The New Jersey franchise owner of four discount stores has been arrested and charged with letting customers use federal food stamps to buy some $5.2 million in items that are not eligible for purchase under the food stamp program, over about two-and-a-half years. It's certainly not unusual for retailers—especially franchisees—to accept food stamps for inappropriate items, either because a clerk doesn't know the rules or the owner chooses to violate them. But accepting more than $5 million worth of banned transactions is a bit much.
Muhammed Farooq, 49, was charged with first-degree money laundering, second-degree theft by deception and fourth-degree food stamp fraud. The probe was an 8-month joint investigation of the Essex County (New Jersey) Prosecutor's Office Financial Crimes Unit, the U.S. Department of Agriculture Inspector General's Office and U.S. Homeland Security.
The purchases happened at four Dollar Stores owned by Farooq. Farooq apparently operates the stores under different names, including Dollar Bazar and Dollar Worth. Unlike traditional dollar stores—which try to limit the price of all products to one dollar—Farooq's pricing ran to $60 (for a small microwave oven) and higher, according to someone who answered the phone at one of his stores. Therefore, it's impossible to determine how many items were involved in the $5.2 million alleged fraud.
A search of Farooq's Somerset home turned up $150,000 in cash, six computers, electronic food stamp machines and detailed business records, said Essex County Deputy Chief Assistant Prosecutor Walter Dirkin, director of the county's financial crimes unit.