Grocery store owner sentenced in extensive fraud case

Tribune Staff • Jul 21, 2015 at 11:22 AM

U.S. District Judge Robert Holmes Bell also ordered Mohamed to pay restitution of $658,636 to the U.S. departments of Agriculture, Housing and Urban Development, Health and Human Services, and Education.

Ahmed’s son, Mohamed Isse; and nephew, Abdulrahman Hassan Mohamed, also pled guilty to conspiracy. They are scheduled for sentencing today and Thursday.

From 2006 to 2009, Ahmed Sheikh Mohamed operated Rayan Phone Card & Grocery, a small store in Grand Rapids that catered to the Somali immigrant community. The defendant applied for and obtained authorization to redeem food stamps at the store, which meant he could accept “Bridge Cards” as payment for approved food products. Retailers participating in the program are strictly forbidden from exchanging food stamp benefits for cash and ineligible items, or accepting them as payment on credit accounts.

The U.S. Department of Agriculture began investigating the case after noting that Rayan was redeeming food stamps at a higher rate than comparable stores in the neighborhood.

Using cooperating customers, USDA made nine exchanges of food stamp benefits for cash, phone cards and other ineligible items. In each instance, the defendants charged the card more than the value of the cash or other items, and deposited the excess directly into Mohamed’s bank account.

On Nov. 18, 2009, federal agents executed a search warrant at Rayan, and seized hundreds of ledger pages showing the defendant had also been extending revolving lines of credit to his clientele. The defendant admitted that he had been extending between $10,000 and $14,000 per month in credit to up to 200 customers at a time. Records established the borrowers paid their credit tabs with food stamps, thereby transferring their debts to the taxpayers.

Evidence at sentencing established the defendant obtained more than $474,000 in fraud proceeds from his food stamp trafficking operation.

To read more of this story, see today’s print or e-edition of the Grand Haven Tribune.

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