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Name, owners changed at South Side store, but food stamp fraud continued

Racine Food Mart 7401 S. Racine.

Racine Food Mart at 7401 S. Racine.

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Updated: October 27, 2012 6:04AM

A tiny corner store in Englewood has changed names again and again.

A decade ago, the store at 7401 S. Racine was called 74 Discount. Then it became L&R Food Mart. Then, Racine Food Mart.

The corner pantry didn’t have space for a lot of food — just packaged lunchmeat, drinks, chips and the like. But over the past 10 years, the store rang up sales like a big grocery.

That’s because a succession of storeowners bilked the government of hundreds of thousands of dollars through food-stamp fraud. The theft continued even after the government twice removed the store from the program for fraud.

It’s an example of the government’s difficulty in preventing storeowners from ripping off the multi-billion dollar program.

The U.S. Department of Agriculture, which administers the program, nabbed Mahmoud Abufarha, owner of 74 Discount, for stealing $264,000 in a food-stamp scam in 2000. He was sentenced to probation in 2005 and the government seized a home to recover some of the loss.

Abufarha owned the property at 7401 S. Racine where the store was located, but the government decided not to seize it because it wasn’t worth very much. He continued to own the property when another storeowner, Raed “Ray” Alfraihat, started a new business there.

The USDA allowed Alfraihat’s store, L&R Food Mart, to join the food-stamp program. But the government discovered he and the store were involved in fraud, too, and barred him from the program, court records show. Alfraihat wasn’t charged with a crime at the time.

Then, in 2006, Alfraihat opened Racine Food Mart at the same location. He put the ownership in someone else’s name but retained control of the business. He and that store ripped off the food-stamp program from 2008 to 2010, prosecutors said.

On Sept. 15, Alfraihat pleaded guilty to fraud and agreed to repay the $159,000 he admitted stealing from the program.

Cook County Sheriff Tom Dart wasn’t involved in the investigation, but his office last year busted five other suburban stores and 10 vendors on the for similar crimes.

Despite his investigations, which were conducted in a partnership with the USDA, the problem has continued to flourish, Dart said.

He said he’s directed his resources toward fighting other types of crime. Dart said he doesn’t think the USDA has enough investigators to fully address the problem.

Nationally, about 100 USDA analysts and investigators reviewed more than 15,000 stores in fiscal year 2011 and conducted nearly 5,000 undercover investigations, the department said.

“We like working with them,” Dart said. “There are just not enough of them.”

Dart said the heart of the problem is the crooked storeowners — and not their customers.

A former employee of Alfraihat agreed.

“They know they can do this to the downtrodden, African-American neighborhoods,” said the woman, who asked that her name not be used.

The scam is simple: A person with a state-issued LINK card lets a storeowner withdraw federal food-stamp benefits, maybe $50. The money is supposed to pay for food for the poor. But the storeowner might hand the cardholder $30 and keep $20 for himself.

A former customer of Alfraihat told the Chicago Sun-Times that he didn’t seem like a bad guy.

When people couldn’t pay for food, he would allow them to pay him back later, said the woman, who only agreed to use her first name, Jada.

“If you came in hungry and without money, he would feed you,” she said.

But Alfraihat was also widely known for food-stamp fraud, Jada said.

“Ray would give them six dollars for every $10 on their card,” said Jada, who lived nearby at 75th and Aberdeen.

“They are taking advantage of the people in the neighborhood,” she said of Alfraihat and other crooked storeowners. “They are taking the money from people who should be using it to feed their kids.”

Alfraihat’s attorney, Mike Clancy, said he’s handled other cases involving food-stamp fraud. Those cases involved a lot more money than his client admitted to stealing, Clancy said.

Clancy added that his client never had a business relationship with Abufarha, the convicted owner of 74 Discount.

Although the USDA wouldn’t comment on the Alfraihat case, department officials said they’re improving their efforts to root out fraud.

That’s increasingly important because the program’s benefit payments have ballooned as the economy faltered.

More than $71 billion in benefits were paid out nationally in 2011, compared to $34 billion in 2008.

The government has recently taken steps to boost sanctions and oversight for fraud in the program, a USDA spokesman said. In fiscal year 2012, USDA permanently disqualified more than 1,000 stores nationwide for trafficking in food-stamp benefits, according to the department.

The USDA estimates one penny of every dollar in the program is lost to trafficking of food-stamp benefits, down from 4 cents for every dollar about 15 years ago.

As Alfraihat awaits sentencing for such fraud, the store at 7401 S. Racine has re-opened under a different name and owner.

A sign on the store welcomes back loyal customers — and says LINK cards are accepted, too.

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