Evaluation of food retailer compliance management demonstrations in EBT-ready states and related initiatives : study of state law enforcement agreements

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Evaluation of Food Retailer
Compliance Management
Demonstrations in EBT-Ready
States and Related Initiatives
Study of State Law Enforcement
Agreements
September 1996
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Summary of "Study of State Law Enforcement Bureau Agreements"
Background
State Law Enforcement Bureau (SLEB) agreements are the mechanisms by which USDA's Food
and Consumer Service (FCS) provides States with food stamp coupons to use in conducting
investigations of the illegal selling, buying, and redemption of food stamp coupons. FCS created
the SLEB agreement mechanism in 1989. By 1994, 32 States had signed agreements.
FCS conducted this stu-Jy to determine what has been accomplished under the terms of the SLEB
agreements, to identify problem areas and the reasons for broad variation among States in their
use of the agreements, to describe best practices and ways to improve the SLEB agreement
process, and to assess the relevance of SLEB to Electronic Benefit Transfer (EBT)
implementation. The report is based on a telephone survey of all States with SLEB agreements
and case studies of six States with noteworthy levels of SLEB agreement-generated activity.
Findings
Accomplishments: Most of the 32 States with SLEB agreements have recently conducted
investigations with the 10 most active States producing substantial results. The most frequent
targets of SLEB agreement investigations are food retailers and individuals who buy food stamp
coupons (as opposed to individuals looking to sell food stamps).
Problems: Due to flexibility in SLEB agreement language and variation in Regional/Field Office
coordination, there is surprising randomness to trafficking investigations. In some States there is
little Federal/State assessment of targets submitted for investigation. Some investigations have
been conducted outside the spirit, if not the letter, of the SLEB agreement, including sting
operations that do not target food retailers or known traffickers. Federal Food Stamp Program
(FSP) and State/local conflict was common over how penalties should be applied (given different
jurisdictions and choices as to fines, penalties and actions) to individuals and retailers found to be
trafficking. Insufficient FCS reporting requirements hinders the overall accountability of
coupons used in SLEB investigations and resulted in few FSP retailers being disqualified as a
result of SLEB activity. States have not implemented mechanisms to refer recipients involved in
trafficking to the FSP disqualification process for further action.
Best Practices: The most effective States used 12 noteworthy practices, described in the report.
These include: using dedicated trafficking units with centralized control of investigations;
integrating SLEB investigations with all of the State's welfare fraud investigations; and
establishing a strong relationship with State and local prosecutors to coordinate activities.
Continued Relevance: SLEBs hold continued relevance. The transfer of SLEB monitoring
activity to FCS Field Offices led to enhanced interagency cooperation and communication in
some problem States. Dynamic USDA/OIG & State relationships have developed where
resources and coordination between the two permit. Texas and New Mexico are working jointly
with the USDA OIG on EBT trafficking investigations which reinforces the continued relevance
for SLEB agreements within an EBT environment.
AupiiiS. 1996
d'l
USDA UnH#d 8tata»
Department of
Agriculture
Food and
Consumer
Service
Evaluation of Food Retailer Compliance
Management Demonstrations in EBT-Ready
States and Related Initiatives
Office of
Analysis and
Evaluation
STUDY OF STATE LAW ENFORCEMENT
AGREEMENTS
September 1996
Authors:
LaoM. AUman
Christopher W. Logan
Submitted by:
Systems Planning Associates
1255 Britannia Lane
AnnapoKs, MD 21403
and
Abt Associates Inc.
55 Wheeler Street
Cambridge, MA 02138
SPA Project Director: Leo M. AUman
Abt Project Director: Christopher W. Logan
Submitted to:
Office of Analysis and Evaluation
USDA Food and Consumer Service
3101 Park Cantor Drive, Rm. 214
Alexandria, VA 22302
Project Officer: Ken Offerman
TMs ttudy was conducts* under Contract No. 53 3198^-021 with the Food and Consumer Service. United States
Department of Agriculture, under the authority of the Food Stamp Act of 1877. as amended. Points of view or opinions
stated in this report do not nccsMsrty represent the official position of the Food end Consumer Service.
d+
ACKNOWLEDGEMENTS
The authors wish to acknowledge the many individuals who contributed to this study
and to the preparation of this report. We gratefully acknowledge the valuable guidance and
support of Ken Offerman, the project officer within FCS' Office of Analysis and Evaluation.
Also at FCS, Bruce Clutter and Lindy Haffey of the Compliance Branch provided a wealth of
information, contacts and helpful comments. Additional thanks go to Ted Macaluso of the FCS
Office of Analysis and Evaluation; to Jordan Benderly, Suzanne Fecteau, Lynn Jordan, and
Preston Mears of the FCS Benefit Redemption Division; and to Russ Gardiner of the FCS WIC
program staff.
The study also benefitted from the input of a number of USDA OIG personnel. At OIG
headquarters, Brian Haaser, and Tom Martin provided valuable perspectives and coordinated
communications with the Regional Inspectors General, whom we also thank for their time and
willingness to share their experiences.
The state SI .KB agreement coordinators who participated in interviews are too numerous
to mention here, but the study would not have been possible without their willing participation.
We extend special thanks to our accommodating hosts for the six case study visits: Richard
Tibbetts, California DSS and the staff of the three trafficking projects; Christo Tolia, Florida
Department of Law Enforcement; Richard O'Herron, Michigan Department of Social Services;
Brett Woods, New Mexico Human Services Department; Paul Rapp, Ohio Department of Human
Services; and Gordan Hardy, Texas Department of Human Services.
Finally, the authors want to thank the people at Abt Associates who aided the study.
John Kirlin was a valuable resource as the technical advisor. We are most grateful to Susan
Byers, who managed the production of this report and other project documents, with significant
contributions from Jan Nicholson and Stefanie Falzone. Lastly, Stan Frerking of Systems
Planning Associates deserves credit for his management support.
&-y
TABLE OF CONTENTS
EXECUTIVE SUMMARY j
Chapter One INTRODUCTION 1
Chapter Two STUDY DESIGN AND PROCEDURES 5
Chapter Three RESULTS OF THE SURVEY OF STATES WITH SLEB
AGREEMENTS 7
Chapter Four ANALYSIS OF FINDINGS FROM THE SLEB AGREEMENT
SURVEY AND CASE STUDIES 23
Appendix A SLEB AGREEMENT QUESTIONNAIRE
Appendix B SUMMARY REPORTS ON SLEB AGREEMENT HISTORY
Appendix C CASE STUDY SUMMARIES AND STATE COMMENTS
C'l
LIST OF EXHIBITS
Exhibit 1
Exhibit 2
Exhibit 3
Exhibit 4
Exhibit 5
Exhibit 6
Exhibit 7
Exhibit 8
Exhibit 9
Exhibit 10
Exhibit 11
States with SLEB Agreements in June 1995, Grouped by Level of
SLEB Activity ii
States with SLEB Agreements: Background and Organizational
Characteristics by Activity Category 8
Summary of SLEB Agreement Activity by State 11
Roie of FCS Regional Office in Decision to Sign Agreement 16
Level of Interest of Law Enforcement Community in What Agreement
Had to Offer 16
Relationship with USDA Office of Inspector General 18
Relationship with FCS Compliance Branch 19
Rating of Investigation Approval Process 20
Rating of Accounting Requirements 21
Research Questions for the SLEB Agreement Study 23
Reasons for Having a Less-Than-Fully-Activated SLEB Agreement . 25
&'{
)
EXECUTIVE SUMMARY
Background
State Law Enforcement Bureau (SLEB) agreements are the mechanisms by which
USDA's Food and Consumer Service (FCS) provides states with food stamp coupons to use in
conducting investigations of the illegal selling, buying, and redemption of food stamp coupons
in the underground economy. These associated criminal acts are collectively known as
trafficking.
FCS created the SLEB agreement mechanism in 1989, in response to two key factors:
the termination, in 1986, of the issuance of food stamp coupons to the states for investigative
purposes by the USDA Office of Inspector General (OIG); and the government's realization that
the federal capacity to deal with trafficking was limited, given the scope of the problem. State
and local law enforcement agencies represented a huge potential resource to enlist in the effort
to enforce the laws governing the use of food stamp coupons in the marketplace.
The SLEB agreement requires FCS approval for proposed trafficking investigations to
be conducted with food stamp coupons. States must also follow specified procedures for coupon
accountability and reporting of investigative activity.
The Purpose of the Study
Because the SLEB agreements were presented to the states as an option, and because
some slates have been reluctant to get involved in trafficking investigations, the SLEB agreement
initiative has produced mixed results. At the time of the study, 32 states had signed agreements,
but only 10 states had conducted sustained campaigns against food stamp coupon trafficking.
FCS included the SLEB agreements in the evaluation of the Retailer Management
Demonstrations because they are the primary example of state activity in the area of retailer
management. FCS wanted to determine what has been accomplished under the terms of the
SLEB agreements, why there is broad variation among the states in their use of the agreements,
and what can be done to improve the SLEB agreement process.
The SLEB agreement evaluation design included two major tasks. The first task
completed was the presentation to FCS of case studies on six states, selected because of their
Executive Summary
noteworthy level of SLEB agreement-generated activity. The case studies are included in this
report as Appendix C.
This report presents the findings from the study's second task, a telephone survey of
all states with SLEB agreements. It also contains the study's overall conclusions regarding the
SLEB agreement process.
Highlights of the Survey Findings
The 32 states with SLEB agreements fall into five categories, indicating their levels of
investigative activity and their roles in the study, as shown in Exhibit 1. (The states with the
most extensive SLEB activity were included in both the case studies and the survey.) The major
findings from the survey are:
Exhibit 1
STATES WITH SLEB AGREEMENTS IN JUNE 1995,
GROUPED BY LEVEL OF SLEB ACTIVITY
Category I: Inactive statas (no SLEB activity ever)
District of Columbia
Minnesota
Nebraska
North Dakota
Utah
Virginia
West Virginia
Category U: States with no recent SLEB activity (in FY94 or FY95)
Alabama
Georgia
Missouri
Wyoming
Category III: States with periodic SLEB activity
Colorado
Illinois
Indiana
Iowa
Kansas
Louisiana
Massachusetts
Mississippi
Montana
South Carolina
Washington
Category IV: States with regular SLEB activity
Arkansas
New York
Oklahoma
Wisconsin
Category V: Case study states (selected because of extensive SLEB activity)
California
Florida
Michigan
New Mexico
Ohio
Texas
U
Executive Summary
Most states with SLEB agreements have recently conducted investigations, but the
SLEB initiative has produced substantial results only in the 10 most active states
(Categories IV and V).
Six of the ten most active states (Categories IV and V) are also among the top ten
states ranked by caseload size.
Six of the ten most active states (Categories IV and V) exert direct control over
trafficking investigations; in the remaining four states the control is in the hands of
local law enforcement agencies.
Food Stamp Program agencies manage the SLEB agreement in 25 states; in the
other seven states, the managing agency is generally the Department of Public
Safety or the Attorney General's office.
Law enforcement agencies are the most common source of intelligence about food
stamp coupon trafficking.
The most frequent targets of SLEB agreement investigations are food retailers and
individuals who buy food stamp coupons. Only California makes recipients a
primary target of trafficking investigations.
•
•
FCS Regional Office staff received positive ratings from the states for their
helpfulness in SLEB agreement-related matters.
Interest from the states' law enforcement communities in the SLEB agreement
process was varied, as were the states' efforts to elicit that interest.
In SLEB agreement-related matters, states rated their relationship with the USDA
OIG from poor to very good. The four active states that rated their relationships
as poor want to see those relationships improve.
The SLEB agreement approval process and accounting procedures were generally
rated favorably. Nonetheless, state and local agencies considered the accounting
requirements burdensome.
Results of the Analysis of the Findings
Taken together, the survey and case study results lead to the following major findings:
• In most states, FCS Regional Office staff were key to the implementation of the
SLEB agreements.
• Strong leadership and commitment on the part of die SLEB agreement
administrators were common elements among the ten most active states.
iii
Executive Summary
•
•
•
•
•
The most critical reasons for states having a less than fully active SLEB agreement
were insufficient resources and lack of interest in the law enforcement community.
Commitment of state resources to the SLEB agreement in some of the active states
was considerable, including the assignment of full-time state staff to trafficking
investigations. Some states may have diverted resources from investigating
eligibility fraud to SLEB agreement activity.
USDA's Regional Inspectors General have the autonomy to form relationships with
states investigating food stamp coupon trafficking under the terms of the SLEB
agreements. Where resources allow and when working relationships with state
agencies contribute to meeting OIG goals, dynamic federal/state relationships have
developed.
Several states have lowered the felony level in their trafficking statutes. Felony
charges are useful when cases are to be plea-bargained, and felony convictions carry
built-in sanctions even if defendants are not sent to jail.
There is a surprising degree of randomness in where, how, and by whom trafficking
investigations are conducted in states where SLEB agreement-generated
investigations are not centrally controlled. Many investigations are not producing
results.
In some states and FCS Regional Offices there is little assessment of targets
submitted for approval by state and local law enforcement agencies. Some
investigations have been conducted outside the spirit, if not the letter, of the SLEB
agreement, including sting operations that do not target retailers or known
traffickers.
SLEB agreement investigations varied in scope from short-term investigations, e.g.,
"buy/bust," to long-term investigations of major complex trafficking operations.
Data on investigation outcomes in many states were often incomplete or unavailable,
often because of inconsistent reporting from local agencies. Data gathering and
reporting requirements were considered burdensome by some states.
Submission of data from states to initiate disqualification processes against retailers
is inconsistent. Relatively few retailers have been disqualified as the result of SLEB
investigations.
SLEB agreement reporting requirements are not providing FCS with timely or
accurate information on food stamp coupons used in SLEB investigations.
The relationship between food stamp coupon and drug trafficking has created a gray
area as to approval of targets for SLEB agreement investigations. Some state and
FCS Regional Offices have approved investigations that appear to have been focused
on drug law enforcement.
iv
Executive Summary
• Food Stamp Program staff are usually not involved in the states' SLEB agreement
processes. States have not implemented mechanisms to refer recipients involved in
trafficking to the Food Stamp Program disqualification process.
• There is often conflict between federal and state staff as to how penalties should be
applied to individuals and firms found to have been involved in food stamp coupon
trafficking as a result of SLEB agreement investigations.
• Texas and New Mexico are working jointly with the USDA OIG on EBT trafficking
investigations. Traffickers have applied their illegal craft to the new EBT systems
with surprising speed, but state and federal staff are making good progress in
adjusting their investigative routines to the new technology.
Noteworthy Practices of the Most Effective States
The following practices have contributed to the effectiveness of SLEB agreement
operations in the most active states. Because the SLEB agreement process must fit unique state
circumstances, some of these practices may not be appropriate for individual states.
Nevertheless, the practices listed below are worthy of consideration by any state interested in
effective trafficking investigations.
• Dedicating state positions to trafficking units (in California, Michigan, New
Mexico, Oklahoma, Ohio and Missouri);
• Involving all welfare fraud investigators in trafficking investigations on at least a
part-time basis (the "Texas modelH);
• Working directly to assist the USDA OIG on trafficking cases, as an alternative to
the SLEB agreement process (the "Missouri model");
• Providing special funding for trafficking projects (in California);
• Maintaining strong relationships with prosecutors (in Michigan, Ohio, California
and New York);
• Developing a standard case format (in Texas);
• Working with other agencies within the state, such as liquor control and lottery
boards, to apply penalties to food retailers engaged in trafficking (in Michigan,
Ohio, and Florida);
Generating publicity about trafficking cases (in Michigan, New Mexico, Ohio, and
Texas);
Executive Summary
Transferring SLF.B agreement monitoring to the FCS Field Offices (in the Southeast
Region);
Investigating trafficking in EBT systems (in Texas and New Mexico); and
Conducting trafficking workshops and regional conferences, and providing state-to-state
technical assistance.
vi
CHAPTER ONE
INTRODUCTION
The illegal trafficking in food stamp coupons has tarnished the image of the Food Stamp
Program. Public awareness of this problem has increased in recent years. This is due, in part,
to expose-type features on trafficking aired by the major television "news magazine" programs.
Food stamp coupon trafficking has become more sophisticated and complex, extending
far beyond casual exchanges among individuals. Street traffickers aggressively solicit recipients,
acting as brokers between recipients and retailers. Investigators in the midwest and southwest
have found that some retailers work in trafficking networks, at times even moving food stamp
coupons to states where trafficking may be easier or illegal profits higher.
Where electronic benefit transfer (EBT) has replacedfood stamp coupons, traffickers
have learned how to apply their craft to the new systems with amazing speed. In the very first
pilot EBT site (Reading, Pennsylvania), hundreds of recipients were found to be trafficking with
their EBT cards at one sandwich shop. Federal investigators have documented EBT trafficking
in Maryland, New Mexico and other states as well.
The federal resources to address the problem of food stamp coupon trafficking are
limited. The USDA OIG devotes a significant portion of its 250 investigators' time to
trafficking, but these investigators are still spread nationwide and focus on major cases that will
be acceptable for prosecution by the US Attorney's Office. FCS' Compliance Branch monitors
authorized retailers for trafficking, as well as selling ineligible items for food stamp coupons.
There are fewer than 50 compliance investigators for the entire country. The Secret Service has
an interagency agreement with the USDA OIG to investigate trafficking by unauthorized
retailers, but the Service is not active in all states. Other federal agencies (such as the Federal
Bureau of Investigation and the Postal Service inspectors) play only a minor rule in investigating
food stamp coupon trafficking. One aspect of food stamp coupon trafficking, in particular, has
been beyond the scope of federal investigations: trafficking around food stamp coupon issuance
sites has been conducted in the open and with impunity.
In 1986, the USDA Office of General Counsel determined that the OIG could no longer
issue food stamp coupons to states for use in independently-conducted trafficking investigations.
The process of providing states with food stamp coupons would have to be assumed by FCS if
1
Chapter One: Introduction
it were lo continue. In 1989, FCS undertook the SLEB agreement initiative. Via the FCS
Regional Offices, the stales were provided with the opportunity to obtain food stamp coupons
for trafficking investigations. The SLEB agreement was clearly viewed by both FCS and the
states as a state option.
A total of 32 states have signed SLEB agreements, but the follow-through to these
agreements has been mixed. A few states have used the agreement to sustain ongoing campaigns
against food stamp coupon trafficking. In other states, there has been only periodic activity
generated by the agreement. Finally, some states have not produced any investigations since
signing the agreement.
The SLEB agreement process establishes strict accounting requirements for the food
stamp coupons issued to state agencies. It also requires that investigations be approved by the
FCS Regional Offices.
In most states, food stamp coupon trafficking is a violation of state law. States
therefore have the authority and broad discretion to conduct trafficking investigations on their
own, largely as they see fit. They need FCS approval to use food stamp coupons in these
investigations, however, and this constraint is a potential source of conflict.
FCS commissioned a study of the SLEB agreements as part of a broader evaluation that
also includes a study of the Food Retailer Compliance Management Demonstration in EBT-Ready
States. The SLEB agreement study was included in the evaluation because SLEB
agreements are the primary example of state activity in the area of retailer management.
The first task completed in the SLEB agreement study was the case studies of six states
that had noteworthy SLEB agreement operations. The two primary objectives in the site visit
component were: first, to describe in detail all aspects of the SLEB agreements in the states
selected into the study; and second, to evaluate the selected state SLEB agreement initiatives,
to the extent that extant data and information gathered during the visits would support such an
evaluation.
This report presents the findings from the SLEB agreement study's second task, a
survey of all states that have a SLEB agreement with FCS. It also presents the final SLEB
agreement study conclusions, based on the results of the case studies and the survey.
Chapter One: Introduction
Evaluation Objectives
The primary objectives of this report are to describe and analyze the 32 SLEB
agreements that FCS had signed with states between 1989, when FCS began the initiative, and
June 1995. The analysis aims to assess the causes for the variations in the levels of
performance, which range from states that have generated no SLEB agreement activity to states
that regularly conduct SLEB agreement investigations in an organized campaign against
trafficking. Conclusions are drawn from the analysis of the survey results and the six case
studies.
Organization of the Report
In Chapter Two, the study design and procedures employed to collect data are
described. The utility of the study questionnaire is assessed.
Chapter Three presents the results of the survey in summary fashion. Data from the
six states visited are included in this section. Both statistical data and the opinions of those
interviewed are summarized.
Chapter Four discusses the conclusions drawn from the study. This chapter answers
the research questions posed by FCS and addresses additional issues that emerged in the site
visits, the telephone survey, and interviews with federal staff.
Appendix A presents the survey questionnaire. Appendix B contains state-by-state
summaries of SLEB agreement status from the 25 survey-only states, and Appendix C provides
the six case studies of states with noteworthy SLEB agreements and the states' comments on the
study reports.
1 mmms
CHAPTER Two
STUDY DESIGN AND PROCEDURES
The overall SLEB agreement study design relied on the use of a questionnaire (see
Appendix A) to gather consistent data from all states with a SLEB agreement. The primary
sources of data in the survey were contacts identified by the FCS Regional Offices for each state
with an agreement. These individuals were sent the questionnaire along with a cover letter that
briefly described the SLEB agreement study. The questionnaire was pre-tested in the six states
visited for the case studies. To test the questionnaire in states other than those fully engaged
in the SLEB agreement process, interviews were also conducted with state staff in Washington,
selected from the states conducting periodic investigations, and in West Virginia, selected from
those states that had generated no activity.
The remaining 24 telephone interviews were conducted between June 22, 1995 and July
10, 1995. The interviews ranged in length from IS minutes to 105 minutes, and averaged 50
minutes. In five states, secondary contacts were made to obtain information not available to the
primary contact. State staff were occasionally recontacted as the summary reports were being
written in order to clarify certain items.
It can be said without reservation that all state staff contacted throughout the entire
SLEB agreement study were cooperative and provided information and opinions in an open and
forthright manner. In some states the historical perspective on the agreement was somewhat
weak, because the SLEB agreement administrators had not held their positions throughout the
life of the agreement.
Sufficient information was gathered through the survey to bring the national status of
the SLEB agreement initiative into clear focus and answer most of the research questions. As
was true in the six case studies, however, information on case dispositions and operational costs
was difficult to obtain. This meant that there were insufficient data for analysis in the area of
comparing costs to effectiveness.
The designated SLEB agreement contacts in the FCS Regional Offices provided valuable
background information prior to contacts with the states. In the FCS Southeastern Region,
monitoring responsibility for the SLEB agreements has been transferred to the Field Office staff.
The officers-in-charge were contacted regarding the SLEB agreement operations in Alabama,
Chapter Two: Study Design and Procedures
Georgia, Mississippi, and South Carolina. The officer-in-charge of the Florida Field Office was
interviewed in person during the Florida site visit.
The seven USDA Regional Inspectors General and OIG Headquarters staff in
Washington, DC were interviewed about the SLEB agreement initiative and to discuss issues and
problems that arise when state and federal agents are working on trafficking cases in the same
area.
Headquarters staff in the FCS Compliance Branch provided valuable information and
assistance throughout the entire study.
CHAPTER THREE
RESULTS OF THE SURVEY OF STATES WITH SLEB AGREEMENTS
This chapter includes the presentation and analysis of elements from the survey of all
states with SLEB agreements. Data are displayed in chart fashion where appropriate.
State-specific summaries of the results of the survey in each state with a SLEB
agreement, with the exception of the six states visited during the study, are presented in
Appendix B.1 The state summaries are arranged in categories determined by their SLEB
agreement-generated activity. In Appendix B and Exhibits 2 and 3, the states are listed
alphabetically in the inactive and not-currently-active groups (Categories I and II). The states
conducting periodic and regular trafficking investigations (Categories III, IV, and V) are
arranged, approximately, from least active to most active. The order was determined by overall
levels of activity and the relative maturity of the states' operations. The rankings do not
represent judgements as to the relative quality or effectiveness of investigations conducted
under the SLEB agreements.
As shown in Exhibit 2, most states with SLEB agreements have recently conducted
investigations (21 of the 32), but only 10 have shown regular, sustained patterns of activity.
States with large food stamp caseloads generally were the more active SLEB agreement states.
States with smaller caseloads tended not to be as active, whereas activity levels among mid-sized
states were mixed.
An interesting finding in this exhibit is the varying relationship between SLEB
agreement activity and Intentional Program Violation (IPV) statistics.2 Food Stamp Program
caseloads and IPV statistics provide some context for the overall anti-fraud environment in which
the SLEB agreement process is managed. That is, a rudimentary assessment of a state's
performance in the area of dealing with food stamp eligibility fraud can be made by comparing
a state's caseload ranking with its IPV ranking. Michigan and Georgia, for example, have IPV
1. The in-depth case study reports on California, Florida, Michigan, New Mexico, Ohio, and Texas are
included in Appendix C.
2. IPV statistics are generated from court and administrative action taken against recipients who violate
eligibility rules, for example, not reporting income. IPVs are reported by states on die Claims Against
Household Report (FCS-209). which is monitored at the FCS regional and headquarters levels.
Chapter Three: Results of the Survey of States with SLEB Agreements
Exhibit 2
STATES WITH SLEB AGREEMENTS: BACKGROUND AND
ORGANIZATIONAL CHARACTERISTICS BY ACTIVITY CATEGORY
State
Average
Food Stamp
Caseload
(FY94J
Food Stamp
Caseload
Rank
IFY94)
IPVs
C-..LB.I—V C«TN>Mn*G
(FY94)
IPV
Rank
(FY94I
Agency
Administering
SLEB Agree
ment
Agencies
Conducting
Investigations
under SLEB
Agreement
1 /. Inactive States (listed alphab stically)
1 District of
\ Columbia
41,408 41 192 40 FS Agency none
1 Minnesota 132,557 26 789 23 FS Agency none
Nebraska 44,830 39 279 36 FS Agency none
North Dakota 17,990 49 378 34 Attorney
General
none
Utah 46,340 38 432 30 FS Agency none
Virginia 232,172 14 500 28 FS Agency none
West Virginia 126,025 28 475 29 FS Agency none
//. States with Ato Recent Activfry ftl FY94 or FY95) (listed al)ohabatically>i
1 Alabama 212,995 16 3.516 7 FS Agency Local police
1 Georgia 329,114 9 7,424 2 Dept. of
Public Safety
State police
1 Missouri* 239,670 13 4,369 4 FS Agency State welfare
fraud inv.
1 Wyoming 12,723 51 263 38 Attorney
General's
Office
Attorney
General inv.
///. States with f'eriodk Activity (from least to most activel"
Massachusetts 190,610 21 673 25 FS Agency State/local
police
1 Montana 27,821 45 100 50 Dept. of
Public Safety
State police
Mississippi 193,597 20 4,181 5 Dept. of
Public Safety
State/local
police
Colorado 106,880 31 1,462 16 FS Agency Local police
1 Indiana 194,061 19 125 49 FS Agency Local police
Kansas 75,996 35 399 33 FS Agency State/local
police
Iowa 78,650 34 221 39 State OIG Local police
Louisiana 278,020 11 1,246 19 FS Agency State/local
police
Washington 196,417 17 863 22 FS Agency State/local
police
8
Chapter Three: Results of the Survey of States with SLEB Agreements
Exhibit 2 (cont.)
Agencies
Average Food Stamp Agency Conducting
Food Stamp Caseload IPVs IPV Administering Investigations
Caseload Rank Established Rank SLEB Agree- under SLEB
State (FY94) JFY94) f.FYB4» (FY94I ment Agreement
Illinois 499,445 7 2,235 11 FS Agency State/local
police
South Carolina 145.535 25 171 43 FS Agency State welfare
fraud inv.
Local police
IV. States with Regular Activity. Survey Only If mm least to most active?
New York 1,003,565 2 2,225 12 FS Agency District attor-neys
State/local
police
Arkansas 107,864 30 600 27 FS Agency State welfare
fraud inv.
Oklahoma 150,396 24 419 31 FS Agency State welfare
fraud inv.
Local police
Wisconsin 121,809 29 405 21 FS Agency Local police
V. Case Study States If mm hast to most activelb
New Mexico 86,416 33 78 51 FS Agency State welfare
fraud inv.
State/local
police
Florida 606,939 4 1,421 17 State Auditor
General
State/local
police
California 1.179,193 1 3,884 6 FS Agency State welfare
fraud inv.
Michigan 434,143 8 8,765 1 FS Agency State police
Ohio 531,497 5 3,345 8 FS Agency State
dedicated unit
Texas 1,001,558 3 7,161 3 FS Agency State welfare
fraud inv.
Local police
NOTE: IPV - Intentional Program Violation.
' Since 1992. Missouri has conducted non-SLEB trafficking investigations in cooperation with USOA OIG.
" Rankings reflect the overall activity and maturity of operations.
Chapter Three: Results of the Survey of States with SLF.B Agreements
rankings much higher than their caseload rankings, suggesting a strong anti-fraud environment.
Such an environment might tend to promote activity under the SLEB agreements, but whereas
Michigan is also active in conducting trafficking investigations, Georgia had no SLEB activity
in either FY94 or FY95. In general, the patterns of IPV and SLEB activity lead to the
observation that there is no direct link between the two areas of anti-fraud activity.
At the other end of the distribution, New Mexico's and South Carolina's IPV rankings
are well below their caseload rankings, but South Carolina has had a relatively high level of
periodic activity and New Mexico has been one of the most active SLEB states. In states where
SLEB activity is unaccompanied by commensurate IPV activity, state resources may have been
diverted from eligibility fraud investigations to trafficking investigations.
In 25 of the 32 states with SLEB agreements, the state's Food Stamp Program agency
administers the agreement. Management of the agreement by an agency other than the food
stamp agency is unlikely to produce high productivity levels. Of the most active states
(Categories IV and V), only Florida has situated the management of the agreement outside of
the welfare department.
It is interesting to note that there is an association between the ievel of SLEB agreement
activity and more centralized control of the SLEB agreement process. The 22 non-active or less-active
states (Categories I, II, and III) exhibit very little central control of the SLEB process.
On the other hand, six of the ten most active states control the food stamp coupons and, to a
very great extent, the actual investigations. These states are Arkansas, New Mexico, California,
Michigan, Ohio, and Texas. Several of these states felt strongly that centralized control was
essential for a successful SLEB agreement operation. This issue is further discussed in Chapter
Four.
As Exhibit 3 indicates, all but two of the 25 states that had some SLEB agreement
activity gave multiple responses to the survey question about their sources of tips and complaints
about food stamp coupon trafficking. "Law enforcement agents" (including state and local
police) were mentioned most frequently, appearing 19 times as either the primary or secondary
source. A closely-related category is "informants." The information provided by informants
is usually obtained by law enforcement agents or state welfare fraud investigators. "Informants"
appears as a primary or secondary source ten times. Seven states indicated that the fraud
hotlines they operate provide valuable tips about trafficking.
10
Chapter Three: Results of the Survey of States with SLEB Agreements
Exhibit 3
SUMMARY OF SLEB AGREEMENT ACTIVITY BY STATE
(al states with tome SLEB activity-excludes category I)
State Sources of Intelligence
Targets of
Investiga-tions
Hf 1
Cumula-tive
Food
Stamp
Coupons
Used*
Jonvic-ttenab
Stores
Referred
toFCS
| //. Status with No Recent Activity (FY94 or FY9S) (listed alphabetically)
\ Alabama Informants
Law enforcement agents
Retailers 3 12.500 N/A 1
] Georgia Law enforcement agents Retailers 3 6,190 1 3
1 Missouri6 Community
Law enforcement agents
Retailers
Buyers
4 1,200 4 0
1 Wyoming Community Buyers 2 <500 N/A 0
1 ///. States with Periodic Activity (from hast to most active?
Massachu-setts
Law enforcement agents Buyers
Drug dealers
3 715 N/A 0
Montana Local offices
Law enforcement agents
Buyers
Retailers
N/A 2,000
(est.l
N/A 0
Mississippi Law enforcement agents
Informants
Buyers
Sellers
4 4,500 1 0
Colorado Community
Informants
Drug dealers
Retailers
2 10,000 N/A 0
Indiana Local offices
Community
Retailers 7 55,000
(est.)
N/A 0
1 Kansas Law enforcement agents
Hotline
Buyers
Drug dealers
6 33,000
(est.)
1 0
Iowa Law enforcement agents
Local offices
Buyers
Retailers
24 13,300 5 0
Louisiana Law enforcement agents
Hotline
Retailers
Buyers
27 13,740 1 0
Washington Law enforcement agents
Informants
Buyers
Drug dealers
35 45,000 N/A 0
Illinois Law enforcement agents
HotHne
Retailers
Buyers
119 19,675 3« 0
South
Carolina
Law enforcement agents
Community
Retailer
Buyers
72 39.000
(est.)
4« 1
11
Chapter Three: Results of the Survey of States with SLEB Agreements
Exhibit 3 (cont.)
State Sources of Intelligence
Targets of
Investiga-tions
No. of
Investi-gations'
Cumula-tive
Food
Stamp
Coupons
Used*
Convic-fJonsb
Stores
Referred
toFCS
| IV. States with Regular Activity, Survey Only (from least to most active)*
New York Informants
Law enforcement agents
Retailers
Buyers
60 135.750 N/A 0
Arkansas Informants
Law enforcement agents
Retailers
Buyers
69 6,280
(est.)
8 4
Oklahoma Community
Law enforcement agents
Retailers
Drug dealers
181 9.276 14 3
Wisconsin Community
Informants
Retailers
Wholesalers
N/A 354,190 40* 41«
V. Case Study States (from least to most active/6
New Mexico Hotline
Informants
Drug dealers
Buyers
45 135,710 N/A 0
Florida Law enforcement agents
Informants
Retailers
Buyers
187 85,000 24« 25
California Informants
Hotline
Runners
Recipients
239 30,000 17 5
Michigan Law enforcement agents
Hotline
Retailers
Buyers
182 54,670 68 12
Ohio Law enforcement agents
Hotline
Retailers
Buyers
207 298,328 141 N/A
Texas FSC
Law enforcement agents
Retailers
Buyers
330 47.500 64* N/A
N/A - not available
NOT£S:
* Ditii are for FY92-FY94 for all case study states except California. California data are for October 1994-March 1995, and were
obtained in reviews of records during site visits. For all other states, data are cumulative for life of SLEB agreement thiough June
1995. as reported tn telephone interviews.
b Conviction counts do not include cases pending from FY94 or prior years, and may understate the actual total number of
convictions due to incomplete data.
c Since 1992. Missouri has conducted non SLEB trafficking investigations in cooperation with USDA OIG.
ri Rankings reflect the overall activity and maturity of operations.
" These states had conviction data enly for some investigations.
' Wisconsin had data on retailer referrals only for some investigations.
12
Chapter Three: Results of the Survey of States with SLEB Agreements
Food retailers who engage in trafficking and individuals who buy food stamp coupons
were the most frequent targets of investigations, each appearing 18 times as either the primary
or secondary target. States typically cited authorized food retailers as being targeted more
frequently than unauthorized stores, even though one objective of the SLEB agreements was to
encourage investigation of non-authorized stores. Interestingly, six states mentioned drug dealers
as primary or secondary targets. The issue of the relationship of drug investigations to SLEB
agreement trafficking investigations is dealt with in more detail in Chapter Four of this report.
Only California lists recipients as one of its top two targets of SLEB agreement-generated
investigations. As mentioned in the case study report on California,3 the state's three
trafficking projects were designed to target "runners" and recipients who conduct their business
around food stamp coupon issuance sites. Runners are individuals who buy food stamp coupons
on the street and resell them, with their "mark-up," to retailers who are usually engaged in
major trafficking enterprises.
Several states mentioned during the course of the study that they were considering
expanding the scope of their investigations to include the targeting of recipients. At this point,
however, none of the states had data on recipients who were disqualified from the Food Stamp
Program as a result of a trafficking investigation. Neither were there mechanisms in any of the
states to provide state or local Food Stamp Program staff with information gathered from
trafficking investigations; there was no perceived need to do so.
The numbers of convictions and stores referred to FCS, as shown in Exhibit 3, reveal
considerable differences in the results of the SLEB initiative between the ten most active states
(those in Categories IV and V) and the rest. Although the ten most active states collectively
reported 376 convictions and 90 retailers referred to FCS, the other IS states (those with no
recent or only peiiodic activity report) reported only 13 convictions and one retailer referral.
One must take care, however, in interpreting the conviction and retailer referral data, because
the data are often incomplete. Tracking cases through the courts is difficult and resource-intensive,
and considerable time may elapse between arrest and conviction. As discussed in
Chapter Four, states do not always track retailer referrals, and referrals do not always lead to
disqualification or other sanction by FCS.
3. Sec Appendix C.
13
Chapter Three: Results of the Survey of States with SLEB Agreements
Although several of the states with periodic activity reported substantial numbers of
investigations, these figures are not truly comparable across states. There is no consistent
definition of what constitutes an investigation, nor are there consistent procedures for counting
investigations. For example, some states may use a narrow definition of investigation by
counting each individual or store targeted. Other states may count as a single investigation an
operation confined to a specific area, which could include many individuals or stores. The
dollar volume of coupons used in investigations is also of limited use in measuring activity,
because states use and account for the coupons in different ways.
Despite the limitations of he quantitative data, the available evidence clearly shows that
the SLEB initiative has produced few results outside of the ten most active states. Those ten
states have mounted sustained campaigns against trafficking, and several others show signs of
potentially sustainable initiatives, but the levels of activity and results in the rest of the states
have been modest at best.
State Laws Making Food Stamp Coupon Trafficking a Crime
'rhree states with SLEB agreements do not have state laws covering food stamp coupon
trafficking. They are the District of Columbia, West Virginia, and Massachusetts. The District
of Columbia and West Virginia staff indicated that the lack of a trafficking statute was the
primary reason for not activating their SLEB agreements. Both state agencies signed agreements
in anticipation of applying for the trafficking demonstration projects that FCS planned but later
canceled. Massachusetts state staff indicated that the lack of a statute contributes to law
enforcement agency and prosecutors' reluctance to get involved in trafficking cases.
Several states indicated that they have amended their trafficking statutes over the
years, usually to lower the dollar value of the illegally-transacted food stamp coupons necessary
to charge a suspect with a felony. There is a wide range in the states' felony levels for
trafficking. For example, in Ohio the level is $1, but in South Carolina it is $1,000. Felony
levels above approximately $400 make it difficult for undercover agents posing as recipients to
make felony transactions, because large amounts of food stamp coupons offered for sale raise
suspicion on the part of the traffickers. Felony charges are a very important element in plea
bargain negotiations once trafficking cases reach court, because they can lead to more severe
14
Chapter Three: Results of the Survey of States with SLEB Agreements
sentences than misdemeanors. Even when a defendant is not sent to jail, a felony conviction
carries certain built-in sanctions (e.g., felons cannot obtain firearm permits).
Conducting Trafficking Investigations Prior to Executing a SLEB Agreement
Seven states indicated that they had conducted trafficking investigations prior to signing
a SLEB agreement. Only Texas and Ohio attached any real significance to this pre-agreement
activity. Both states indicated that they developed an early commitment to engage in trafficking
investigations and had worked successfully with the USDA OIG in joint investigations. They
also used food stamp coupons provided by OIG independently until OIG had to discontinue the
practice of issuing coupons to states.
Ratings of the FCS Regional Offices' Role in States Deciding to Sign a SLEB Agreement
The FCS Regional Offices received overwhelmingly positive ratings for their dealings
with the states on initiating the SLEB agreements (see Exhibit 4). Only two states (six percent
of those responding) rated their Regional Offices as "not helpful." One state perceived the
SLEB agreement process to be a low priority for FCS. The other state's rating was influenced
by the criticism that the Regional Office had of the state's monitoring of the investigations
conducted at the local level.
Ratings of the Level of Interest in the SLEB Agreement Process in the States' Law
Enforcement Community
The state respondents' ratings in this area (see Exhibit 5) were certainly influenced by
how the states presented the SLEB agreement to state and local law enforcement agencies. In
some states, only a formal letter was used to make the agencies aware of the process. In other
states, personal contact was made with key officials. Two strongly-stated reasons for little or
no interest were that food stamp coupon trafficking simply could not compete with other law
enforcement priorities, especially violent crime, and that the accounting and reporting
requirements appeared to be burdensome.
It is important to note that states generally have not emphasized the opportunity for local
law enforcement agencies to receive SO percent matching funds for trafficking investigations.
It is only recently that FCS Regional Offices have encouraged states to make funding of
investigations part of a renewed approach to their law enforcement communities. This approach
15
Chapter Three: Results of the Survey of States with SLEB Agreements
Exhibit 4
ROLE OF FCS REGIONAL OFFICE IN DECISION
TO SIGN AGREEMENT
Level of Activity
Not active
Somewhat active
Moderately active
Active
Very active
10%
42
42
Degree of Helpfulness
Not helpful
Somewhat helpful
Moderately helpful
Helpful
Very helpful
6%
39
48
Number of respondents » 31. Totals do not sum to 100 because of
rounding.
Exhibits
LEVEL OF INTEREST OF LAW ENFORCEMENT COMMUNITY
IN WHAT AGREEMENT HAD TO OFFER
Percent of Al SLEB States
Not interested 28%
Somewhat interested 19
Moderately interested 13
Interested 9
Very interested 6
No contact made by signatory agency 25
NOTE: Number of respondents - 32
16
Chapter Three: Results of the Survey of States with SLEB Agreements
grew out of new emphasis being placed on overall retailer management and a realization that
SLEB agreement investigations could be a key feature of FCS and state efforts to protect the
integrity of emerging EBT systems.
Law Enforcement Status of States' Welfare Fraud Investigators
When designing the SLEB agreement study, it was thought thai tales in which welfare
fraud investigators have "peace officer" status (i.e., are armed and b~vc arrest powers) might
have more interest in trafficking investigations than would other states. This is apparently not
the case. In only six of the states with a SLEB agreement do welfare fraud investigators have
peace officer status. In three of these states—North Dakota, Montana, and South Carolina-there
is a less-than-fully-active SLEB agreement. In California, sworn officers in three of the
state's jurisdictions are participating in trafficking investigations under a special funding
arrangement. Until this special funding was made available, only two California counties had
conducted a few SLEB agreement investigations. New Mexico and Oklahoma are the only other
states in the peace officer category that regularly conduct investigations under the terms of the
SLEB agreement. (New Mexico's welfare fraud investigators do not have state-conferred peace
officer status, but have been deputized by local police departments during trafficking
investigations.)
Ratings of States' Relationships with the USDA OIG
As indicated in Exhibit 6, the majority (52 percent) of states with SLEB agreements
rated their relationships with the USDA OIG as good or very good. Some states indicated that
they had dynamic working relationships with OIG staff and regularly exchanged information
about trafficking, even though they had registered little or no SLEB agreement-generated
activity.
Of the ten most active states (Categories IV and V), three states—California, Oklahoma,
and Texas -rated their relationship with OIG as very good. These states have conducted joint
investigations with OIG staff. As further evidence of the strength of the relationship in Texas,
the State Inspector General and the Houston Police Department have joined forces with USDA
OIG staff to investigate trafficking cases that are emerging in the state's new EBT system. In
17
Chapter Three: Results of the Survey of States with SLEB Agreements
Exhibit 6
RELATIONSHIP WITH USDA OFFICE OF INSPECTOR GENERAL
Percent of AM
Active SLEB States
Percent of Most
Active SLEB State*
Poor 16% 40%
Fair 12 0
Good 20 20
Very good 36 30
No contact 16 10
(Number of respondents) (25) (10)
NOTE: "Most active" statM include categories IV and V in Exhibit 2.
California, OIG provided technical assistance and training as the three trafficking projects were
just getting off the ground. In Oklahoma, an OIG agent works almost full-time with state staff.
Four of the ten most active states, however, indicated that their relationships with the
USDA OIG were poor. In three of these states, what had been good relationships, in the
opinion of state staff, have deteriorated. State staff said that OIG had disengaged from federal/
state task forces and joint investigations, and that OIG had become reluctant to share intelligence
about trafficking. The fourth state reported that OIG had problems with the timing of the local
SLEB investigations, and that this had stood in the way of developing a better working
relationship between state and federal staff. (The OIG perspective on its relationship with the
states with SLEB agreements is presented in Chapter Four.)
Ratings of the States' Relationships with the FCS Compliance Branch
Because the FCS Compliance Branch is a much smaller agency, the states generally
have a less dynamic relationship with it than they do with the USDA OIG. As indicated in
Exhibit 7, 40 percent of the active survey respondents said that they had no contact with the
Compliance Branch. Four of the most active states rated their relationship with the Compliance
Branch as very good. Only one state rated its relationship with the Compliance Branch as poor,
citing the withdrawal of the Compliance Branch from joint investigations.
18
Chapter Three: Results of the Survey of States with SLEB Agreements
Exhibit 7
RELATIONSHIP WITH FCS COMPLIANCE BRANCH
Percent of AI
Active SLEB States
Percent of Most
Active SLEB State*
Poor 4% 10%
Fair 20 20
Good 16 20
Very good 20 40
No contact 40 10
(Number of respondents) (25) (10)
NOTE: 'Most active" states include categories IV and V in Exhibit 2.
Other Federal Agencies Involved in SLEB Agreement-Related Matters
Thirteen of the states with SLEB agreements indicated that they had worked with or
exchanged information with federal agencies outside of USDA. Six states said that they had
some, but infrequent, contact with the FBI related to trafficking investigations. Nine states said
that their contacts with the Secret Service were generally more frequent and more dynamic than
those with the FBI, owing to the Secret Service's agreement with the USDA OIG to engage in
trafficking investigations not involving authorized retailers.
Ratings of the SLEB Agreement Approval Process
The SLEB agreement requires FCS regional office approval of all investigations.
Generally, this approval process was rated as clear, reasonable, and adequate (see Exhibit 8).
Some knowledge of the states' approach to dealing with this requirement, however, is necessary
to understand the high ratings. Several states have worked with their FCS Regional Offices to
streamline the approval process, usually by making direct contact with the USDA OIG and the
Compliance Branch to make sure that neither is already investigating the state target. In most
states, the approval process is seen essentially as a simple clearance procedure with OIG and die
Compliance Branch, and there is no assessment of the merits of the proposed investigations that
could cause delay and denials.
19
Chapter Three: Results of the Survey of States with SLEB Agreements
Exhibit 8
RATING OF INVESTIGATION APPROVAL PROCESS
Percent of AH Active SLEB States
Clarity of Procedures
Unclear 4%
Somewhat clear 0
Moderately clear 28
Clear 68
Reasonableness of Procedures
Unreasonable 4%
Somewhat reasonable 8
Moderately reasonable 16
Reasonable 72
Adequacy of Procedures
Inadequate 12%
Somewhat adequate 4
Moderately adequate 16
Adequate 68
NOTE: Number of respondents - 25.
The FCS Southeast Regional Office has transferred the responsibility for monitoring the
SLEB agreement process to its Field Office staff. The states in the region think that this allows
for a much better approval process and much better interagency communication.
As mentioned previously, the investigation approval process has occasionally been a
problem. One state indicated that the process took too long in some cases. Two other states
indicated that there was the potential for FCS to impede state investigations by asking states for
more information than is available in the targeting phase of an investigation.
Ratings of the SLEB Agreement Food Stamp Coupon Accounting Requirements
The ratings of the accounting requirements in the SLEB agreement process were
generally very positive (Exhibit 9). Most states viewed these requirements as clear, reasonable,
and adequate. This result is interesting, for two reasons. First, the requirements were seen as
20
Chapter Three: Results of the Survey of States with SLEB Agreements
burdensome by states and, especially, local agencies. Elaborative comment made during the
rating of the accounting requirements left the impression that the states see them as difficult and
burdensome, but necessary. Second, the Food Stamp Accountability Report (FCS-250), which
is the principal mechanism for reporting SLEB agreement activity, is not providing FCS with
accurate, sufficiently detailed, or timely data on food stamp coupons used in trafficking
investigations. A review of the data available at FCS Headquarters showed that, as late as June
1995, some states had not reported for FY94. Also, the data that were posted to the accounting
system did not show sufficient detail to monitor the states' use of food stamp coupons in
trafficking investigations conducted under the terms of the SLEB agreements.
Exhibit 9
RATING OF ACCOUNTING REQUIREMENTS
1 Percent of Al Active SLEB States
Clarity of Procedures
Unclear 4%
Somewhat clear 4
Moderately clear 12
Clear 80
Reasonableness of Procedures
Unreasonable 4%
Somewhat reasonable 8
Moderately reasonable 16
Reasonable 72
Adequacy of Procedures
Inadequate 12%
Somewhat adequate 4
Moderately adequate 16
Adequate 68
NOTE: Number of respondents - 26.
21
^ VMME
CHAPTER FOUR
ANALYSIS OF FINDINGS FROM THE SLEB AGREEMENT
SURVEY AND CASE STUDIES
The SLEB agreement study was designed to gather data via both the survey of all states
with agreements and the case studies, in order to answer the research questions posed by FCS
and draw conclusions about the SLEB agreement process. The research questions, as they
originally appeared in the RFP, have been rearranged and modified slightly to combine certain
similar items and add issues that emerged during the study. The final set of research questions
is listed in Exhibit 10. This chapter addresses each research question in turn.
Exhibit 10
RESEARCH QUESTIONS FOR THE SLEB AGREEMENT STUDY
• What process lad to tha implementation of the SLEB agreements?
• What obstacles ware encountered in states' efforts to develop fully active SLEB agreement
processee?
• What state and local resources have been devoted to tha SLEB agreement process?
• What ia tha level of cooperation and coordination among stats, local, and federal agendee in
SLEB agreement-related matters?
• How do states develop intelligence about food stamp coupon trafficking and choose targets for
investigetion?
• Whet are tha characteristics of SLEB agreement-generated investigstions?
• Are states foaowing SLEB agreement procedures end reporting and accounting requirements?
• What ia tha relationship between SLEB agreement-generated investigations and drug inves-tigations?
• What ia the relationship between trafficking investigations and tha Food Stamp program
eligibility determination process?
• What peneJtiee have been applied to individusls and food retaeera aa a result of SLEB
egreement-generated investigstions?
• What is tha reletionship between tha investigation of trafficking in EBT benefits and tha SLEB
agreements?
» What are the noteworthy precticee of the states with the moat affective SLEB egreementa?
23
Chapter Four: Analysis of Findings from the SLEB Agreement Survey and Case Studies
What process led to the implementation of the SLEB agreements?
The FCS Regional Offices were key to the implementation of the SLEB agreements.
Although regional office staff received high ratings as to their helpfulness in the agreement-signing
process, there was a perception by some state staff that the agreements were not an FCS
priority.
After the SLEB agreements had been signed, regional office staff continued to work
with the states in their implementation efforts. Several states mentioned FCS help in designing
intra-state agreements and in streamlining the investigation approval process.
The decision to sign the SLEB agreement was usually made by the SLEB agreement-administering
agency, with little outside influence and few obstacles to overcome. Higher-level
welfare department executives and, in a few cases, governors' offices, were generally supportive
of the administering agency's decision to undertake the SLEB agreement initiative.
The states' decisions to sign the agreement were strongly influenced by the following
factors:
• Trafficking was seen as a significant problem. States often cited media reports of
trafficking being rampant, especially in large cities;
• States had usually had some contact with federal investigators with regard to
trafficking; in some states staff had participated in joint investigations with federal
agents;
• State agencies believed that it was within their mandate for protecting the integrity
of the Food Stamp Program to conduct trafficking investigations;
• Undercover trafficking investigations were different than investigating eligibility
fraud, and would bring a new dimension to the states' anti-fraud operations; and
• Strong leadership and commitment on the part of the SLEB agreement
administrators, especially in the ten most active states, were the keys to the
implementation of the agreements.
24
Chapter Four: Analysis of Findingsfrom the SLEB Agreement Survey and Case Studies
What obstacles were encountered in the states' efforts to develop an active
SLEB agreement process?
MM
Exhibit 11 displays the reasons given by the 22 states that were inactive, had no recent
activity, or conducted periodic investigations (categories I, II, and III) for having a less-than-fully-
activated SLEB agreement.
Exhibit 11
REASONS FOR HAVING A LESS-THAN-FULLY-ACTIVATED SLEB AGREEMENT
Reason Times Mentioned
Inadequate state and/or local resources 10
Little or no interest in the state and/or local law enforcement community 10
Requirements too burdensome 3
No state trafficking law 3
Trafficking not a priority for the state 3
Agreement did not appear to be a priority for FCS 2
Prohibition on using food stamp coupons in drug investigations 2
Trafficking not a significant problem in state 2
Local department of social services reluctant to participate
No perceived need with EBT on the horizon
Better to refer case to USDA's OIG
Better to bypass agreement and work with OIG
Trafficking is a federal problem
Process too new to be producing results
Court reluctant to impose significant sentences
Undercover investigators not available for trafficking investigations
Ra»ponsai era from aH 22 states with SLEB agraemants that do not regularly conduct investigations (Catagoriea I, II and
Numbar giving mora than one reason: 13.
The inadequacy of resources was one of the two most cited reasons for states not
moving forward with their SLEB agreement initiative. All states struggle to maintain an
adequate response to the problem of eligibility fraud in the Food Stamp Program. Several states
25
Chapter Four: Analysis of Findingsfrom the SLEB Agreement Survey and Case Studies
mentioned that new emphasis on "front-end" fraud prevention had severely taxed their
administrative and investigative resources. Similar problems with meeting work load demands
were encountered both at the state and local levels of the law enforcement community.
A lack of interest on the part of law enforcement agencies was mentioned just as often
as inadequate resources. As mentioned in the preceding chapter, the states' approach to the law
enforcement community must certainly have influenced agencies' reaction to the SLEB
agreement process. States that did not make focused efforts to enlist law enforcement rarely
generated much interest. Especially in high crime areas, many police departments were very
reluctant to merge food stamp coupon trafficking onto their law enforcement agenda.
Some of the reasons that appear less frequently in Exhibit 11 than resources and lack
of interest were no less decisive in those states that cited them. For example, two of the states
without a specific trafficking statute, the District of Columbia and West Virginia, will not
implement a SLEB agreement process until such a law is on the books. Montana and Wyoming
are also unlikely to devote attention to the SLEB agreement process, because trafficking is
perceived not to be a significant problem in those states. Under prevailing conditions,
approximately half of the states with a less-than-fully-activated SLEB agreement indicated that
there was some potential for trafficking investigations to begin or increase. The balance of the
states saw little potential for different results unless the process were changed, such as by
making more federal funds available.
What state and local resources have been devoted to SLEB agreement
process?
Of the 32 states with SLEB agreements, 13 are devoting little if any staff time to their
SLEB agreement process. These include all of the inactive states (Category I); Alabama,
Georgia, and Wyoming in the no recent activity category (Category II); and Massachusetts,
Montana, and Mississippi in the periodic category (Category III). The balance of the 11 states
with periodic activity are devoting varying levels of administrative attention to the agreements.
The administration of the agreement is typically a part-time responsibility of the agreement
administrators.
26
Chapter Four: Analysis of Findingsfrom the SLEB Agreement Survey and Case Studies
No precise estimate can be made of the resources contributed to trafficking
investigations by state and local agencies ir tates with periodic activity. Little information of
any kind was usually available on the investigations conducted in the states in this category. In
addition, there was no consistent level of staff devoted to SLEB agreement investigations. None
of the investigative agencies in states with periodic activity has made a commitment to conduct
trafficking investigations on a regular basis. The investigations that were discussed with state
staff could best be categorized as short-term investigations on targets of opportunity that often
did not result in arrests or convictions.
In the ten most active states, the contributions from state and local agencies, although
difficult to quantify, were significant. This was also the case in Missouri, which falls in the no
recent activity category but is active in trafficking investigations outside of the SLEB agreement
process. In seven of the states—Arkansas, Oklahoma, New Mexico, California, Michigan,
Ohio, and Missouri—state positions have been assigned to the SLEB agreement process. Except
in California, these dedicated staff are supported, within the states' cost allocation processes,
with a combination of FCS and state funds. The California trafficking projects are funded by
FCS under a special two-year agreement.
In Texas, the entire staff of welfare fraud investigators in the Office of the Inspector
General is engaged on a part-time basis in the generation of trafficking investigations. These
investigators are also supported by the federal/state funding mix.
In Florida, New York, and Wisconsin, local staff in certain areas are heavily involved
in the SLEB agreement-generated investigations. In Florida, both state and local law
enforcement agencies have conducted trafficking investigations. In New York, it is district
attorney's offices that are most active in the early stages of the SLEB agreement initiative. In
Wisconsin, only the Milwaukee Police Department has recently been active.
In New York and Florida, FCS matching funds have not yet been used for SLEB
agreement-generated investigations, but access to these funds is an emerging issue. In New
York, the agency most active in trafficking investigations is the Manhattan District Attorney's
Office. That office is intent on establishing a fee-per-investigation reimbursement schedule for
the work that it does under the terms of the state's SLEB agreement. In Florida and the less
active states in the FCS Southeast Region, mechanisms to provide matching funds to state and
local agencies are being discussed.
27
Chapter Four: Analysis of Findings from the SLEB Agreement Survey and Case Studies
What is the level of cooperation and coordination among state, local and
federal agencies in SLEB agreement-related matters?
The level of cooperation and coordination among state, local, and federal agencies in
SLEB agreement-related matters varies widely. Examples of problems between agencies are as
prevalent as the exemplary state/federal working relationships that have developed in some
states.
State/FCS Regional Office Interactions. At the administrative level, few serious
problems surfaced in the relationships between state staff and FCS Regional Offices. The
notable exception here was the relationship between FCS and one state's staff, where the SLEB
agreement investigations conducted by a local police department have created a good deal of
friction. At the center of this difficult situation is a disagreement over the definition of the role
of the SLEB administering agency, and how much supervision state staff should have over
operations carried out by local law enforcement agencies.
In the Southeast Region, FCS has designated its field offices as the SLEB agreement
coordinators. This approach appears quite successful at fostering two-way communication with
the states.
State/FCS Compliance Branch Interactions. States' relationships with the FCS
Compliance Branch centered on the SLEB investigation approval process and the exchange of
intelligence about trafficking. Not all states have the opportunity or need to develop
relationships with the Compliance Branch, however, because the Branch has limited presence
in some areas. In addition, the Compliance Branch is limited in the extent to which it can
establish relationships with state and local law enforcement agencies by OIG policy, as specified
in the Statement of Determinations that governs the Compliance Branch's anti-trafficking
activities.
Information from the Compliance Branch can be of immense help to states in targeting
their SLEB agreement investigations. Six states made particular mention of their strong working
relationships with the Compliance Branch.
State/USDA OIG Interactions. The USDA OIG is responsible for investigating
trafficking in food stamp coupons. For this reason, the most critical state-federal relationship
28
Chapter Four: Analysis of Findingsfrom the SLEB Agreement Survey and Case Studies
for states with SLEB agreements is with the USDA OIG. Without coordination and cooperation
between the states and OIG, problems of "turf" and inadvertent interference with existing
investigations can certainly arise.
According to OIG headquarters staff, the agency's seven regional offices have a total
of approximately 2S0 investigators who spend roughly half of their time investigating trafficking
in food stamp coupons. OIG maintains a presence in all states, but concentrates its resources
in areas where high volumes of food stamp coupons are circulating in the marketplace.
Because of its limited resources and a desire to have the greatest impact on trafficking,
OIG generally concentrates on "big cases" involving high volumes of food stamp coupons and/or
trafficking networks of authorized retailers and/or wholesalers.
The U.S. Attorney's Offices exert strong influence on the types of investigations
undertaken by OIG. Again because of resource and impact issues, the federal prosecutors will
accept for prosecution only cases that reach a certain minimum dollar amount in trafficked food
stamp coupons, upward of $50,000 in some areas.
The OIG Headquarters endorses the FCS effort to sign SLEB agreements with state
governments. State agencies are viewed by OIG as a very valuable resource in the overall effort
to combat trafficking. The seven Regional Inspectors General (RIGs) also support the SLEB
agreement concept. Several RIGs observed, however, that the SLEB agreement initiative has
not produced results commensurate with the amount of energy that FCS and state staff have
expended on getting the agreements signed and investigative processes implemented.
The RIGs have the autonomy to develop relationships with state and local agencies when
they see potential for those relationships to be helpful in attaining agency goals. In matters not
related to SLEB agreement-generated trafficking investigations, such as assisting states in
investigations of employees, OIG has uniformly good relationships with state Food Stamp
Program agencies. In states with SLEB agreements, however, state staff rated the
relationships with OIG regional offices from poor to very good.
In certain states, the RIGs have terminated or curtailed working relationships, leading
those states to rate their relationships with OIG as poor. OIG Headquarters representatives saw
several reasons for the RIGs' actions. First, the agency will not compromise its investigations
to accommodate state-initiated activity. For example, OIG was conducting a long-term
investigation into widespread trafficking in one state when a local agency began to target
29
Chapter Four: Analysis of Findings from the SLEB Agreement Survey and Case Studies
retailers for investigation under the terms of the state's SLEB agreement. OIG believed that it
was absolutely the wrong time for these state investigations to take place.
Second, in most states, OIG investigators' time is fully committed to the agency's
agenda. Staff usually cannot be diverted to participate on state/federal task forces. This
resource issue, according to OIG, was a major contributing factor to OIG breaking off its once
close working relationships with investigators in two states.
Third, OIG will only follow the lead of state or local investigators if the investigations
that they are conducting are fully compatible with the agency's mission and standards for
conducting investigations. Conflict with this principle was the reason that OIG terminated its
role in one local trafficking investigation, which OIG felt was too aggressive.
In three of the ten most active states—California, Oklahoma, and Texas—and also in
Missouri, OIG staff agreed with state staff that strong dynamic working relationships exist.
There are several levels of cooperation in these relationships. Intelligence sharing and
communication at both the administrative and operational levels take place on a frequent basis.
Joint investigations have been undertaken when it has made sense from a strategic point of view
for OIG to share staff and equipment resources. State staff can also facilitate the participation
of local law enforcement agencies in investigations. A good example of this type of relationship
is in Texas, where USDA OIG, the state OIG, and the Houston Police Department are working
together on EBT trafficking cases.
Finally, a strong relationship can result in the maximization of resources by having the
state and OIG investigators focus on different targets. This is the situation in California, where
OIG has been helpful in setting up the three trafficking projects. As the state units became
operational, they started investigating trafficking at issuance sites, a type of target that OIG did
not have the resources to cover.
For the last several years the OIG has been investigating trafficking in states with EBT
systems. In Texas and New Mexico, both states with active SLEB agreements, OIG is working
EBT investigations jointly with state staff. In the other EBT states OIG operates more
independently, and these states' investigators are not actively involved in conducting EBT
trafficking investigations.
OIG staff agreed that in states with large food stamp caseloads, trafficking is so
prevalent that there is plenty of work for federal, state, and local investigators. At a minimum.
30
Chapter Four: Analysis of Findings from the SLEB Agreement Survey and Case Studies
coordination between OIG and state staff is necessary for the safety of investigators. It will take
additional effort in some states, on the part of both state and federal staff, to make sure that
communication takes place at levels beyond the requirecf investigation approval process.
How do states develop intelligence about food stamp coupon trafficking and
choose targets for investigation?
There is a surprising degree of randomness in how states target their SLEB agreement
operations. In many states, including Wisconsin and Florida among the ten most active, there
is no central control over investigations. Targets are generated by local agencies from their own
sources. The targets are routinely passed through the approval process only to make sure that
federal agents are not already conducting an investigation.
In some states the few law enforcement agencies that have conducted investigations have
done so because of local interest or the temporary availability of staff, not because of any
strategic decision to target known centers of trafficking. SLEB agreement-generated
investigations are often conducted in rural areas, but not in major cities. States can document
few outcomes of these investigations, though the assumption can be made that many ad hoc local
investigations do not even result in arrests.
This random "targeting" process may continue to be the norm in states where the SLEB
agreement administering agency is basically "just the bank for the food stamp coupons." In
Florida, the Florida Department of Law Enforcement is considering assuming the role of
coordinating investigations and fostering more interest in the SLEB agreement process among
local agencies.
The other eight most active states do take a more methodical approach to managing
intelligence about trafficking, developing targets, and initiating investigations. Both Michigan
and Ohio keep active files, by county, of tips and complaints about trafficking. The supervisors
of the trafficking units decide when a new area is to be targeted. The file of tips and complaints
is used, in conjunction with other sources of intelligence, to start the process of selecting specific
targets and deciding on the overall scope of investigations. During investigations, investigators
31
Chapter Four: Analysis of Findings from the SLEB Agreement Survey and Case Studies
are always looking for leads that could expand the investigations to more traffickers in the
targeted area.
Of all the states with SLEB agreements, California's investigative efforts are most
restricted to specific targets. By design, the three projects are focused on the trafficking that
takes place around coupon issuance sites. Food retailers are investigated as secondary targets
when they are identified by leads developed during the investigations at the issuance sites.
What are the characteristics of SLEB agreement-generated investigations?
From an operational perspective, there are two components common to all SLEB-generated
trafficking investigations. These components are the use of controlled food stamp
coupons and an undercover operative. Investigations also usually include the use of surveillance
and recording technology and back-up officers. The quantity of food stamp coupons used in
investigations ranges from small (well under $100 in "introductory" transactions with targeted
traffickers) to very large, especially at the peak of an investigation (for example, a $10,000
transaction at the end of the investigation observed in Ironton, Ohio).4
States have relied on both dedicated trafficking unit staff and "borrowed" undercover
operatives for their investigations. The "borrowed" staff are often officers whose primary
function is to work undercover in drug investigations.
Sophisticated video and audio surveillance equipment is often deployed in trafficking
investigations. It is standard practice for undercover officers making food stamp transactions
to be "wired" for sound, both for their protection and to produce evidence for subsequent use
in court.5
Most active SLEB agreement states use armed undercover law enforcement officers in
their undercover trafficking investigations. Four states, however, have allowed unarmed welfare
fraud investigators to conduct investigations: Arkansas, Missouri, New York, and Texas.
4. Sec the Ohio case study in Appendix C.
S. It is interesting to note that, although the Michigan State Police follow the practice of "wiring" undercover
officers, they do not use audio tapes in court. The State Police believe that testimony of state troopers is
credible enough evidence in trafficking cases.
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Chapter hour: Analysis of Findings from the SLEB Agreement Survey and Case Studies
Although some states felt strongly that unarmed investigators should not conduct undercover
investigations, it is worth noting that FCS Compliance Branch investigators are unarmed and do
not have back-up when they conduct their routine undercover compliance investigations.
The scope of investigations conducted under the terms of the SLEB agreements varied
greatly. In most states with periodic activity (Category III), the investigations tended to be
short-term and directed at specific targets, such as food stores or bars. Also mentioned were
more exploratory investigations in which an officer or detective in a small town or county would
see what kind of trafficking could be uncovered if transactions were attempted on an almost
random basis.
In contrast, some of the most active states (Categories IV and V) conducted long-term
complex probes into major trafficking operations. These investigations often were joint
operations with federal, state, and local agencies. Arrests often attracted significant press
coverage, and occasionally resulted in jail time for the convicted offenders.
The most active states' strategies in deciding the scope of their trafficking investigations
did vary, however. Texas conducted short-term investigations with a high volume of arrests,
whereas Ohio took the longer-term approach of following leads in investigations until major
cases could be developed.
Are states following SLEB agreement procedures and reporting and
accounting requirements?
The SLEB agreements emphasize requirements for state and local agencies to maintain
control over and account for the use of all food stamp coupons used in trafficking investigations.
As mentioned, active state and local agencies generally accept these requirements, but
nonetheless see them as burdensome.
At the state level, the SLEB agreement administrators had adequate control over the
processes of drawing coupons from inventory and issuing and accounting for them. In states
with decentralized systems, however, there were often problems in getting local police
departments to report on the status of the food stamp coupons under their control. With some
updating and calculation, the administrators could give an accounting of their running inventory
33
Chapter Four: Analysis of Findingsfrom the SLEB Agreement Survey and Case Studies
of SLEB agreement coupons. The year-end reporting system, however, utilizing the FCS-2S0
Food Coupon Accountability Report, is not providing FCS with accurate or timely data. As late
as June 1995, several states had not submitted data for FY94.
As to the other, less-specific requirements in the SLEB agreements, compliance is more
difficult to assess. Two sets of requirements, in particular, raise issues: the investigation
approval process, and state reporting on investigation outcomes.
In many slates, the investigation approval process is a simple clearance process, both
at the state andfederal levels. Denials of requests are rarely, if ever, made on any other basis
than a conflict with USDA OIG or Compliance Branch investigations. This lack of scrutiny has
led to several situations in which investigations have been conducted outside of the spirit, if not
the letter, of the SLEB agreement.
In particular, investigations have been approved in which food stamp coupons are
used in a pre-existing underground economy that does not involve food retailers, or in sting
operations in which state and local agencies create a focal pointfor illegal transactions. In
some situations these types of operations, although they may produce arrests, do little to reduce
food stamp trafficking; some states and regional offices are approving investigations that are not
demonstrably tied to a Food Stamp Program problem.
Continuing with the issue of the investigation approval process, many investigations
conducted under the terms ofthe SLEB agreement are simply notproducing results. This lack
of results raises questions about the targeting and execution of these investigations. In addition,
some explicitly untargeted investigations have been conducted; these have also produced little
in the way of results.6 The existence of dubious and unproductive investigations creates some
question about the effectiveness of the investigation approval process.
Finally, states are not consistently reporting on the results of investigations, as
required in the SLEB agreement. Reporting of results is weakest in states with decentralized
systems, where the state SLEB agreement agency has no control over the investigations. Several
states even indicated that they were not attempting to gather outcome data from local agencies
conducting SLEB agreement investigations, and would find it a significant burden to do so.
6. Such investigations are often referred to as "trolling expeditions," and have occurred in rural areas where
only casual or infrequent low-level trafficking takes place.
Chapter hour: Analysis of Findings from the SLEB Agreement Survey and Case Studies
What is the relationship between SLEB agreement-generated investigations
and drug investigations?
Six states indicated that they are generating SLEB agreement trafficking investigations
via drug task forces active at the state or local levels. These states included drug dealers as
targets of their investigations. Several states mentioned that food stamp coupons, provided via
the SLEB agreement, have been used as "buy money" in drug investigations.
Although the states' SLEB agreement administrators know that FCS does not want to
provide food stamp coupons for drug-focused investigations, the exercise of their discretion in
this area varies widely. Some states have put the strict prohibition against drug investigations
up front in their negotiations with law enforcement agencies over the terms of intra-state SLEB
agreements. Other states have more or less assumed that there is usually a connection between
drugs and food stamp trafficking in their targeting and investigations.
In the underground economy, food stamp coupons can often be used to purchase drugs,
and the same individuals can be involved in both drug and food stamp coupon trafficking.
Within the context of the SLEB agreement, this overlap creates a gray area. Should a SLEB
agreement investigation be initiated because law enforcement agents believe that a drug dealer
will accept food stamp coupons for drugs? Or, instead, should there first be an indication that
the drug dealer does a significant portion of his business in food stamp coupons? Clearly, some
states are not asking these kinds of questions. Furthermore, some state staff would argue that
they do not have the responsibility to exert control over investigations conducted by agencies
engaged in the enforcement of state laws, as long as the agencies have a clear understanding of
the terms of the SLEB agreement.
What is the relationship between SLEB agreement-generated investigations
and the Food Stamp Program's eligibility determination process?
There is very little connection between trafficking investigations conducted under the
terms of the SLEB agreements and the states' Food Stamp Program operations, including the
35
Chapter Four: Analysis of Findingsfrom the SLEB Agreement Survey and Case Studies
investigation of eligibility fraud. States uniformly did not have any statistics on recipients
disqualified as a result of trafficking investigations. In states that primarily target retailers or
trafficking brokers, recipients are often not involved at all in investigations.
At the time of the study, California was the only state targeting recipients by design.
In the early stage of the California projects' development they had some arrest and conviction
data on recipients, but they could not yet provide any data on whether involved recipients had
been disqualified from participation in the Food Stamp Program.
Trafficking investigations take place in the realm of law enforcement, and it was not
uncommon for Food Stamp Program administrators to have little knowledge or involvement with
state management of the SLEB agreement.
What penalties have been applied to individuals and retailers as a result of
SLEB agreement-generated investigations?
Generally, state and local agencies engaged in the SLEB agreement process have relied
on the courts to impose criminal penalties on those involved in food stamp coupon trafficking.
As mentioned, there was no evidence to indicate that recipients were being administratively
disqualified from the Food Stamp Program as a result of trafficking investigations.
As to having SLEB agreement investigations result in the disqualification of offending
retailers, some of the active states overestimated the impact they were having in this area.
During the course of this study, the Compliance Branch conducted an informal survey of FCS
field offices to determine the number of retailers disqualified as a result of SLEB agreement
investigations. It found that, in eight states, a total of 59 retailers had been disqualified, 34 of
which were in Wisconsin. Further investigation into this issue indicated that states were not
always submitting data on retailers to FCS after investigations were concluded, that
information was not always passed from the FCS Regional Offices to the Field Offices in a
timely fashion, and that the Field Offices oftenfound state data inadequate to support retailer
disqualification efforts.
Even in states with overall good communication and coordination with FCS, the
application of penalties was an area where more top level administrative attention would be
36
Chapter Four: Analysis of Findings from the SLEB Agreement Survey and Case Studies
beneficial. Some state and local law enforcement agencies questioned the effectiveness of the
federal administrative penalties. Federal staff, on the other hand, questioned whether sufficient
results were produced by the significant time and effort that states were devoting to seeking
criminal penalties via the court system, where long delays are typical, and sentences that include
jail time and large fines are rare.
What is the relationship between the investigation of trafficking in EBT
benefits and the SLEB agreements?
At the time of the study, of the eight states with EBT systems,7 only Texas and New
Mexico had state or county staff investigating trafficking in the new electronic environment.
The states' SLEB agreements have not been amended to include provisions governing the use
of EBT cards and benefits in trafficking investigations, but FCS has given these states
provisional approval for state investigators to use EBT benefits in conducting investigations.
In both Texas and New Mexico, investigators began their EBT trafficking investigations
well after the systems began issuing benefits. Understandably, the states focused on
implementation issues, not fraud investigations, during the developmental stages of the EBT
systems. State staff are doing a good job of adjusting their investigative routines to the new
technology.
In Texas and New Mexico, state staff are working with OIG in joint EBT trafficking
investigations. The key issues that have arisen in the early phases of these investigations are:
access and use of the transaction history data available from the EBT system, both to develop
intelligence about trafficking and to document cases; the issuance of EBT cards to investigators;
the issuance and replenishment of benefits to investigators' EBT cards; the tracking and
reconciliation of benefits used in EBT investigations; and enlisting local law enforcement
agencies in EBT investigations.
7. Stales with EBT systems in place at the time of the study included Texas, New Mexico, New Jersey,
Minnesota. Ohio, Maryland. Pennsylvania, and South Carolina.
37
Chapter Four: Analysis of Findings from the SLEB Agreement Survey and Case Studies
What are the noteworthy practices ofthe states with the most effective SLEB
agreements?
This section highlights the noteworthy practices of the states that have made the most
effective use of the SLEB agreement. For similar practices that existed in two or more states,
the most notable examples are listed in parentheses. The lists of states are not meant to be all-inclusive;
other states may be engaged in the practice to a lesser degree. Because the SLEB
agreement process must fit unique state circumstances, some of these practices may not be
appropriate for individual states. Nevertheless, the practices listed below are worthy of
consideration by any state interested in effective trafficking investigation.
Dedicated trafficking units (California, Michigan, New Mexico, Oklahoma, and Ohio).
These states have created units dedicated to investigating trafficking, thereby making
an extraordinary commitment to capitalize on the SLEB agreement process. Centralized
control of investigations is a key component to an organized campaign against
trafficking. The states mentioned have been successful in enlisting the assistance of
local law enforcement agencies to provide back-up and assist in arrests, and to provide
investigative resources in larger cases.
The "Texas Model". The integration of SLEB agreement investigations with the
workload of all of the state's welfare fraud investigators gives Texas the capacity to
conduct a truly statewide anti-trafficking campaign. The supervisors of the Regional
Inspector General's Offices are expected to develop working relationships with federal
and state agencies and produce results. The central office has been flexible as to how
individual investigators can meet their quotas for initiating trafficking investigations.
The "Missouri Model". Missouri has dedicated state staff members to conduct
trafficking investigations, but has bypassed the need to use the SLEB agreement. State
investigators participate in investigations run by the USDA OIG. The relationship is
perceived by both parties as having been successful in maximizing resources and
producing results.
Funding for the California projects. FCS and state staff worked together to develop
an innovative funding arrangement, setting aside FCS' share of fraud control funds for
the three trafficking projects in California. FCS might encounter other situations where
similar arrangements to use funds already set aside for fraud control could be explored.
Analysis of trafficking intelligence (Michigan and Ohio). In both centralized and
decentralized systems, a process for managing tips and complaints about trafficking is
essential for selecting good targets for investigations. Organization of a trafficking
38
Chapter Four: Analysis of Findings from the SLEB Agreement Survey and Case Studies
intelligence database at the state level will facilitate strategic planning and deployment
of staff.
Strong relationship with prosecutors (Michigan, Ohio, California, and New York).
Much time and effort can be wasted in conducting trafficking investigations if state or
local prosecutors are not interested in accepting the cases. In the states mentioned,
three approaches have been used to ensure strong relationships with prosecutors. First,
in New York and in the Los Angeles project, SLEB agreement investigations are being
conducted by investigative staff of the District Attorney's office. Second, in Michigan
and the other two California projects, prosecutors are supported with Food Stamp
Program funds to handle the cases produced by the trafficking units. Third, in Ohio,
state staff made a special effort to engage local prosecutors early in trafficking
investigations. The high rate of convictions in Ohio's trafficking cases attests to the
state's success in this effort.
Standard investigation report format (Texas). State staff in Texas have developed a
standardized concise case file reporting format for their trafficking cases. This format
saves time for investigators, ensures that prosecutors get consistent information about
cases, and also aids in gathering statewide data.
Working with other agencies within the state to apply penalties to retailers (Michigan,
Ohio, and Florida). Investigators in these states have been successful in working with
otner state agencies to apply penalties to food retailers found to be trafficking food
stamp coupons. Liquor control and lottery agencies have been particularly helpful and
effective in closing businesses that engage in trafficking and related illegal activities.
Generating publicity about trafficking cases (Michigan, New Mexico, Ohio, and
Texas). These states routinely generate publicity about their successful trafficking
investigations. Michigan in particular has tried to capitalize on the deterrent effect of
having statewide media coverage of trafficking arrests and convictions. The Governor,
Attorney General, Director of the State Police, and Secretary of the Department of
Social Services have participated in press conferences to announce the results of major
investigations.
Transfer of SLEB monitoring activity to FCS Field Offices. The FCS Southeast
Regional Office has transferred the responsibility for monitoring states' SLEB
agreement activities, along with other retailer compliance functions, to its Field Offices.
The SLEB agreement states in the region believe that this transfer has enhanced critical
interagency cooperation and communication. In Florida, the only state in the region
regularly conducting trafficking investigations, the relationship between state staff and
the Field Office has improved the sharing of intelligence about trafficking and the flow
of information necessary to initiate disqualification action against authorized retailers
found to be trafficking.
Investigation of trafficking in EBT systems (Texas and New Mexico). State staff in
these two states are making good progress in adjusting their investigative routines to the
states' new EBT systems. In both states, successful EBT investigations have been
39
Chapter Four: Analysis of Findings from the SLEB Agreement Survey and Case Studies
conducted. State staff have learned very quickly how to search for the data in the EBT
system that they need to target traffickers.
Trafficking workshops and regional conferences. Many states commented on the
usefulness of the occasional workshops and regional conferences that have been
conducted concerning food stamp coupon trafficking. There is a small but growing
number of experts—investigators, supervisors, and administrators—that have a wealth
of experience and knowledge that they are willing to share. In addition to workshops
and conference participation, these individuals are often willing to provide technical
assistance on a state-to-state basis. FCS has provided state exchange funds for state
staff to attend these conferences and workshops.
40
APPENDIX A
SLEB AGREEMENT QUESTIONNAIRE
HI
OMB I 0584-0465
Approval Expires 1/1/96
STATE LAW ENFORCEMENT BUREAU (SLEB) AGREEMENT
QUESTIONNAIRE
State:
Respondent's Name:
Title:
Administrative Unit:
Phone Number:
Date of Interview: Start Time: End:
Public reporting burden for this collection of information is estimated to average 2.29 hours per response, including
the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collection of information. Send comments regarding this burden estimate or any other
aspect of dm collection of information, including suggestions for reducing this burden, to Department of
Agriculture. Clearance Officer, Room 404-W, Washington, D.C. 20250.
iNsrmjcnoMS
hease review the questions in this guide andcoitect the information you will need to answer
them. Some questions in this survey ask for very detaaad information going bock to the
beginning of the SLEB agreement You should only gather these date if they ere readily
available. We will discuss dote met would be difficult to retrieve during the interview.
In some states the SLEB agreement has never heap activated or has becomeelective. Many
of the survey questions are not applicable to state* In this situation.
A SLEB ktveet/gmtlon Is an investigation that uses food coupons leaved to the law
enforcement aoanev under the a—an end condMona of the SLEB agreement and not from
any other sourcti. such as 010.
H7.
Page A-1
BACKGROUND, HISTORY AND STATUS OF AGREEMENT SECTION
I. (INTERVIEWER: RECORD ANSWERS TO 1 AND 1A IN ADVANCE IF AVAILABLE) Does the state have
specific criminal statutes covering food stamp related crimes, including trafficking? (YES (Y)
I No (N) I DON'T KNOW (DK)) (IF NO OR DON'T KNOW, SKIP TO 2)
a. If yes, in what year did the state enact food stamp crime statutes?
b. Was there a specific reason (or reasons) that these statutes were enacted, such as media
attention, legislative investigations, law enforcement agency interest or concern, FCS regional
office priority, etc.? (Y/N/DK)
c. What were these reasons?
d. Who advocated for enacting the statutes?
2. Who signed the current SLEB agreement?
When? Were there earlier signed agreements that were replaced by the current agreement7
(Y/N) (IF NO, SKIP TO 3)
a. If yes, explain.
3. Was any state agency investigating food stamp trafficking before the agreement was available?
(Y/N/DK) (IF NO OR DON'T KNOW, SKIP TO 4)
a. If yes, explain how, when, where, and by whom these investigations were conducted.
b. Was there a way to obtain food stamp coupons for these investigations? (Y/N)
Explain.
¥3
PageA-2
4. What, if any, obstacles had to be overcome in order .jet the agreement signed?
5. Can you identity individuals or agencies that either strongly supported or strongly opposed the
agreement? (Y/N) (IF NO, SKIF TO 6)
a. Please explain who was involved and what positions they took.
6. Rate the role of the FCS Regional Office in the state's decision to sign the agreement (mark one
response in each column):
Not active
Somewhat active
Moderately active
Active
Very active
Not helpful
Somewhat helpful
Moderately helpful
Helpful
Very helpful
a. Additional comments about FCS's role in getting the SLEB agreement signed.
7. How and by whom was the law enforcement community made aware of the agreement?
8. Rate the level of interest the law enforcement community had in what the agreement had to offer
them at the time it was signed.
Not interested
Somewhat interested
Moderately interested
Interested
Very interested
*f PigeA-3
NOTE: QUESTIONS 9-12 CONCERN THE CURRENT STATUS OF WELFARE FRAUD INVESTIGATIONS IN YOUR
STATE, INCLUDING ELIGIBILITY FRAUD AND OTHER PROGRAM ABUSES.
9. Rale the welfare department's current overall resources to handle the welfare fraud workload
(include food stamp, AFDC, and other public assistance cases):
Never able to meet the demand
Occasionally able to meet the demand
Moderately able to meet the demand
Usually able to meet the demand
Fully capable of meeting the demand
10. Where are welfare fraud investigations handled: at the state level or at the local level
? (CHECK ALL THAT APPLY)
a. If both, explain the roles of the state and local units.
I. Which of the following categories best describes how the state's welfare fraud investigators operate:
(CHECK ONE)
Law enforcement officers (guns, arrest powers, etc.)
Field investigators (unarmed)
Case file reviewers
Some other model (explain)
12. Rate the general level of success that the state welfare investigators now have with getting cases
prosecuted.
No success
Little success
Moderate success
Good success
Very good success
PageA-4
a. If no or little success, please explain.
b. Has the level of success changed since the SLEB agreement was signed? (Y/N) (IF NO,
SKIP TO 13)
c. If yes, please explain.
13. Has the state ever drawn down coupons under the SLEB agreement? (Y/N)
a. If yes, when was the last draw-down? (SOP TO 15)
b. If no draw-down has been made, is there a request pending? (Y/N) (IF YES, SKIP TO
15)
14. If there has been no draw-down of coupons in 1994 and/or if the SLEB will not participate in
investigations, explain the reasons for the agreement being inactive.
IF THE SLEB AGREEMENT HAS NEVER BEEN ACTIVATED BY REQUESTING OR DRAWING DOWN COUPONS,
SKIP TO THE COMMENTS SECTION (QUESTIONS 28-41).
%
PageA-5
ORGANIZATION AND OBJECTIVES OF INVESTIGATIONS UNDER SLEB AGREEMENT
(SKIP TO 28 IF SLEB AGREEMENT HAS NEVER BEEN ACTIVATED)
IS. Describe the roles of each state and local agency that is involved in SLEB agreement activities and
how its role has changed over the life of the agreement.
16. Describe the roles of federal, state and local prosecutors in SLEB agreement activity, in particular
at the investigation phase, and how these roles have changed over the life of the agreement.
Federal
State
Local
17. Describe the role, if any, of the Compliance Branch in SLEB agreement activities, and how this role
has changed over the life of the agreement.
18 Describe the role, if any, USDA's Office of Inspector General (OIG) has had in SLEB
investigations or related activities to date, and how this role has changed over the life of the
agreement.
a. Have any other federal agencies been involved in SLEB investigations or related activities, such
as the Secret Service, Postal Service, FBI, or IRS? (Y/N) (IF NO, SKIP TO 19)
#7
Page A-6
b. Describe the roles of any such agencies in SLEB agreement activities to date, and how this role
has changed over time.
19. What are the sources of tips and complaints that generate SLEB agreement investigations? (CHECK
THOSE APPROPRIATE)
the community at large
the retail community
informants
the law enforcement community
FCS
hotline(s)
local welfare offices
others (specify)
a. What is the most common source?
20. What are the targets of SLEB agreement investigations? (CHECK THOSE APPROPRIATE)
individuals buying food stamps
individuals selling food stamps
trafficking "runners"
retailers authorized to accept food stamps
wholesalers authorized to accept food stamps
firms not authorized to accept food stamps
recipients
drug dealers
others (specify)
a. Which are the most frequent targets? .
b. Which are the highest priority targets?
21. Have SLEB agreement investigations been (CHOOSE ONE) part of a sustained campaign
against food stamp trafficking part of a sustained campaign against other crimes
reactions to tips or other opportunities?
Hi PageA-7
a. If SLEB agreement investigations have been part of a sustained campaign, over what period?
b. Describe this campaign against trafficking or other crimes
PageA-8
SLEB AGREEMENT ACTIVITIES
(SKIP TO 28 IF SLEB AGREEMENT HAS NEVER BEEN ACTIVATED)
22. By federal fiscal year, how many transfers of food stamps were made under the SLEB agreement?
What was the value of food coupons transferred to the SLEB?
Value of
Coupons Transferred
90
91
92
93
94
23. Describe how SLEB agreement investigations are defined and counted.
24. How many investigations were initiated in each fiscal year?
Investigations Initiated
FY89
90
91
92
93
94
50
Page A-9
25. Identify each separate law enforcement agency that has used SLEB agreement-issued food stamps.
Indicate the number of investigations they conducted and the fiscal years in which they were active.
If an agency was active in more than one year, report each year's number of investigations
separately.
Agency Number of Investigations Fiscal Year
26. How many SLEB agreement-initiated cases have been processed through the court system (include
plea-bargained cases) by Fiscal Year? How many individuals and stores were involved? How many
individuals were convicted? What is the dollar amount of criminal fines imposed?
No. of No. of Amt. of
No. Cases Individuals Stores No. Convicted Fines
FY89
90
91
92
93
94
27 I low many SLEB agreement-initiated retailer cases have been referred to FCS for sanction action?
No. Cases
FY89
90
91
92
93
94
S/
Page A-10
COMMENT SECTION (FOR ALL STATES)
_'X Kale I he level ol cooperation between slate and PCS staff in SLEB agreement related matters:
No cooperation
_ Little cooperation
Moderate cooperation
Good cooperation
_ Very good cooperation
a. Describe successes and problems in working with PCS staff on SLEB-related matters.
Iv What training or technical assistance from FCS would be helpful in SLEB agreement-related
matters?
NOTE FOR 29 AND 30: "REASONABLE1' PROCEDURES CAN BE FOLLOWED WITHOUT UNDUE EFFORT.
"ADEQUATE" PROCEDURES PROVIDE CONSISTENT, VALID INFORMATION TO FCS.
2*>. Concerning the procedures for getting approval from FCS to undertake SLEB investigations, they
are: (MARK ONE RESPONSE IN EACH COLUMN)
_ Not clear
_ Somewhat clear
Moderately clear
Clear
Not reasonable
Somewhat reasonable
Moderately reasonable
Reasonable
a. Comments.
SL
Not adequate
Somewhat adequate
Moderately adequate
Adequate
Page A-11
30. Concerning the procedures for the draw-down and accounting for food stamps used in SLEB
investigations, they are: (MARK ONE RESPONSE IN EACH COLUMN)
Not clear
Somewhat clear
Moderately clear
Clear
a. Comments.
Not reasonable
Somewhat reasonable
Moderately reasonable
Reasonable
Not adequate
Somewhat adequate
Moderately adequate
Adequate
31. Is there a better way to report on SLEB activity than the current year-end reporting process
established by FCS? (Y/N) (IF NO, SKIP TO 32)
a. If yes, explain.
32. How many requests from your state to undertake SLEB investigations have been denied by FCS?
____ (IF NONE, SKIP TO 33)
a. On what basis?
b. How could state and FCS staff work together to improve the rate of approval?
33. Has the SLEB agreement prohibition against transferring food stamps, issued under the agreement,
from the receiving agency to another agency been an issue in your state? (Y/N/DK) (IF NO
OK DONT KNOW, SKIP TO 34)
a. If yes, explain.
&
Page A-12
34. Has the loss of 75 percent FSP funding for fraud control affected SLEB agreement activity in your
state? (Y/N/DK) (IF NO OK DON'T KNOW, SKIP TO 35)
a. If yes, how much and in what ways?
35. As an incentive, if FCS were to propose that states be allowed to keep non-SLEB food stamps
confiscated during investigations, how would this policy affect SLEB activity in your state?
36. Are there other incentives or features that could be built into the SLEB agreements to increase the
number of investigations and their quality and success?
37. How could the SLEB agreement process with FCS and its procedures be improved?
38. Do you wish to make any other comments about the SLEB agreement process or related matters?
SH
PageA-13
EBT QUESTIONS (FOR ALL STATES)
39. USDA has announced a plan to replace food stamp coupons with electronic benefit transfer (EBT)
systems. Are you familiar with how this technology works? (Y/N) (IF NO, EXPLAIN TO
RESPONDENT)
40. Do you think EBT would help or hinder SLEB agreement investigations in your state? (CHECK
ONE) Help Hinder Both No effect Don't Know (IF DON'T
KNOW, SUP TO 41)
a. In what ways would EBT affect investigative targets, methods and results?
b. How would EBT affect the number or size of SLEB agreement investigations in your state?
41. EBT systems allow investigators to identify both recipients and retailers involved in fraudulent
transactions. This capability means that large numbers of recipients may be referred for
administrative or criminal action.
a. How much capacity does your state have to process additional administrative disqualification
cases against recipients arising from SLEB investigations? (CHECK ONE)
None
Can handle small increase
Can handle moderate increase
Can handle major increase
Unlimited capacity
Don't know (IF DON'T KNOW, TERMINATE INTERVIEW)
b. What are the challenges or problems of obtaining disqualifications resulting from SLEB
investigations under EBT? What are the advantages or opportunities?
//
Page A-14
c. How much capacity does your state have to process additional recipient fraud prosecutions
arising from SLEB investigations? (CHECK ONE)
None
Can handle small increase
Can handle moderate increase
Can handle major increase
Unlimited capacity
d. What are the challenges or problems of prosecuting recipient fraud cases resulting from SLEB
investigations under EBT? What are the advantages or opportunities?
THANK YOU FOR PARTICIPATING IN THIS IMPORTANT SURVEY
4
PagcA-15
TEXT FOR SLEB SURVEY COVER LETTER
In 1989, USDA's Food and Consumer Service (FCS) created State Law Enforcement Bureau (SLEB)
agreements as a mechanism for enlisting the resources of state and local law enforcement agencies in the
investigation of food stamp fraud. Some states have pursued this option quite aggressively, whereas
others have not. FCS has hired Abt Associates and its subcontractor. Systems Planning Associates (SPA),
to evaluate the SLEB agreement initiative and to describe the differences between levels and types of
SLEB agreement activity in the states.
Your name was provided by FCS staff as the contact regarding the SLEB agreement in your state. I
would like to schedule a telephone interview with you to answer the questions in the attached survey.
If you think someone else is better suited to answer the interview questions, please call me at (410) 628-
7642 to identify the appropriate contact.
The survey is not meant to require an exhaustive search for historical data. Any problems in collecting
data could be discussed before or during the interview.
I will call you in a few days to schedule a time to complete the enclosed questionnaire. If your state has
been active in utilizing the SLEB agreement, the interview process (including preparation) will take 2.S
to 3 hours; otherwise, the interview process will take about 1.25 hours.
This study is funded by the USDA under Contract No. 53-3198-4021. The FCS Contracting Officer's
Representative, Ken Offerman, can be reached at (703) 305-2115.
Thank you for your cooperation and assistance.
Yours truly.
Leo M Allman
*7
Page A-16
APPENDIX B
SUMMARY REPORTS ON SLEB AGREEMENT HISTORY
//
CONTENTS
Category I: Inactive states
District of Columbia B-l
Minnesota B-2
Nebraska B-4
North Dakota B-5
Utah B-6
Virginia B-7
West Virginia B-8
Category II: States that have conducted SLEB agreement investigations but show
no activity for 1994 or 1995
Alabama B-9
Georgia B-10
Missouri B-ll
Wyoming B-12
Category III: States that have conducted periodic SLEB agreement investigations,
some of which occurred in 1994 and/or 1995
Massachusetts B-13
Montana B-14
Mississippi B-15
Colorado B-16
Indiana B-17
Kansas B-18
Iowa B-19
Louisiana B-20
Washington B-21
Illinois B-22
South Carolina B-23
Category IV: States that regularly conduct SLEB agreement investigations
New York B-25
Arkansas B-28
Oklahoma B-29
Wisconsin B-31
SI
Appendix B: Summary Reports on SLEB Agreement History
CATEGORY I: INACTIVE STATES (in alphabetical order)
District of Columbia
Dale of Interview: 6/28/95 (30 minutes)
Respondent: Wilber Dunn, Chief, Examination Division, Office of Investigation and
Compliance, District of Columbia Department of Human Resources
The District of Columbia signed a SLEB agreement in 1993. At that time, the District
was preparing a proposal in response to FCS' solicitation for demonstrations of trafficking
investigations. The District has not activated the agreement because it does not have a statute
making food stamp coupon trafficking a crime. Such a statute is currently pending before the
District's City Council, but is not a priority item. Mr. Dunn could not estimate the likelihood
of passage.
In anticipation of having a trafficking law on the books, the Office of Investigation and
Compliance has had preliminary planning meetings with the Narcotics Unit of the Metropolitan
Police Department and the Corporation Counsel (the District's equivalent of a District Attorney's
Office). In addition to these meetings, Mr. Dunn has started to gather intelligence about street
trafficking by observing locations in the District where trafficking takes place in the open. He
stated that the police are particularly anxious to pursue the connection between trafficking in
food sump coupons and drug trafficking. The resources that any agency in the District will
have to devote to the SLEB agreement process will certr -nly be affected by the District's current
fiscal crisis.
B-l b
Appendix B: Summary Reports on SLEB Agreement History
Minnesota
Dales of Interviews: 6/28/95 (90 minutes); 7/7/95 (15 minutes)
Respondents: • Daniel Haley, Fraud Analyst, Program Integrity, Assistance Payment
Division, Minnesota Department of Human Services
• Brian Shields, Senior Investigator, Program Integrity
• Margaret Philben, EBT Project, Ramsey County
Minnesota signed a SLEB agreement in 1992. The motivation to do so came in part
from press coverage of rampant trafficking in Minneapolis, about which the local police said
they could do nothing. In spite of considerable effort on its part, the Department has not been
able to activate the agreement. One of the obstacles has been the strong county management of
the state's food stamp and cash assistance programs. The Department has not been able to enlist
the county social service departments as partners in a SLEB agreement initiative, and it is
reluctant <> deal directly with local law enforcement agencies.
The state staff have met with USDA's OIG in an effort to initiate a food stamp coupon
trafficking task force. According to Mr. Haley and Mr. Shields, the effort failed because "key
players were absent." The meeting got as far as some discussion of funding issues, but no
strategic decisions were made. Mr. Shields, a former USDA OIG agent, recognized that both
state and federal staff were frustrated at not accomplishing more at the meeting. Now, as the
state gets closer to statewide implementation of its EBT system, there is some thought that it
would not be worthwhile to initiate an effort to address the problem of trafficking in food stamp
coupons.
Ms. Philben was contacted to discuss whether there had been an effort to investigate
trafficking in the EBT system. She indicated that ten EBT cards had been issued to USDA's
OIG for use in investigations. She did not know how many investigations had been conducted,
nor whether any trafficking had been substantiated. No EBT cards are in use by state or local
staff for the purpose of investigations of any kind.
Ramsey County has hired a contractor to develop fraud-prone profile programs and
apply them to the EBT database. The programs produce reports on the location of ATMs used
by recipients to access their cash benefits, to determine if they were living in another jurisdiction
while receiving benefits from Ramsey County; cases with balance accumulations; cases that had
B-2 Cl
Appendix B: Summary Reports on SLEB Agreement History
received multiple replacement cards; recipients who were accessing all of their cash at once; and
whole dollar food stamp purchases. All but the last of these programs target eligibility fraud.
The county staff are still analyzing the reports to determine their usefulness. Staff
found that it was difficult to interpret the food stamp sales data because there were many
legitimate whole dollar transactions on the report. Ms. Philben thought that more refinement
to the program would be needed before it could be used to target retailers suspected of
trafficking.
B-3 tit
Appendix B: Summary Reports on SLEB Agreement History
Nebraska
Date of Interview: 7/10/95 (20 minutes)
Respondent: Mike Harris, Administrator, Food Programs, Nebraska Department of
Social Services
Nebraska signed a SLEB agreement in 1989. According to Mr. Harris, the state has
not activated the SLEB agreement "purely because of the resource issue," which became
apparent after staff had determined what would be required to set up a viable process. There
are only four welfare fraud investigators for the entire state, and they would have little time for
the additional duties that trafficking investigations would entail, even if they were only
performing administrative functions. There has been no effort to inform the greater Nebraska
law enforcement community of the SLEB agreement, again because of the lack of staff resources
at the state level. Mr. Harris believes that the accounting requirements in the SLEB agreement
alone would be very burdensome.
It is interesting to note that the Department of Social Services recently proposed a
welfare reform package that included the "cash-out" of the Food Stamp Program. The laws that
would have enacted the reform were not passed by the state legislature. Mr. Harris indicated
that the climate for implementing the SLEB agreement was not good, as the Department was
working to cash out the Food Stamp Program.
B-4 0
Appendix B: Summary Reports on SLEB Agreement History
North Dakota
Dates of Interviews: 7/10/95 (45 minutes); 7/12/95 (15 minutes)
Respondents: • William Broer, Director, Bureau of Criminal Investigation, North
Dakota Attorney General's Office
• Darleen Daly, Assistant Director, Food Stamp Program, North Dakota
Department of Human Services
North Dakota signed a SLEB agreement in 1993. Coincidentally, during the period that
the agreement has been in effect, the state has been trying to reorganize its entire welfare fraud
operation. An effort to transfer all of the responsibility for investigation of fraud from the
Attorney General's Office to the Department of Human Services became "very political" and
ultimately failed in the state legislature. Activating the SLEB agreement was not a priority for
the Bureau of Criminal Investigation during this period.
The Bureau of Criminal Investigation has shared intelligence about food stamp coupon
trafficking with USDA's OIG and has had "two or three false starts" at initiating investigation
at bars suspected of trafficking. No food stamp coupons have been drawn down into a SLEB
agreement inventory, however.
According to Mr. Broer, the splitting of responsibility for investigating welfare fraud
between the Attorney General's Office and the Department of Human Services created a less-than
ideal situation. Taking this into consideration, in addition to the state's concentration on
the implementation of an EBT system, he thought that renewed interest in the SLEB agreement
was unlikely in the foreseeable future.
B-5
Appendix B: Summary Reports on SLEB Agreement History
Utah
Date of Interview: 6/29/95 (30 minutes)
Respondent: Brenda Hofer, Associate Director, Office of Recovery Services, Utah
Department of Human Services
Utah signed a SLEB agreement in 1993, in preparation for applying for one of the
Trafficking Investigation Demonstration Projects that FCS iiad advised the states would be
available. When the funding for the projects did not materialize, the state quickly abandoned
its interest in the SLEB agreement. Ms. Hofer made it very clear that the Department would
not undertake any aspect of investigating food stamp coupon trafficking unless the effort were
fully funded by FCS. The state has no fiscal or staff resources to devote to optional Food Stamp
Program activity.
B-6 1/
Appendix B: Summary Reports on SLEB Agreement History
Virginia
Date of Interview: 7/7/95 (30 minutes)
Respondent: George Sheer, Chief, Bureau of Fraud and Special Investigations, Virginia
Department of Social Services
Virginia signed a SLEB agreement in 1993 and enacted a food stamp coupon trafficking
law in 1994. The Bureau of Fraud and Special Investigations' role in the SLEB agreement
process is to make food stamp coupons available to local law enforcement agencies. To this
end, with assistance from the FCS Mid-Atlantic Regional Office, the Bureau developed an
intrastate SLEB agreement for agencies that wish to investigate coupon trafficking. In areas of
the state where trafficking is known to occur, selected law enforcement agencies were notified
by letter of the SLEB agreement.
In November of 1994, Lancaster County, a rural county on the Chesapeake Bay, was
issued $1,000 in food stamp coupons for an undercover trafficking investigation. No
investigation was conducted, however, and the food stamp coupons were returned to the state.
Other than this single episode, Mr. Sheer said that there has been a distinct lack of interest in
the SLEB agreement process from the law enforcement community. He attributes this attitude
in part to the accounting and reporting requirements set forth in the intrastate agreement, and
to the FCS prohibition against using food stamp coupons in investigations that focus on the
violation of drug laws.
B-7 a
Appendix B: Summary Reports on SLEB Agreement History
West Virginia
Date of Interview: 1/23/95 (35 minutes)
Respondent: Sharon O'Dell, Chief Investigator, Office of the Inspector General (OIG),
West Virginia Department of Health and Human Resources
[Ms. O'Dell was interviewed during the pretest of the SLEB agreement study interview guide.]
West Virginia signed a SLEB agreement in 1992. The state, however, has not enacted
a statute making trafficking in food stamp coupons a crime. Although OIG managers would like
to have such a law on the books, they have not been able to put it on the Department's
legislative agenda. There has been some interest on the part of the greater West Virginia law
enforcement community in conducting trafficking investigations in conjunction with investiga-tions
of narcotic violations. Ms. O'Dell attended the Food Stamp Coupon Trafficking
Workshop, jointly sponsored by FCS and the state of Michigan, in July 1992. She was
impressed with what other states had been able to accomplish with their SLEB agreements.
The OIG has no plans to attempt to activate the SLEB agreement until a trafficking
statute is enacted. When that happens, it will have to face the issue of the severe lack of fiscal
and staff resources, which will restrict its capacity to undertake the additional duties involved
in implementing the agreement.
B-8
(d
Appendix B: Summary Reports on SLEB Agreement History
CATEGORY II: STATES THAT HAVE CONDUCTED SLEB AGREEMENT INVESTIGATIONS
BUT SHOW NO ACTIVITY FOR 1994 OR 1995 (in alphabetical order)
Alabama
Date of Interview: 7/5/95 (45 minutes)
Respondent: Joseph Sutton, Director, Program Integrity Division, Alabama Department
of Human Resources
Alabama signed a SLEB agreement in 1989. Only three investiga