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Post date: February 11 2015

A.G. Schneiderman Announces Prison Sentence For Suffolk Convenience Store Operator In Nearly $1 Million Food Stamp Fraud

Operator Of Mastic Supermarket Sentenced To 1 1/3 To 4 Years In Prison

Theft From SNAP Program Included Emergency Funds Allocated To Help Victims Of Hurricane Sandy

Schneiderman: Perpetrators Of Benefits Fraud Schemes Will Be Brought To Justice

NEW YORK - Attorney General Eric T. Schneiderman today announced the sentencing of Haricharan Malhotra, a Suffolk County convenience store operator who pleaded guilty for participating in a multi-year larceny scheme to illegally trade cash for almost $1 million in Supplemental Nutritional Assistance Program (SNAP, formerly known as the Food Stamp Program) benefits. In December 2014, Malhotra pleaded guilty before the Honorable James Hudson in Suffolk County Supreme Court to the crime of Grand Larceny in the Third Degree (a class D felony). Today, Judge Hudson sentenced Malhotra to 1 1/3 to 4 years in prison.

“SNAP fraud is a serious crime which my office will prosecute to the fullest extent of the law,” Attorney General Schneiderman said. “Mr. Malhotra stole from a government program aimed at providing nutritional assistance to New Yorkers in need, especially those harmed by Hurricane Sandy. As seen by today’s sentence, perpetrators of benefits fraud schemes will be brought to justice.”

According to the indictment and statements made by prosecutors, Malhotra, together with the store's two owners, used his position as a clerk at Mastic Supermarket to fraudulently exchange food stamps for cash. The evidence revealed that on hundreds of occasions, dozens of SNAP recipients presented their SNAP benefit cards to Malhotra at the register at Mastic Supermarket. Instead of ringing up eligible food purchases, Malhotra rang up phantom purchases and then split up cash in the amount of the phantom purchase between the store and the recipients. The government then reimbursed Mastic Supermarket for these phantom purchases made using SNAP benefits cards.

These illegal exchanges sharply increased in the wake of Hurricane Sandy, when the government program allocated an additional 50% in benefits to all SNAP recipients in affected areas, without regard to need. After the storm, numerous SNAP Recipients in Suffolk County received this Sandy benefit and then illegally exchanged their benefits for cash at Mastic Supermarket. The investigation determined that nearly $1 million was fraudulently stolen from the government program as a result of this scheme.

The case stems from an investigation initiated by the United States Department of Agriculture and the Attorney General’s Criminal Enforcement and Financial Crimes Bureau in 2013. A civil lawsuit, filed by the Attorney General’s Office against Malhotra and other individual and corporate defendants, is still pending. The Attorney General’s lawsuit seeks $963,000 in restitution.

The Attorney General thanks: the United States Department of Agriculture, Office of Inspector General, Northeast Region; United States Department of Agriculture, Food and Nutrition Service; the Suffolk County District Attorney's Office; the Suffolk County Department of Social Services; the Suffolk County Police Department; the Nassau County Police Department; and the New York State Department of Financial Services for their assistance in the case.

The case is being handled by Assistant Attorneys General Tyler Reynolds and Rhonda Greenstein of the Criminal Enforcement and Financial Crimes Bureau. The Criminal Enforcement and Financial Crimes Bureau is led by Bureau Chief Gary T. Fishman and Deputy Bureau Chiefs Meryl Lutsky and Stephanie Swenton. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

The investigation was conducted by Legal Support Analyst Theo Davidson, Investigator Ryan Fannon, Supervising Investigator John Sullivan and Deputy Chief Investigator John McManus. The Investigations Division is led by Chief Investigator Dominick Zarrella.

If see or know of waste, fraud or abuse in a social services program in New York State, please contact the Office of the Attorney General's helpline at (800) 771-7755.