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Food assistance fraud costing millions in Michigan

Posted at 10:42 PM, Feb 08, 2017
and last updated 2017-02-09 10:27:17-05

Tara Cardoza is one of the 1.4 million people in Michigan on food assistance.

"Its very important," she says, as a way to feed her young children.

She and thousands of other Michigan families have a real need. But the 7 Investigators have learned not everyone is honest.

Fraud investigations are up, more than 10 percent year-to-year, and many of the targets---those abusing food assistance, used locally by way of a Bridge Card.
          
Over a one year period, more than $23 million dollars was defrauded by those scamming public assistance, including food assistance, according to the state.

When you factor in attempted fraud and monies recovered, the number jumps to over $100 million.

More than 10,000 stores in the state accept Bridge Cards and nearly a 1,000 ATM's can be used to access cash benefits.

The state's Office of Inspector General (OIG) works with the feds to investigate abuse.

"The consumers get hurt, the taxpayers get hurt, as well as the people on public assistance who could probably getting more money," says Douglas Woodard with the OIG.

Those abusing are not only card holders, but businesses doing the unthinkable.

"Catering businesses that will buy cards off of people to fund their business," says Woodard.

Also retailers who sell non-food items like liquor, cigarettes and lottery tickets or exchange the cards for cash.

"All this money that's supposed to be purchasing food goes to a waste."

The federal government keeps track of businesses they have busted for fraud. They provided 7 Action News with a list of the worst storefront violators in Detroit - those who have been permanently disqualified from the program.

We went down the list visiting each one.

What we found---many of those who get sanctioned quickly fold, and reopen under new management, allowing the store to reapply for its right to take Bridge Cards.

We visited other stores that were locked and out of business altogether. Much of the revenue at these places comes directly from customers on food assistance. So when that stops, so does the business.

At one gas station which lost its license, new management is in place, and they are scrambling to reapply for a license for food assistance acceptance.

Tara Cardoza tells us, food assistance fraud not only hurts the taxpayer, but those who actually need it.

"That's not good, cause then its messing it up for us," she says.

The state says they rely on honest recipients, people like Cardoza, to tip them off when they see folks committing fraud. One hundred seventy seven agents and employees statewide will then do their best to weed it out.