley Market estimated it would have eligible annual food sales of $124,000; that was revised a few months later to $34,500 annually. In its renew application in 2011, the new owner reported estimated annual food sales of $613,000. The convenience store, which sells canned foods, sandwiches and burritos, snack items, soft drinks and cigarettes, actually redeemed $2.6 million in SNAP benefits between January 2010 and October 2012, according to one indictment.

The 9th Street Corner Market became an authorized SNAP store in April 2009 and estimated it would have eligible annual food sales of $12,750. In an updated application submitted in 2010, the market estimated it would have annual SNAP sales of $420,000. The Corner Market, which offers similar food and snack products, redeemed $6 million in SNAP benefits between April 2010 and October 2012, according to a court document.

The Utah defendants will make their first appearance in federal court Wednesday. The potential penalties range from prison sentences of five to 20 years and fines of $250,000 on most of the alleged counts.

The indictments also seek to seize associated properties held by the individuals, including homes in Elk Grove, Thornton, Marysville and McKinleyville, Calif.; a home and commercial property in Ogden; funds in various bank accounts and a total money judgment of approximately $7.7 million.

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Defendants face prison and fines

P The Utah defendants will make their first appearance in federal court Wednesday. Potential penalties range from prison sentences of five to 20 years and fines of $250,000 on most of the alleged counts.

The indictments also seek to seize associated properties held by the individuals, including homes in Elk Grove, Thornton, Marysville and McKinleyville, Calif.; a home and commercial property in Ogden; funds in various bank accounts and a money judgment of approximately $7.7 million.