[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

FOOD STAMP FRAUD AS A BUSINESS MODEL: USDA'S STRUGGLE TO POLICE STORE
OWNERS
=======================================================================

HEARING

before the

COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

__________

MARCH 8, 2012

__________

Serial No. 112-141

__________

Printed for the use of the Committee on Oversight and Government Reform

Available via the World Wide Web: http://www.fdsys.gov
http://www.house.gov/reform

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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana ELIJAH E. CUMMINGS, Maryland,
JOHN L. MICA, Florida Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee PETER WELCH, Vermont
JOE WALSH, Illinois JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania

Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Robert Borden, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director

C O N T E N T S

----------
Page
Hearing held on March 8, 2012.................................... 1

WITNESSES

The Honorable Kevin Concannon, Under Secretary for Food,
Nutrition and Consumer Services, U.S. Department of Agriculture
Oral Statement........................................... 5
Written Statement........................................ 7
The Honorable Phyllis K. Fong, Inspector General, U.S. Department
of Agriculture
Oral Statement........................................... 15
Written Statement........................................ 17
Ms. Jennifer Hatcher, Senior Vice President, Government and
Public Affairs, Food Marketing Institute
Oral Statement........................................... 25
Written Statement........................................ 27
The Honorable Kenya Mann Faulkner, Inspector General,
Pennsylvania Office of Inspector General
Oral Statement........................................... 35
Written Statement........................................ 37

APPENDIX

The Honorable Elijah E. Cummings, A Member of Congress from the
State of Maryland: Opening Statement........................... 65
The Honorable Gerald E. Connolly, A Member of Congress from the
State of Virginia: Written Statement........................... 67
News article,``Scripps Investigation Unveils Food Stamp Fraud''.. 69
News article, ``Concannon: USDA Cracking Down on SNAP Fraud''.... 72

FOOD STAMP FRAUD AS A BUSINESS MODEL: USDA'S STRUGGLE TO POLICE STORE
OWNERS

----------

THURSDAY, MARCH 8, 2012

House of Representatives
Committee on Oversight and Government Reform,
Washington, D.C.
The committee met, pursuant to call, at 9:30 a.m., in Room
2154, Rayburn House Office Building, Hon. Darrell E. Issa
[chairman of the committee] presiding.
Present: Representatives Issa, Platts, Walberg, Meehan,
DesJarlais, Gowdy, Farenthold, Cummings, Towns, Tierney,
Connolly, Braley, and Speier.
Staff Present: Michael R. Bebeau, Majority Assistant Clerk;
Robert Borden, Majority General Counsel; Molly Boyl, Majority
Parliamentarian; Lawrence J. Brady, Majority Staff Director;
Ashley H. Callen, Majority Counsel; John Cuaderes, Majority
Deputy Staff Director; Gwen D'Luzansky, Majority Assistant
Clerk; Jessica L. Donlon, Majority Counsel; Adam P. Fromm,
Majority Director of Member Liaison and Floor Operations; Linda
Good, Majority Chief Clerk; Frederick Hill, Majority Director
of Communications; Christopher Hixon, Majority Deputy Chief
Counsel, Mark D. Marin, Majority Senior Professional Staff
Member; Noelle Turbitt, Majority Staff Assistant; Rebecca
Watkins, Majority Legislative Policy Director; Beverly Britton
Fraser, Minority Counsel; Kevin Corbin, Minority Deputy Clerk;
Ashley Etienne, Minority Director of Communications; Jennifer
Hoffman, Minority Press Secretary; Carla Hultberg, Minority
Chief Clerk; Brian Quinn, Minority Counsel; Steven Rangel,
Minority Senior Counsel; Dave Rapallo, Minority Staff Director;
and Davida Walsh, Minority Counsel.
Chairman Issa. The Committee will come to order.
The Oversight Committee exists to secure two fundamental
principles: first, Americans have a right to know that the
money Washington takes from them is well spent and, second,
Americans deserve an efficient, effective government that works
for them. Our duty on the Oversight and Government Reform
Committee is to protect these rights. Our solemn responsibility
is to hold government accountable to taxpayers, because
taxpayers have a right to know what they get from their
government. We will work tirelessly in partnership with citizen
watchdogs to deliver the facts to the American people and bring
genuine reform to the Federal bureaucracy.
I will now recognize myself for an opening statement and,
pursuant to the mission statement, would ask that the video be
played, since it reflects the watchdog in question.
[Video shown.]
Chairman Issa. America deserves better.
Just yesterday, one of our witnesses penned an op-ed that
depicted the improvement in this SNAP program, proudly stating
how much better it was. It is not for us today to question
whether or not the program has improved; the question is in a
day in which, in a moment's notice, in a few keystrokes, I can
look at a storefront anywhere in America, find out who, what,
where owns that, or, in this case, that Scripps Howard could do
a few public record searches available to the Department of
Agriculture and find out what they were doing wrong from open
source. We need to do better.
The hearing today is about children. The hearing today is
about families. Ultimately, the food stamp program is about
providing nutrition to people in need. Forty-two million people
rely on the food stamp program. A few misuse the program. Our
hearing today is not about the individuals who, out of
desperation for drugs, alcohol, or just spending money, misuse
food stamps; it is about America's responsibility, this
Administration and this Congress's responsibility to make sure
that the money or the benefit of the money gets to the people
who are supposed to get it. It is not to buy alcohol,
cigarettes, or drugs.
A relatively few storefronts around America represent a
considerable amount of fraud. Understand that a small amount of
stores does not mean there is a small amount of fraud. People
who want to use or misuse, I should say, the resources provided
to them by the taxpayer in the way of food stamps seek out
stores who will cheat. It is not an accident that you find out
that somewhere in the neighborhood an entity will trade you
$100 in food stamps for $50 in cash so you can go score. That
score is bad enough, but let's understand somewhere there is a
family that relied on food that instead got nothing.
These companies and these individuals behind these
companies need to be punished on a consistent basis. If in fact
they are suspended, it needs to be for a period of time with an
understanding of whether or not they are ever going to be able
to sell again. If they are permanently excluded, then in fact
permanent needs to mean permanent.
More importantly, in this day and age of the ability to
research, if you only have 100 people to track this huge amount
of potential waste, one can make the other 99 more effective.
The scandal we are looking at today is important because we
know that 100 people working for the Secretary in fact found
people who were stealing from the taxpayers and stealing from
families who need that food and need that benefit. One of those
100 assigned to do what whistleblowers have done for us in fact
could have prevented many of these stores from being back in
business. It is that simple.
We will hear today, as we often do, if we only had more
resources. This Committee has no more resources to provide. In
fact, you are going to have to do more for less. That is more
oversight, more accountability with less money available for
that, and more need by people on the food stamp program.
Ultimately, we are going to hear testimony on both sides
saying we are doing a better job, and we are going to hear
people saying you are not doing well enough. Both can be true.
America, in fact, expects both to be true. Continuous
improvement, but in fact never satisfied that we have done
enough.
With that, I recognize the Ranking Member for his opening
statement.
Mr. Cummings. Thank you very much, Mr. Chairman. I welcome
today's opportunity to conduct oversight of the SNAP program,
which has one of the most vital missions of any government
program, and that is to prevent abject hunger in homes all
across America. I am so glad that you said that this hearing,
amongst other things, is about children.
Mr. Chairman, thank you for agreeing to invite the
Minority's witness, Ms. Jennifer Hatcher of the Food Marketing
Institute. Since this hearing is about store owners, I thought
it was appropriate to invite them. Ms. Hatcher's organization
represents 26,000 supermarkets and food stores across the
Country that implement the SNAP program on a daily basis.
I also want to thank you for allowing our Minority witness
to appear on the first panel with everyone else. You did not
have to do that, but you did, and we are indeed grateful.
Let me start by emphasizing a very critical point. Nearly
half of the beneficiaries of the SNAP program are poor, hungry
children. SNAP currently serves 46 million Americans with
incomes at or below 130 percent of the poverty level. According
to USDA, 47 percent are under 18 years old. SNAP also serves
millions of people who are elderly or have disabilities.
SNAP has never been more critical than it is today. The
2008 financial crisis drove more Americans into poverty than
any other time since we started tracking this data. The
collapse of Wall Street and the evisceration of trillions of
dollars in household savings forced millions of Americans to
turn to this critical safety net, and it has been there for
them.
While the need for the SNAP program is at an all-time high,
fraud within the program is at an all-time low. SNAP is one of
the most efficiently run Federal programs, with one of the
lowest fraud rates of any government benefits program. Fraud
has declined from approximately 4 cents of every dollar
expended in 1993 to only 1 cent of every dollar expended today.
But I agree that that is not good enough. The Majority
appears to be basing today's hearing on recent press stories
about certain store owners who have been disqualified from the
program but allegedly regain entry in some way. Although this
would be problematic if true, we have not seen evidence to
support allegations that there is a pervasive weakness in the
program or the magnitude of fraud in the program may be much
greater than initially reported.
In fact, today we will hear just the opposite, that this
press account has significant problems. The USDA has acted
quickly to address the bad actors and the SNAP program
continues to be an extremely well run program. Given the strong
track record, I am concerned that the true purpose of this
hearing may be to discredit the entire program in order to
justify draconian cuts.
Last year, every Republican member of this Committee voted
to convert SNAP program into a block grant program and slash
its funding by $127 billion over the next 10 years, a massive
reduction of almost 20 percent.
Again, I go back to what you said a little bit earlier, Mr.
Chairman, in part, this is about children.
This proposal was part of the plan proposed by Budget
Committee Chairman Paul Ryan and adopted by the House
Republicans last April. According to the Center on Budget,
Policies and Priorities, this proposal will force up to 8
million men, women, and children to be cut from the program or
will severely reduce the amount of food they can buy. Where are
these children supposed to go if they are hungry?
I believe there is a compassion deficit here in Washington.
Obviously, a dollar squandered in this program is a dollar that
does not go to poorfamilies that desperately need food. But
efforts to impose draconian cuts to this program will cause
even greater harm to the very people who need the most help.
So while I strongly support efforts to make the program
more effective and efficient, and I strongly support the fact
that we must root out fraud, I will do everything in my power
to oppose efforts to use these isolated examples to discredit
and gut the entire program.
I look forward to a productive discussion today on ways to
improve one of the most successful Federal programs to prevent
poverty and hunger throughout these United States and with
that, Mr. Chairman, I yield back.
Chairman Issa. I thank the gentleman.
Members will have seven days to submit opening statements
for the record.
We now recognize our first panel. Mr. Kevin Concannon is
the Under Secretary for Food, Nutrition and Consumer Services
at USDA. Prior to this service at the Department of
Agriculture, he served as director of three different State
government departments of health and human services, Maine,
Oregon, and Iowa. Welcome.
Ms. Phyllis Fong is the USDA Inspector General and has
served the Department for 10 years. She is also concurrently
serving as the first Chairperson of the Council of Inspectors
General on Integrity, Efficiency, and, in fact, in that role
you may be aware that this Committee would like to pass on to
that Council greater authority, including potentially subpoena
authority. That remains one of our long-term goals if we can
convince the Senate of the importance of investing in
inspectors general.
Ms. Jennifer Hatcher is the Senior Vice President of
Government and Public Affairs for the Food Marketing Institute.
Prior to joining FMI, she served Chairman Spencer Bachus as his
chief of staff.
Lastly, Ms. Faulkner is Inspector General of the
Commonwealth of Pennsylvania. Prior to becoming Inspector
General, Ms. Faulkner was a law partner at the Philadelphia
office of Ballard Spahr LLP. She has had a lengthy career in
public service as an Assistant U.S. Attorney, Deputy Attorney
General of Pennsylvania, and Philadelphia public defender. That
is a lot to pack in a short time.
If you would all rise. Pursuant to our Committee rules, all
witnesses are to be sworn. Please raise your right hand.
Do you solemnly swear or affirm that the testimony you are
about to give will be the truth, the whole truth, and nothing
but the truth?
[Witnesses respond in the affirmative.]
Chairman Issa. Let the record reflect all witnesses
answered in the affirmative.
This Committee historically tends to have a soft gavel. As
I informed the witnesses ahead of time, we have a vote on a
district work period, last working day. I know my people; they
will not return. So in order to not have you wait an hour for a
relatively small period afterwards, if we have not concluded by
the time of the vote, we will end at that point.
As a result, I will hold everyone on your side very close
to the five minutes. I will hold my own people close to the
five minutes not just for questions, but for your answers. So I
ask all the members on the dais to please include time in your
five minutes for both questions and a reasonable period for
witnesses to answer.
With that, Mr. Secretary, you are recognized for five
minutes.

WITNESS STATEMENTS

STATEMENT OF THE HONORABLE KEVIN CONCANNON

Mr. Concannon. Thank you for the opportunity to join you
today, and let me thank Inspector General Fong, who is a strong
and independent oversight agent at the USDA.
The mission of the Supplemental Nutrition Assistance
Program, or SNAP, is to help low income people get the food
they need while they get back on their feet, and it has never
been more important in the lives of Americans than now. So
strong administration and oversight, including accurate
payments and proper use of benefits, are just as critical.
The focus of today's hearing is about USDA's oversight and
management of the retailers that are authorized to redeem SNAP
benefits across the United States. Particular emphasis is being
given to recent news stories, the result of several months of
intensive investigative journalism by a team of reporters at
Scripps Howard news service that focused on retailers that had
previously been disqualified from SNAP for trafficking.
Trafficking is the sale or purchase of SNAP benefits for cash,
an illegal activity punishable by disqualification, fines, and
criminal prosecution.
While we recognize the importance of the issues raised by
Scripps, I want to set the record straight about several facts.
As with other leads we receive from the public, we took the
information Scripps brought to our attention very seriously. We
immediately began our own investigation into the stores that
were referred to us. Our results suggest that the issues may
not be as widespread as reported by Scripps, as many of the
cases they raised have not proven to have integrity problems.
Of the 36 owners Scripps referred to FNS as suspicious, our
investigation found that over three-quarters had no connection
to the disqualified owner or were not authorized at SNAP
stores. The remaining quarter have been either disqualified,
charged, or withdrawn from SNAP. One is under criminal
investigation by the OIG.
That said, we still believe broader action was needed. We
increased security measures to keep out previously disqualified
owners, including more robust review of applicants' public
records and shorter time period authorizations for stores and
locations with previous disqualifications.
Prior to these reports, FNS has been upgrading its
electronic transaction data mining technology to better detect
suspicious SNAP redemptions and we are preparing to post
information regarding the owners of permanently disqualified
stores to GSA's excluded party list system, a Federal list to
protect other Federal agencies. We are also developing rules
that will increase penalties for trafficking stores.
Combating fraud has long been a USDA priority over the last
15 years, and I believe the charts are rotating up here. You
will see one of those charts reflects various initiatives we
have taken over the years. We are not yet satisfied and USDA
continues to work closely with our partners to fight
trafficking. In fiscal year 2011, FNS reviewed over 15,000
stores, conducted nearly 5,000 undercover investigations, and
sanctioned or punished 2,000 retailers.
While USDA has direct responsibility for overseeing SNAP
retailers, our integrity work includes every aspect of SNAP
administration. By overseeing and working closely with our
partners, including State and local governments, USDA strives
to ensure that scarce taxpayer resources are managed with
integrity and accountability.
First, over the past decade we have made major improvements
in SNAP payment accuracy. Over 98 percent of SNAP clients are
indeed eligible and accuracy in 2010 reached 96 percent, a
historic high. 2010 errors were less than billions than they
would have been under the 2000 year rate.
Second, USDA also oversees and provides guidance to States
to find and hold accountable recipients who commit fraud. USDA
recently issued new policy to clarify that even the intent to
sell benefits, for example, by offering a SNAP card on a social
media site like Craig's List, can lead to disqualification.
Last year I wrote to all of the Nation's governors,
individually, asking them to make SNAP integrity a priority. We
have also engaged the retail community in this effort. I have
personally met with State commissioners around the Country to
enlist their support, including a greater focus on recipient
trafficking and increased partnership with law enforcement.
To conclude, fraud is neither new nor static. While a vast
majority of retailers and clients follow the rules, a few bad
actors will always seek to exploit SNAP. But the program is too
important for taxpayer investment, too great to tolerate fraud.
As in cybersecurity, we must be vigilant and continuously
update systems to find and thwart new fraud schemes. USDA will
continue to crack down on violators. We welcome our partners'
constructive engagement in this effort.
Thank you very much.
[Prepared statement of Mr. Concannon follows:]

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Chairman Issa. Thank you.
Ms. Fong?

STATEMENT OF THE HONORABLE PHYLLIS K. FONG

Ms. Fong. Thank you, Mr. Chairman, Ranking Member Cummings,
and members of the Committee. At the outset, I want to express
my appreciation to you, Mr. Chairman, and to many of the
distinguished members of this Committee for your support of the
Federal IG community over the past several years. You have a
noteworthy record of bipartisan support for IG contributions
and you have demonstrated time and again through legislation,
hearings, and speeches your interest in our work. So on behalf
of the entire community, I want to thank all of you for your
support.
Today you have invited me to testify about USDA IG's work
to protect the integrity of the SNAP program. To put this in
context, the IG office at USDA is responsible for providing
oversight to all USDA programs, which currently number over
300. Of course, SNAP is the largest program in our portfolio,
with over $70 billion, and it has drawn much of our attention
over the past few years.
In the last two years alone we have devoted almost half of
our investigative resources to addressing SNAP fraud, with
measurable results. We currently have over 900 cases open. Over
600 of these cases involve retailers in some way. My written
statement provides some examples of our most significant cases
involving disqualified retailers.
But I want to emphasize, more than the cases that we do,
that the core problems in this program are not new, namely,
there will always be people willing to commit fraud and to
traffic in SNAP benefits, even though the specific schemes
themselves may take different forms. So we, as an IG office,
have been working on these issues with FNS, our partners, and
with State and local agencies for many years to address these
issues, and I can assure you that we have cases right now going
on in every region of the Country and our agents are
continually adjusting their work to deal with new schemes as
they arise.
While it is important to investigate, prosecute, and bring
to justice wrongdoers, these actions alone will not fix the
problem. It is critical that we also focus our efforts on
looking at how retailers bypass the system that we have put in
place to control access and to try and figure out what can be
done to improve the program for the future.
To this end, we have issued several audits over the past
few years with recommendations for corrective actions. We have
been working with FNS and our partners at USDA to address these
issues. In particular, we recommend that retailer applicants
need to have clean backgrounds, with no history of criminal or
illegal activity. There needs to be a way to do that. We also
believe that USDA should make better use of suspension and
debarment appropriately to ensure that disqualified retailers
do not participate in government programs in the future.
So, to conclude, we strongly believe that retailer
integrity is a critical component of ensuring an effective SNAP
program that delivers nutritious food to people who need it. In
our experience, unscrupulous retailers are at the heart of most
of the trafficking schemes that we have seen. So we look
forward to continuing our work with FNS, with our State and
local partners to address this fraud where it occurs and
improve the integrity of this very important program.
Thank you for your interest, and we look forward to
addressing your questions.
[Prepared statement of Ms. Fong follows:]

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Chairman Issa. Thank you.
Ms. Hatcher?

STATEMENT OF JENNIFER HATCHER

Ms. Hatcher. Good morning, Mr. Chairman and members of the
Committee. On behalf of the Food Marketing Institute and the
families served by the 25,000 stores operated by our members, I
want to thank you for the opportunity to testify today. My name
is Jennifer Hatcher and I am Senior Vice President for
Government and Public Affairs at FMI. For the past 13 years,
through the transition from paper food stamps to electronic
benefits transferred, and now the new program named SNAP, I
have worked on these issues.
SNAP EBT is a positive example of a public-private
partnership that works, and that adds efficiency and reduces
fraud for all stakeholders in the program. Supermarket
retailers are proud of our partnership with USDA and the State
agencies to deliver safe, healthy, and affordable foods to
customers in need of assistance. Unfortunately, the number of
customers in need is higher today than it has ever been. In
large part due to the conversion to electronic delivery of
benefits rather than paper food stamps, a significant portion
of the fraud has been removed from the system.
Many supermarkets remember vividly situations where paper
food stamps were being sold by criminals in front of the store.
Paper stamps provided anonymity for the perpetrators of these
illegal transactions. EBT ties any fraudulent activity to a
particular transaction, customer, and store location. This has
taken the criminal element out of our store parking lots.
Electronic delivery has also provided State agencies with a
better mechanism to compare transaction activity and look for
duplication across State lines, particularly with States that
share a common border. Some States have employed mathematicians
to electronically identify potentially fraudulent patterns of
sales.
EBT has also improved efficiency and cut down on the
potential for human clerical error. SNAP EBT transactions are
protected by a user's personal identification number, PIN, so
that they are much more secure than paper or even credit cards.
FMI members take the responsibility as authorized food
stores for the delivery of these benefits very seriously. Being
an authorized SNAP retailer is part of their identity and their
reputations in their communities, which is very important for
them to protect. After reviewing the Scripps report and the
associated list of disqualified retailers, we found no FMI
members on the list, and agree that those who impugn the
integrity of the program should be removed.
Fighting fraud before it happens is critical, and I thought
I would share some of the steps our supermarket members take to
prevent fraudulent activity in their stores.
First, and most important, is training. FMI member
companies conduct onsite and offsite training for both their
associates and their managers in the rules and regulations that
govern SNAP transactions. There is a 76-page manual on the
website that we consult on a daily basis for all of the rules
and regulations governing the program. There is also a 25-page
guide for retailers and a 17-minute training video in multiple
languages that can be utilized for these purposes. Several of
our members have also set up their own internal audits to
ensure they are in compliance and that each of their
transactions is in compliance.
The vast majority of our members utilize computer systems
that allow them to program via UPC code eligible and ineligible
food items, and then lock the point of sale purchase system
should someone attempt to purchase an ineligible item with SNAP
benefits.
FMI also publishes and sends to our members on a regular
basis the names and contact information of the USDA FNS
regional offices and the State administrators for SNAP EBT.
Both FMI and our members make the USDA fraud hotline number
available to their associates and managers through each of
these training materials.
There is one more issue that I feel I need to raise in the
context of this hearing, and that is the extreme concentration
of benefits issuance at the first month in a number of States.
There are a number of issues that spreading the issuance of
SNAP benefits across the entirety of the month, instead of just
on the first day, could help accomplish, and we think a
reduction in fraud may be an additional positive result of this
change.
Thank you for inviting FMI to share our thoughts on
identifying and reducing fraud in the SNAP program. Our
industry is committed to ensuring a pleasant and efficient
shopping experience for all our customers and we welcome the
opportunity to work with the Committee and the Department to
move towards additional efficiencies in the SNAP program. Thank
you.
[Prepared statement of Ms. Hatcher follows:]

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Chairman Issa. Thank you.
Ms. Faulkner?

STATEMENT OF THE HONORABLE KENYA MANN FAULKNER

Ms. Faulkner. Thank you. Good morning, Chairman Issa and
Honorable Members of the Committee on Oversight and Government
Reform. I would like to thank you for the opportunity to
address this Committee on the Pennsylvania Office of Inspector
General's proactive and progressive steps it takes to deter and
combat fraud in the Supplemental Nutrition Assistance Program,
or, as we refer to it, SNAP.
Let me first say that Pennsylvania Governor Tom Corbett
believes it is important for Pennsylvania to provide health and
human services such as SNAP to its truly deserving citizens.
Individuals who engage in fraud take away those limited
resources from the neediest of Pennsylvanians.
As Inspector General, it is the mission of my office to
uncover fraud, waste, and abuse within SNAP to hold those
individuals who have committed fraud within the program
accountable for their actions, and to recover overpaid tax
dollars. The Office of Inspector General conducts its mission
to combat SNAP fraud by operating several fraud investigative
programs within its Bureau of Fraud Prevention and Prosecution.
These programs are the Field Investigation, Fraud
Investigation, and SNAP Trafficking programs. These programs
are operated in coordination with the Pennsylvania Department
of Public Welfare, which we refer to as DPW, which administers
the Supplemental SNAP Assistance Program.
The Office of Inspector General's approach to combating
fraud begins with the application for SNAP benefits. Through
our field investigation program, when DPW refers an application
or re-application for SNAP benefits and suspects fraud or
receives inconsistent or incomplete information, it refers the
application to my office, the Office of Inspector General. The
OIG investigates all applicant circumstances and provides DPW
with its findings. Based on these findings DPW may deny
benefits or approve benefits at a reduced amount. This same
referral process exists for active recipients of SNAP benefits
where DPW becomes aware of circumstances in a recipient's
ongoing case.
This proactive approach to combating SNAP fraud before
benefits are authorized or investigating ongoing cases to
ensure that only those entitled to benefits are actually
receiving them is a critical function of my office.
As a best business practice, there is greater efficiency in
denying or reducing incorrectly authorized benefits versus
attempting to collect overpayment benefits. In fiscal year
2010-2011, the OIG conducted approximately 22,308 field
investigations where SNAP benefits were involved. The cost the
taxpayers avoided based on the OIG's investigations where SNAP
benefits were either denied, closed, or reduced was a little
over $19 million.
Not all fraud, however, can be prevented by the OIG's Field
Investigation program. When DPW becomes aware of circumstances
which affect a recipient's past benefits, it will calculate an
overpayment of SNAP benefits and refer that overpayment to my
office, the OIG, for investigation.
The OIG and its Fraud Investigation program conducts
investigations on overpaid SNAP benefits and determines if the
overpayment was due to the recipient's willful intent to
defraud the program. Investigations where the OIG is able to
substantiate that fraud occurred either criminally prosecuted
or adjudicated through an administrative hearing. Court or
administrative findings of intentional program violations
include orders to fully repay restitution to the Commonwealth
or carry a program disqualification for the defendants.
The OIG follows Federal regulations in the progressive
disqualification penalties for intentional program violations,
with the first violation carrying a 12-month disqualification
period. In the fiscal year 2010-2011 for SNAP overpayment
claims, the OIG conducted approximately 3,335 investigations
which involved SNAP benefits. The OIG filed 613 criminal
complaints for a total restitution of a little over $1.4
million.
The OIG disqualified 822 defendants as a result of its
criminal charges, which resulted in a little over $1.6 million
in cost savings from preventing further program participation.
The OIG filed 180 administrative hearings with a total
restitution amount of $322,463. The OIG disqualified 172
defendants as a result of its civil proceedings, which resulted
in approximately $496,000 in cost savings from preventing
further program participation, which includes figures from SNAP
trafficking program.
In addition to efforts to combat SNAP fraud at the
application stage or through prosecuting overpayments, the OIG
focuses on fraud which is occurring through recipients who sell
or exchange their SNAP benefits to negotiate them into cash
services, credit, or anything other than food, which is defined
as SNAP trafficking in my agency. The practice of SNAP
trafficking is actively pursued in Pennsylvania and has been
done so for many years in Pennsylvania to maintain the
integrity of SNAP benefit distribution by ensuring the
credibility of the vendors and the recipients. The OIG operates
a small but dedicated unit to operate its SNAP Trafficking
program and works integrally with the USDA and the Nutrition
Service, the USDA Office of Inspector General, as well, and
local district attorneys to identify store owners and
recipients who engage in SNAP trafficking.
This active participation between the USDA and OIG is a
chief reason why Pennsylvania has success in targeting SNAP
trafficking. The USDA is responsible for disqualifying
individual store and store owners, and filing criminal charges
against them for engaging in SNAP trafficking. But, as you
know, it takes the active participation of recipients of SNAP
benefits for SNAP trafficking to occur. The OIG's
responsibility in its partnership with USDA is to actively
pursue the recipients who trafficking their benefits and hold
them accountable for their actions, including criminal
prosecution, obtaining repayment of illegal transacted
benefits, and disqualification from the program.
[Prepared statement of Ms. Faulkner follows:]

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Chairman Issa. Thank you.
I will now recognize myself for five minutes.
Ms. Faulkner, a lot of what you were talking about, of
course, are people who receive the benefit and abuse it. That
represents a large part of the State's role, is to make sure
that the food, we still use the term stamps, but that SNAP
program funds get to the ultimate recipient, which is usually
family members, is that correct?
Ms. Faulkner. That is correct.
Chairman Issa. Now, in your enforcement, the fact that
these are basically credit cards that are digitally monitored
and that you can track, that has dramatically made your job
more accurate, hasn't it, than the old days of paper?
Ms. Faulkner. Yes, it has.
Chairman Issa. Well, that begs the question, I think, well,
Ms. Hatcher, I have been at the grocery store when I have seen
the exclusion of unauthorized materials, where every grocery
store I have gone to has the software where they simply say,
yes, that is fine you have just credited $35, but you still owe
us $6.50 for the cigarettes, or whatever. That is great. Do 100
percent of your members have that? And if not, why not?
Ms. Hatcher. A hundred percent of our members that have
electronic point-of-sale systems would have some ability to
download that, and we are increasing that number. I would have
to get back with you on the exact number, percentage of stores,
but it is over 90 percent for sure.
Chairman Issa. That is excellent.
Well, Mr. Concannon, every grocery store I go to these days
is electronic. Not every liquor store I go to is electronic.
One of the basic questions is, if you cannot reduce fraud to an
acceptable level, to make your IG happy, if you will, is it
that important that every liquor store, and I use the term
liquor store very specifically, because sometimes people want
to call themselves convenience stores. But we all know, as the
ratio gets close to your minimum food to cigarettes and
alcohol, your fraud level goes up. No question at all; it is
well understood. Is that one of the areas in which the test
must be higher and the tolerance for any slippage must be
lower?
Mr. Concannon. I appreciate the question, Mr. Chair, and to
the point you make, stores, by Federal requirement in the Farm
bill, must provide a certain number of foods in the food group,
and it is what we refer to as the depth of stock requirements.
I am very interested, I know Secretary Vilsack is as well, in
increasing the obligation on stores that have more foods than
those minimums that currently meet it for stores that maybe
their real interest is in selling tobacco or selling alcohol to
folks. They can't buy that with their SNAP card, but it is
encouraging people to come into those locations.
Chairman Issa. I appreciate that.
Now, both your op-ed, which I would ask unanimous consent
be placed in the record, without objection, and your statement
quite frankly give a fairly rosy picture, and in the case of
your comments on Scripps Howard it was a little bit like the
Ranking Member's thanking us for the hearing and then saying we
want to starve the children implications in everything
Republicans do in the budget. Scripps Howard exposed, at least
in some cases, fraud you were not aware of, is that correct?
Mr. Concannon. Yes, they did, in a very small number of
cases. And I want to correct the record because the Scripps
Howard piece mistakenly made the notion----
Chairman Issa. No, I appreciate that, and you said that in
your op-ed, you've said it in your opening statement.
Mr. Concannon.--stores are taken out of the program, not
the physical location----
Chairman Issa. Right. My time is limited.
Mr. Concannon. Okay.
Chairman Issa. And you were invited here not to be
mistreated, but you were invited here because we are concerned
and we really don't want to have our whistleblower bashed, even
if there was 1 percent accuracy; and there appears to be far
more than 1 percent accuracy.
Here is the question I have for you, and it is the only
question I am going to make today, and I think Ms. Fong will
particularly appreciate it. The rest of government uses
permanent exclusion and debarment fairly aggressively. It is
not an easy task, but it guarantees that those who have cheated
the American people as vendors are not just removed for a
period of time from your program, but in fact are removed from
eligibility government-wide. Why do you not use it broadly, and
will you begin using debarment, or do you believe you don't
have the authority to?
Mr. Concannon. There are many compelling reasons why we do
not currently use it. We are able to take stores, we have taken
stores out this very week for simply trafficking or for
misleading us in their application, falsification. We don't
have to hold hearings. During the pendency of that, we give
stores 10 days to respond to us. We take them out. If we use
debarment, we have to go through a whole extended hearing
process.
Now, as well, when we take these stores out, most of the
stores we are talking about are small stores; they rarely
interact with other parts of government. They don't have
pharmacies, they are not stores that government doesn't buy
liquor from liquor stores, to use the earlier reference point.
It is far more efficient for us to do this.
Now, I will say this. We have completed requirements with
the General Services Administration to allow our agency to now
start filing excluded parties listing, which means once that
company is on that list, they can't do business with any part
of the Federal Government. This is a more efficient way to do
it, and in the meantime we can take bad actors out.
Chairman Issa. Ms. Fong, my time has expired, but it looks
like you have at least a partial answer beyond that.
Ms. Fong. Thank you. We feel very strongly that USDA, as a
whole, needs to do a better job with suspension and debarment.
We believe that there may be some room here to work with FNS to
really get the best possible system in place, and I think
excluded parties program disqualification and suspension and
debarment are all necessary remedies to be looked at, and we
feel strongly about that.
Chairman Issa. Thank you.
The Ranking Member is recognized for five minutes.
Mr. Cummings. Thank you very much, Mr. Chairman.
Let me make it very clear that if there is one dime of
money that is not going where it is supposed to go, there is
nobody I think in this room, and particularly not on this side
of the aisle or the other, that would stand for that. I want an
even higher standard than the 1 percent. I want zero. At the
same time, though, I want to make sure that we have balance in
this whole process when we have taken $127 billion out of a
program. We want to make sure that the people who need the
program are taking advantage of and have an opportunity to get
the funds that they need.
Now, Secretary Concannon, I want to thank you for your
testimony, and again going back to what I just said, House
Republicans have cut $127 billion out of this program. That
means that they would eliminate food assistance to some 8
million people, according to the Center on Budget and Policies.
Mr. Concannon, according to your agency's data, nearly half of
the SNAP beneficiaries are under the age of 18, is that right?
Mr. Concannon. Correct, sir.
Mr. Cummings. And I want to go back for a moment because
there is something that the Chairman didn't give you a chance
to answer, but I think I know what you were trying to get to.
Sometimes you have a store that is disbarred. This goes with
the owner, is that right?
Mr. Concannon. That is correct, sir.
Mr. Cummings. So it is sort of like, when I was practicing
law, if somebody, say, for example, had a liquor license and
they were a bad actor, they then sold it or whatever, then the
new person comes in and that's a new situation, is that right?
Mr. Concannon. Correct.
Mr. Cummings. So some of the Scripps article was about
folks who had been taken out, but then the store was owned by
somebody else, and then that came under a whole new situation,
is that right?
Mr. Concannon. Correct. Some of those articles that were
referenced to me suggested that, again, the location and the
owner were one and the same when they came back in. We have
231,000 locations in the United States authorized for this. The
majority of them are small stores, and that is invariably where
these problems occur, in small stores. And of that 231,000 over
the years, we have taken out permanently some 8,300 stores over
a 10-year period. And in about just over 1,200 locations of
that 8300 different owners came and are operating the program.
So it is not the same as saying that same person came back,
but in fairness to Scripps Howard, they found a small number in
that 36 that I showed here earlier that had slipped back into
the program by falsifying their applications, and we have
strengthened, on the basis of working just in the past two
months, strengthened the requirements for a variety of vetted
pieces of information that will assure usw that there is no
connection whatsoever to a prior owner.
Mr. Cummings. Now, let me give you some interesting
information. My good friend, Senator DeMint down in South
Carolina, introduced legislation to cut SNAP benefits provided
under the Recovery Act. The Pennsylvania Governor, Tom Corbett,
announced a plan to disqualify anyone under the age of 60 who
has more than $2,000 in savings and assets, which would prevent
families from working towards self-sufficiency. The mayor of
Philadelphia called this proposal ``one of the most mean-
spirited and asinine proposals to come out of Harrisburg in
decades.'' Other States have pursued similar proposals. In
Georgia a bill was introduced to require beneficiaries to
obtain mandatory ``personal growth'' activities.
Now, Mr. Concannon, do you know what these personal growth
activities are and do you know how they would be implemented on
a national level or the State level?
Mr. Concannon. I am unfamiliar with that. I have seen
references to that in the media, but I am unfamiliar with the
specifics of the bill.
Mr. Cummings. Now, we all know that there will be instances
of fraud and we all agree that we need to be vigilant to
prevent fraud before it happens and prosecute it in all of
these cases. But according to your data fraud rates in this
program have been going down, not up, is that right?
Mr. Concannon. That is correct.
Mr. Cummings. Do you concur with that, Ms. Fong, they have
been going down?
Ms. Fong. We are aware of FNS's studies that say that. We
have not personally assessed those studies, and we plan to do
some work on that.
Mr. Cummings. Okay.
Now, Mr. Concannon, they have dropped to an all-time low
record of less than 1 percent, is that right?
Mr. Concannon. Correct, sir.
Mr. Cummings. All right.
I know the Chairman got about a minute and a half longer,
but----
Chairman Issa. [Remarks made off microphone.]
Mr. Cummings. Would you just answer that?
Mr. Concannon. We have been working very closely with
States across the Country both to reduce what is called the
improper payment level, meaning individuals get more than they
should or less than they should. That is less than 4 percent,
what was traditionally an 8 percent number.
In the case of trafficking, as was mentioned earlier I
think by the Chair, in the era of paper coupons was much more
widespread. The electronic benefit card has considerably
brought that down. That and other work with States. One percent
was the last study we did. We are going to do another study
later this year to update that on trafficking. But it is 1
percent. It is one of the best records among Federal programs.
Mr. Cummings. But that is not good enough for you, is it?
Mr. Concannon. It is not. I am not satisfied with that,
even.
Mr. Cummings. Very well. Thank you.
Chairman Issa. The gentleman from Tennessee, Mr.
DesJarlais, is recognized for five minutes.
Mr. DesJarlais. Thank you, Mr. Chairman, and thank you all
for being here today. I think that this is one thing that we
can agree on on both sides of the aisle. We don't want to see
hungry children. We don't want to see hungry people. We live in
a Country that is fortunate enough to be able to share and help
these people, and it is unfortunate that here in Congress it is
so common for Democrats and Republicans to make accusations
against one another when really we agree that, on all these
programs that are designed to help people, we want to do the
very best we can to make sure that those in need are the ones
getting the help.
So if we can tone down the political rhetoric and look at
how we can do the very best we can to make sure that not a
single calorie is taken away from those in need, then we can
get a lot further than arguing and making accusations. I know
that is the case in Medicare, it is the case in Medicaid, it is
Social Security disability. So often one side accuses the other
of trying to go over the top, but oftentimes that is for
political reasons. And these aren't Democrat issues or
Republican issues; these are people issues. So again I
appreciate you being here today.
Ms. Fong, if we are going to try to do the very best,
whether it is 1 percent, 5 percent, a half a percent, we need
to find out what the problems are and how to solve them, so can
you tell me what is the most typical kind of fraud that you see
in the food stamp program?
Ms. Fong. Well, we have a number of schemes that we see.
Most of them focus on trafficking, which is a situation where a
recipient goes to a retailer and tries to cash in the card for
money, in which case both parties come away feeling that they
have gotten a good bargain. There are numbers of ways that this
happens. We have seen different schemes over the years where
retailers and recipients get very creative about shopping the
card, as it were.
Mr. DesJarlais. Okay. Do people who illegally traffic food
stamps, do they tend to be people that also try to commit fraud
in other government assistance programs like Section 8 housing
or Medicaid?
Ms. Fong. I don't believe we have any data on that,
although I will say that we do, on occasion, joint
investigations with other government agencies such as HHS,
which manages the Medicaid-Medicare program, and sometimes
there will be recipients who are involved in all of those
programs.
Mr. DesJarlais. How much money could a store owner who
traffics in food stamps likely make illegally?
Ms. Fong. Well, I think you would want to look at it on
sort of a per benefit basis. It can range. There are some very
small retailers who, in the context of their business, will
make thousands of dollars. There may be other larger retailers
or smaller ones who engage in multiple transactions who can
benefit by hundreds of thousands of dollars or even millions.
And some of our investigative results will show restitution
sentences that can range from hundreds of thousands to
millions.
Mr. DesJarlais. Okay. Just so we kind of know if there are
citizen watchdogs and people out there that are looking for
this type problem, can you give us an example of the most
elaborate scam involving store owners that your office has
investigated?
Ms. Fong. Well, I think we certainly have a number of cases
going on. Most recently we have seen situations where there
have been runners employed who will take cards from recipients
and take them to many different retailers and swipe those cards
to get benefits, and there will be maybe a group of retailers
who work together to do this. So there are some very
complicated schemes there.
Mr. DesJarlais. Ms. Faulkner, you probably also have seen
this type of thing. Could you share maybe what one of the most
egregious fraud cases that you are aware of? And then when that
happens, do you frequently see children deprived when their
guardians engage in SNAP fraud?
Ms. Faulkner. I think any time there is fraud, children are
involved, especially when it relates to the SNAP program. But
what I would like to share with you is one of the more
sophisticated trends, and I think Inspector General Fong
touched upon it. In a program such as SNAP, a recipient will go
to a restaurant or a bar, and this is not a place where they
would accept EBT cards, but they would go there and the
restaurant or bar would go to a grocery store and buy, say,
$200 worth of groceries for the bar or restaurant, and then
they would give the recipient half, 75 percent, something off
of the EBT card. And really it cuts out, you never really see
the bar or restaurant transaction; what you see is the
recipient using to buy $200 worth of groceries at this
particular grocery store.
That is a little hard to track, and being stricter on the
retailers will help this problem because you cut out that
restaurant that is being used to get the money. So we see that
in Pennsylvania sometimes.
Mr. DesJarlais. Well, I see time has expired, but thank you
all for what you to do make sure that those people in need get
the food that they need.
I yield back.
Mr. Gowdy. [Presiding] The Chair thanks the gentleman from
Tennessee and recognizes the gentlelady from California, Ms.
Speier.
Ms. Speier. Thank you, Mr. Chairman.
I want to compliment the Chair of this Committee in
recognizing the important function we have to look at
government programs and evaluate the fraud.
Having said that, I want to compliment everyone on the
panel. I think you have a 98 percent grade, and a 98 percent
grade is something we should be applauding. A 1 percent fraud
rate is just remarkable, and I am very impressed by what you
are doing.
Here is my question. Are we spending more with the budgets
for fraud detection and the IG than we are generating in
restitution or repayments? Yes, Inspector General Fong?
Ms. Fong. I would be happy to comment on that. I will say
that our budget in the IG's office is around $85 million a
year, and we bring in, on average, $14 or $15 for every dollar
that is appropriated to us.
Ms. Speier. Okay, so you are valuable in what you are
doing.
Here is my concern. There has been a recommendation, I
think by the IG, that you review retailer applications for
criminal records. Makes a lot of sense. Why aren't you doing
it?
Mr. Concannon. Thank you very much. We have received that
recommendation that we rely upon something called the NCIC, the
National Crime Information Center, data. I was a former State
director and I used that system through the State police in the
States that I was in. One has to be a law enforcement agency in
order to access those data; we can't do it as the FNS. The OIG,
if it had the resources, it could possibly do so, but we are
not allowed to. You have to be a law enforcement agency to get
into that database.
Ms. Speier. All right, I understand what you are saying,
Under Secretary.
So this is to General Fong, then. How would you suggest we
review the criminal records, then? What do we need to do in
order to accomplish that? And will it give us enough bang for
the buck? If we invest in doing that, will we save a
significant amount so that it would be worth our while to do
it?
Ms. Fong. That is a very complex question, and the Under
Secretary is absolutely right, we have been back and forth on
this issue as to the best way to get criminal background
information. I think right now the application form has been
revised to require certification under penalty of criminal
prosecution, and I think that is a very good move. I think we
can continue our discussions on this. Right now we do not have
the authority as the IG's office to run these kinds of NCIC
checks for a program purpose, so we will need to do some
further consultation.
Ms. Speier. Well, we are able, I know, in California to do
background checks for childcare providers, so I can't believe
that the Federal Government, as talented as it is, cannot find
a way to create a means by which this background check can take
place. So I would encourage the Committee to pursue this and
find a way to achieve that.
The other issue that I wanted to draw attention to was this
issue of suspension and debarment. As I understand it, there
were 615 wholesalers and retailers convicted, but none of them
have been suspended or debarred, and the rationale for not
doing this is that it is costly. Well, democracy is costly. I
don't think we can use the argument that it is costly. If we
have evidence of convictions and these retailers have violated
the laws and we don't debar them, then shame on us.
Anyone want to respond to that?
Mr. Concannon. If I can try to answer that. The preamble to
the new departmental regulations on debarment excludes the SNAP
and WIC program transactions because of statutory language that
provides for comprehensive statutory disqualifications. In
everyday English let me say that we rely upon our taking owners
of stores and corporate groups out of the program, and as I
mentioned earlier in my testimony, we have been negotiating
with the General Services Administration to have these folks
listed on a listing that they operate where people who are
permanently barred from doing work with the government, they
cannot. They will now be listed on this list that goes to all
Federal agencies.
So in our view we will achieve what debarment is intended
to, but it will allow us to take them out without extended due
process hearings that drag this out on and on, and allow people
to stay in the program during that time.
Ms. Speier. All right, my time has expired. Thank you, Mr.
Chairman.
Mr. Gowdy. I thank the gentlelady from California.
The Chair would now recognize the gentleman from
Pennsylvania, former United States Attorney, Mr. Meehan.
Mr. Meehan. Thank you, Mr. Chairman. You sit well in that
seat.
I am very appreciative of all of the panel for the work
that you do, the significantly important work that you do, and
I want to attach myself to the comments of Dr. DesJarlais
earlier in our shared interest, first, and most importantly, in
delivering these services appropriately to those most in need.
So to the extent that we are able to effectively root out the
fraud, more is available for those purposes.
Ms. Faulkner, I noticed there was some testimony, I did
want to correct the record to the best of my understanding.
There was some testimony today about the Pennsylvania
administration's guidelines with regard to points at which
there would be determinations of eligibility, and I know that
there was an original proposal, but to the best of my
understanding, there was also some collaboration on the part of
the governor's office and that they have made a significant
change with regard to that guideline so that it is far more
realistic in terms of--is that accurate?
Ms. Faulkner. Yes. What I would like to say is that
everyone has been referring to the asset test.
Mr. Meehan. Correct.
Ms. Faulkner. Which was always in place in Pennsylvania
until 2008. But the asset test is apples and oranges. We are
talking about fraud and the asset test is something different.
But, yes, the governor reinstated and increased the threshold
to $9,000 and to $5,500. So it has been increased. It was
always in place and, really, it is apples and oranges from
fraud to what we are talking about here today.
Mr. Meehan. I just wanted to make sure that that was clear.
I want to express my deep appreciation. In a very short
time you have really developed quite a reputation for the very
good work that you are doing in that office.
Ms. Faulkner. Thank you.
Mr. Meehan. And I am particularly interested in the work
that relates to this concept that between 8 and 15 percent of
the fraud is associated with trafficking. It would seem to me
that this is a choke point that we would really be able to work
on. Now, are there some things that you do that you see
characteristics that take place when there is trafficking that
help you to identify those that may be the most suspect?
Ms. Faulkner. What we have been doing in Pennsylvania is we
have a dedicated unit. We have the Fraud, but we have OSC,
which is really just a unit that focuses on SNAP. And what we
find in Pennsylvania is that that has been growing, the fraud
hasn't been reducing.
So we have worked with Federal and local DA's offices to
try to reduce what is going on with the retailers and the
recipients, and what we find is that once the Federal
Government determines who the stores are, we then come in and
tell them who the recipients are in order to close the loop,
because the recipient is the one who really starts the ball
rolling in this.
Mr. Meehan. It would seem to suggest, if you are seeing an
increase, then that is sort of contrary to some of the
important progress that we have been able to make through the
electronic process. But you have given testimony earlier that
creative criminals can always find ways around a system, so are
you looking for patterns and other kinds of things that help us
get to those? I am really particularly interested in the
retailers, because they are the ones that are facilitating the
ability.
Ms. Faulkner. I am sorry to interrupt. One of the things we
did notice with the retailers is that they would have whole
dollar amounts; you would go to the store and see $100 used.
And that was one of the things that they used to determine
whether this could be some type of fraud. So we do follow that.
People going to the same stores all the time. Those are just
indicators; they are not always determinative.
But we look at those things to see if trafficking is
occurring there. And we have, like I said, a small unit in the
office right now, a supervisor and three people working on this
entirely. We are hoping to expand it more. That is what we see
in Pennsylvania, that there is a need to investigate this more.
I can't talk about the Federal Government or other States, but
in Pennsylvania we see a need to----
Mr. Meehan. Do States work with other States so that while
you are looking at patterns within your own State, are you able
to check with New Jersey or Delaware or Maryland in any way to
determine whether you are matching your efforts to see if there
are patterns that exist among some of the same individuals?
Ms. Faulkner. Well, I think the concern is--I did reach out
to New Jersey. They handle their SNAPs differently. Every State
is different. So while I have personally done some reaching
out, I have not been able to connect in sort of determining
whether there are patterns in States.
Mr. Meehan. Well, thank you. As a former prosecutor, I am
sort of quite surprised by the concept that we aren't able to
take the very simple information that is contained in the NCIC,
one of the fundamental databases that we use oftentimes. I
would really appreciate the work of you individuals to help us
identify what we can do. I would be delighted to work with the
gentlelady from California to assist you in those efforts.
If we can facilitate the basis to do what seems like a very
common sense thing, I would ask your assistance in following up
in submitting to us whatever recommendations you have that
would make it easier, and I once again applaud the work of each
of you for the efforts that you do. Thank you.
Mr. Gowdy. I thank the former distinguished U.S. attorney
from Pennsylvania, Mr. Meehan, and now would recognize the
gentleman from New York, Mr. Towns.
Mr. Towns. Thank you very much, Mr. Chairman.
Let me begin with you, Mr. Concannon. Can you explain to me
what kind of quality control system the SNAP program uses to
ensure that only people who are truly eligible for SNAP are
actually receiving it? What do you have in place to detect it?
Mr. Concannon. Thank you very much. As was mentioned at the
outset, I was the State Health and Human Services Director for
25 years in three States, and of all of the Federal and State
benefit programs that are administered, the Food and Nutrition
Service, long preceding my time here, puts a particular
emphasis on what is referred to as the quality control error
rate, meaning people need to be eligible for the program, so
they have to demonstrate, in fact, their eligibility by virtue
of pay stubs or other sources of information.
We also have to make sure that when I present myself, I am
who I say I am. And that QC program, that error rate has gone
from historically up in the 8 to 9 percent range down to below
4 percent, and that has been achieved by encouraging States to
use multiple databases. So, for example, in the States that I
worked in, when somebody would come in and apply, Mr. Concannon
would check against the Labor Department, we check against IRS,
we can check against the child support program list for new
hires every State has to maintain.
Social Security has something called the Social Security
list; the U.S. Department of Health and Human Services has
another list, the acronym of which is PARIS; and now some 47
States rely on that database alone. Back in 2000, only 16
States used it. And the Office of Inspector General, among
others, has urged us to make sure that States make use of these
particular databases. So there are a variety of ways to assure,
one, I am who I am and that when I report my income it is that
which is truly income that is coming into my household.
Mr. Towns. Let me ask you this. How does the SNAP error
rate compare to other Federal programs?
Mr. Concannon. I believe, I haven't really tracked them
lately, but I can tell you that I think it is one of the best
among Federal, State benefit programs. And I know that at a
State level, governors' offices, I know this very directly, pay
careful attention when the QC error rate is made known to each
State. We do this individually. We punish the States that fall
below a certain minimum around QC error rates and we reward
States who do an outstanding job in that regard.
Mr. Towns. Let me ask Ms. Fong, I think it was you that
mentioned the amount of indictments. My question to you would
be what is the conviction rate? You know, sometimes we read
about indictments and that is all we hear, and sometimes people
get all excited because there was an indictment, but there is
no conviction. So what is your conviction rate?
Ms. Fong. I would be happy to provide that for the record,
but my recollection of the data is that we have a very high
conviction rate. It is a significant percentage of our
indictments.
Mr. Towns. The reason I raise this question, I was sort of
thinking in terms of the question that the gentlewoman from
California raised in terms of your budget versus the amount of
money that you bring in, because I was just wondering about
that other piece, which is not a part of your budget, that
would also be a certain amount; I'm not sure how much. So I was
just sort of looking to see in terms of the profit involved
here based on your budget, based on the amount that you are
actually retrieving.
Ms. Fong. I am just retrieving some data here. Just to give
you a general sense of it, in the last few years our monetary
results in SNAP alone have been almost $30 million. And I think
I should just make sure that I provide that for the record, but
our conviction rate is close to 50 percent.
Mr. Towns. Right. And the reason I ask this, you know, I
don't view this Committee as one of those ``I gotcha''
committees; I view it as a committee that is working to save
the Government money and to make certain that people that are
supposed to get service, that they get service, and that we
have an obligation and responsibility on this side of the aisle
to work with you to try to make certain that that happens.
And I want you to know that is my reason for being on it
for, like, 30 years. That is my purpose, and I hope my purpose
never changes.
Thank you very much, Mr. Chairman.
Mr. Cummings. Would the gentleman yield?
Mr. Towns. I would be delighted to yield.
Mr. Cummings. Just real quick.
Mr. Concannon, you said punish the States that have bad
error rates. How do you punish them?
Mr. Concannon. We have sanctioned States or punished them
both by we can recover, we can penalize them financially. We
send them letters, warning letters saying basically you are
falling below a certain threshold. Now, our goal, obviously, is
to get that error rate down so that we provide technical
assistance and training, but we put them on notice, and over a
period of five or so years I think we have sanctioned some 17
States. I will make sure I verify that, but that is what I
recall.
I know we take, it can be a financial penalty. We do pay
attention to the performance of States because we know it
affects the very consumers that members have been asking about
here this morning.
Mr. Gowdy. I thank the gentleman.
When this Committee was looking at Medicare and Medicaid
fraud, I distinctly remember the hearing because there was
outrage, appropriate outrage that the entities that had engaged
in the fraud were still doing business with the government. I
think the gentleman to my right expressed very appropriate
outrage.
So my question, Ms. Fong, is the same as Mr. Cummings' was
then. When you have recidivists, repeat offenders, what do we
need to change about the debarment process so that that is the
default, instead of disqualification? Because disqualification
is an insufficient penalty, to me, for recidivist offenders.
Ms. Fong. I believe that the government suspension and
debarment process is an effective process, and USDA has
implemented regulations and, as a whole, the Department could
do a better job of implementing that. I think that there are
concerns, as the Under Secretary has expressed, about
timeliness and length of time.
I think we need to engage in those discussions because my
understanding is that if you have somebody convicted of a
criminal felony, that disqualification, while it may be
effective vis-a-vis the food stamp program, it is not really as
effective for other government programs. And if you have a
criminal conviction, it should be a pretty quick process,
because the conviction, in and of itself, is sufficient
evidence to proceed, so it should not take a long time to do
this, maybe a month, two months.
Mr. Gowdy. Well, let me say this. I distinctly remember
spending four days in a courtroom prosecuting a lady for
disturbing a school, and I spent three days in a courtroom
prosecuting someone for throwing an iced tea cup at a DEA
agent. So resources and time should not be the only barometer
by which we decide whether a case should be prosecuted or not,
or else we would never prosecute petty crimes. So whatever
needs to be changed in the process, I hope you will give all of
us that have expressed an interest in it a list so we can put a
little more teeth into the punishments when people systemically
defraud the Government.
I want to move to the gentlelady from California and Mr.
Meehan's point about NCIC. You know, NCIC has arrests that
don't result in convictions; it has pardons, it has
expungements; it has other information that law enforcement may
have an interest in seeing, but they are not convictions.
But the remedy is very easy, because schools do it and
churches do it and after-school programs do it: just have one
NCIC-trained operator on site and then redact the non-
convictions. The notion that we can't do background checks on
people who want to do business with the Government, people do
them all the time for schools, churches. Everyone does it.
So redact the information. Go to a law enforcement agency
that does track convictions; go to the clerk of court's office.
There is a way to get that information other than NCIC. And if
there needs to be an exception to NCIC for government agencies
that are looking at fraud, I can't speak for the gentleman from
Maryland, but I would be happy to do that, and I don't think
law enforcement would resist it one bit.
Ms. Fong, you mentioned a 50 percent conviction rate. I
would have been run out of office if I had a 50 percent
conviction rate, and I don't think Mr. Cummings would have been
hired as often as he was hired if he had one. That strikes me
as a low conviction rate. Is it because you are negotiating a
civil punishment instead of a criminal punishment? Does the
statute need to be changed? What needs to be done so we don't
swing and miss half the time?
Ms. Fong. Let me take a look at that data, because I want
to make sure that I get you the right percentage, and I will
provide that for the record. And when we do that, we will also
provide you with our insights on that.
Mr. Gowdy. All right. And my final question for you is
this: If I wrote the numbers down right, you said there are 900
cases, 600 of which are against retailers. I think your
energies and efforts should be directed towards retailers, but
not to the total exclusion of individuals who are providing a
market, if you will, for this kind of fraud. So what do your
numbers look like on prosecuting individuals who either sell
their cards for cash or otherwise engage in fraudulent
activity?
Ms. Fong. Let me just generally address the approach that
we take on law enforcement. We focus our efforts on the
retailers because when we go to the U.S. attorney's offices for
Federal prosecutions, they have certain thresholds for
prosecution which involve dollar amounts, et cetera.
So the dollar amounts tend to be on the retailer side,
which are much higher. When it appears that there are
recipients involved, as there usually are, we partner with the
State prosecutors because those tend to be violations of State
and local laws. So our most effective approaches are when we do
joint work, where we take the retailers to the Federal
prosecutors, the State prosecutors work on the individual
recipients, and we can approach all of those as a global kind
of approach.
Mr. Gowdy. That sounds like a perfect marriage. And you are
going to need witnesses against the retailers, and sometimes
the recipients make very good witnesses.
With that, the gentleman from Massachusetts, Mr. Tierney.
Mr. Tierney. Thank you very much, Mr. Chairman. This is
exactly the type of oversight that we need to be doing on
programs. If we are going to have programs where everybody
agrees that we need to reduce hunger and that we agree that
fraud can't be allowed, if we are going to have the public
support behind it, then I think this is a good thing for this
Committee to be doing on that basis.
In my district, the 6th District of Massachusetts, we have
a lot of tremendous groups working very, very hard to try to
reduce hunger on that. The have seen a 40 percent increase in
people accessing soup kitchens and pantries. With the economy
the way it is, it has been very, very difficult for them.
Massachusetts is the only State that I am aware of that
actually has a line item for this type of issue under the
Massachusetts Emergency Food Assistance Program, but they have
sort of level budgeted.
So all of my folks that are working real hard on this, when
they see a proposal or a 20 percent cut in the SNAP program, it
is panic, because they want to make sure that fraud isn't an
issue as well, but they want to make sure that they have the
resources. When I hear the numbers of 4 percent down to as low
as 1 percent on fraud, but 20 percent cut in the budget, I
understand why they are looking that way.
We have over 15,000 people in our district that benefit
from these programs. I guess 35 percent of them have a
household member over 60; 41-plus percent have a household
member under 18. So we are talking seniors and children, so it
is important that we get this right.
Julie Fontaine, who does our Open Door program up there
covers Amesbury to Beverly, they serve about 5,400 individuals,
about 2,200 families, basically. But then we have Haven for
Hunger, Bootstraps. We have a lot of people working very hard
on that.
So we need to know that we are focusing and this is a
situation on fraud that we need to do.
But I do make the note, Mr. Chairman, this Committee has a
broader portfolio. On the subcommittee on which I sit, we have
been looking at contracts in Afghanistan, and I just know that
on food service I have asked the subcommittee chairman to have
a hearing on that. We just recently had a situation where the
Defense Logistics Agency thought that they were overpaying the
food distributor in Afghanistan $787 billion and have asked for
that money back. That is serious, serious money.
So we need to do it on this program and I am impressed, Mr.
Concannon, that you are continually working on this and your
numbers are keeping it down, and we need to do it right across
the board on that because we can't allow it to happen.
The focus here, what I am hearing, is you think you have it
down well below 4 percent, maybe as low as 1 percent, is that
correct?
Mr. Concannon. Correct.
Mr. Tierney. And you are trying to get all the new
permutations of how people might do fraud. Do you have a new
website?
Mr. Concannon. We have a new website we started up a month
ago and later this spring we will be promulgating regulations
that increase the financial penalties. When a store is taken
out of the program and it is sold to a new owner, I have been
interested in increasing the financial penalties so people
don't just say, well, it was the cost of doing business; I will
flip the store. So we continue to add layers.
Mr. Tierney. You also had an issue with Facebook and
Craig's List and those issues. How did you attack that?
Mr. Concannon. We did. We notified--and that is what the
inspector general was talking about, new types of fraud. That
is an example. We have had several examples that way recently
and we have written to Craig's List, some of the other social
media sites, but we have also amended our regulations so even
the simple intent, the expressed intent to sell your benefits
constitute a violation. We consider that trafficking; you will
be out of the program.
Mr. Tierney. And you have tried to increase some of the
fines for falsifying information, things of that nature?
Mr. Concannon. We have indeed. We have strengthened, again,
the requirements and look for a variety, require a variety of,
for example, tax--these are particularly from stores to the
earlier comments that were made--on looking for additional
corroborating information beyond what we have traditionally
sought, and especially so in locations where we have had prior
issues.
These kinds of issues of trafficking and fraud tend to
congregate in the same location, so we want those spots get
moved up on our high-risk profiles, but we also want to make
sure that we are exhausting every available source of
information to us.
Mr. Tierney. And I think the acting chairman's comments on
the debarment issue, that contractor in Afghanistan that was
overcharging $787 million, they are still operating on a single
course contract; they don't even have to compete for the
contract and they are still in business, so I know that your
efforts at debarring people is important to this Committee,
both sides of the aisle, and moving forward on that. I hope
that you do proceed.
But I am hearing from Pat Baker, who does our Mass. law
reform, tells me you are doing a very good job, and they are
adamant to work with you on that. But people are clever and
they keep coming up with different ways.
One of the ones that they have noticed recently crosses the
border between abuse or people who abuse the system. They are
finding that some women who are supporting their children on
this are being threatened and sometimes even physically
attacked by people to get them to turn over their electronic
card. Are you addressing that issue at all? Has anybody come
across that? Because apparently it is more prevalent.
Mr. Concannon. That would be the kind of incident where we
have a number of partnerships with what we call State law
enforcement bureaus as well, and we would definitely want to
know about that because that absolutely is the worst kind of
extortion. So we would want to work closely as Inspector
General Faulkner mentioned, we work very closely with State
agencies in a variety of things, but that would be horrific. We
would be happy to pursue that.
Mr. Tierney. Good. Well, thank you all. I think it is
important that do.
Thank you, Mr. Chairman.
Mr. Gowdy. I thank the gentleman from Massachusetts and I
apologize to the gentleman from Virginia and the gentleman from
Texas because I got the order out of whack. So I would now
recognize the gentleman from Virginia, as I should have, and
then the gentleman from Texas.
Mr. Connolly. Mr. Chairman, thank you. No need for an
apology. I know the pressure sitting in that chair.
[Laughter.]
Mr. Connolly. But you are always gracious and I thank you.
Mr. Concannon, I am old enough to remember some
groundbreaking books like Nick Katz's Let Them Eat Promises and
Michael Harrington's The Other America, and the groundbreaking
work done by the United States Congress, especially by then
Senator George McGovern on a bipartisan basis with then Senator
Bob Dole to establish the food stamp program to address a
pervasive problem of hunger and malnutrition in the United
States. Has the food stamp program in fact successfully
addressed the issue of hunger and malnutrition in the United
States?
Mr. Concannon. I believe the food stamp program has been
one of the most effective line efforts to reduce hunger in the
Country, and it also has reduced poverty. We know even the
Census Bureau, in the last year, pointed out that last year
alone 4 million additional Americans would have sunk below the
poverty line absent the food stamp program.
As has been mentioned here today, almost half, 47 percent
of the beneficiaries of food stamps are children; another 8
percent are senior citizens over 60; about 20 percent of the
households have a person with disabilities. And increasingly
these days the food stamp program is serving households in
which 41 percent of the household members live in a household
where one of the adults is earning, that is, is in the
workforce.
And I refer to that group of beneficiaries as often the new
faces of SNAP. These are folks who have been displaced in this
difficult economy. They may not be getting as many hours at
their work, so it is really important that the SNAP program be
responsive.
Across the Country, SNAP is now serving 72 percent of the
eligibles in the Country, and that has been moving upwards from
in the mid-50s, then the mid-60s, now 72 percent; and we are
serving more than 90 percent of the eligible children across
the Country. There are a few States that are still far below
the rest of the Country that we continue to dialogue with and
work closely with, but the program really is responding as it
should to the needs of folks in this Country. It is the most
inclusive of both State and Federal feeding programs.
Mr. Connolly. So if I understand your testimony, in the 40-
plus years since we started this program, it has in fact
achieved its desired result in reducing hunger and malnutrition
in rural and parts of urban America, as well as reducing the
poverty rate in the United States.
Mr. Concannon. Yes, indeed. A measure that the Federal
Government uses that we publish reports on annually is food
insecurity, and we have data that points to the impacts of the
food stamp program, as it is still known in 20-something
States.
Mr. Connolly. And what percentage of food stamp recipients
are children?
Mr. Concannon. Forty-seven percent.
Mr. Connolly. Forty-seven percent. And that translates into
how many people?
Mr. Concannon. Well, there are 46 million people, so in
round figures it is somewhere around 21 or 22 million.
Mr. Connolly. Children.
It is too bad the title of this hearing is Food Stamp Fraud
as a Business Model: USDA's Struggle to Police Store Owners,
because it seems to suggest or one could infer from that title
that we have already prejudged the case and apparently fraud is
rampant, and it kind of begs the question of the purpose and
original mission of this program, and whether it, in fact, has
achieved that mission, some fraud that has to be stamped out
notwithstanding.
But let me ask you a question. Given that title, what
percentage of SNAP funds were improperly issued last year? This
Committee, the subcommittee I sit on, has looked at improper
payments. What percentage of the total program has been
classified as improper payments?
Mr. Concannon. Last year we achieved record low. We and
States--I should point out we work closely, all of our benefits
are extended through States and we achieved an improper payment
rate of 3.81 percent. About 3 percent of that was overpayments
and just under 1 percent of that was underpayments, meaning the
beneficiary, based on his or her income or household income, 3
percent of them received more than they should have; less than
1 percent received less. This is part of our quality control
effort.
Mr. Connolly. And of that total--I am sorry, we are
running----
Mr. Concannon. Okay.
Mr. Connolly. Mr. Chairman, your pitch hitter, Mr.
Chairman, offered to give one extra minute, I think.
Chairman Issa. [Presiding] He is so much kinder than I
would be.
[Laughter.]
Mr. Connolly. I lucked out, Mr. Chairman, that is right. So
I would ask the Chair to honor that request.
But 3.8 percent, roughly, of improper payments, so all of
that was not fraud?
Mr. Concannon. Correct.
Mr. Connolly. What percentage of fraud again?
Mr. Concannon. The fraud figure that we have is 1 percent.
Mr. Connolly. And have we reduced improper payments over
the last decade or is that going up?
Mr. Concannon. We have considerably--that is one of the
charts that I think we handed out. We have reduced it
considerably over the past decade and continue to focus on it,
as well as reducing fraud in the program also.
Mr. Connolly. So it is good that this Committee is having
this hearing to absolutely highlight there are still problems,
and our goal should always be to get it to zero. But let's not
overstate the problems and let's not lose sight of the mission,
especially at budget time, when some people might be thinking
of $100 billion cut in the program.
Ms. Fong, you mentioned to us that you still think that Mr.
Concannon's operation still could do a better job of debarment
and suspension, correct?
Ms. Fong. That is correct.
Mr. Connolly. Mr. Concannon, could you address that in my
final question?
Mr. Concannon. Well, as I mentioned----
Chairman Issa. In your second overrun minute.
Mr. Connolly. I am sorry, Mr. Chairman.
Chairman Issa. Go ahead, please.
Mr. Concannon. Thank you. Well, I mentioned earlier that we
believe that the approach that we take of moving people out of
the program immediately is a more effective way and to most of
the beneficiaries, the stores, I should say, that we are
concerned with don't do other business with the Federal
Government. But even to cover that we have been working with
the General Services Administration to have these stores or
companies put on the excluded parties list system, which will
prevent them from being able to participate with other
government programs.
Now, we are also continuing to have dialogue with the
Office of the Attorney General to see if there are ways we can
do both. Our desire--we don't have an aversion to the debarment
process; it is that it slows it down, and we like the authority
we have right now. When we find that a store has misled us
about their business relationships or where they have been
debarred before, we can take them out of the program. We send
them a letter, we give them 10 days; they are out. I don't have
to give them more hearings, I don't have to give them more due
process; they are gone.
Mr. Connolly. Mr. Chairman, I thank you for your
consideration.
Chairman Issa. Of course. And because I know you want full
disclosure, Ms. Faulkner, I think you had something to say on
those questions too.
Ms. Faulkner. I wanted to talk about what my SNAP
trafficking program has found in the fiscal year 2010-2011. We
conducted 584 just SNAP trafficking investigations. We
scheduled 158 administrative hearings with a total restitution
we received back of over $250,000. We disqualified 77
recipients of SNAP benefits who committed trafficking
violations, which really gave us a cost savings of close to
$500,000. And that is with the limited staff that we have.
So in Pennsylvania, as I stated earlier, we are seeing more
fraud, we are, and that we have little staff. We hope to get a
little bit more, but that was our 2010-2011 alone, and we don't
expect it to go down.
Chairman Issa. I know Ms. Fong has previously said that you
don't necessarily concur with those figures independently at
this point, and I would only ask that since the Secretary said
that they are going to redo them again, I would hope that we
could expect them to be mutually agreed to by metrics that then
you could essentially concur with.
Ms. Fong. Yes. We have some work planned for this year to
take a look at the methodology and those numbers.
Chairman Issa. Thank you.
We now go to the gentleman from Texas, Mr. Farenthold.
Mr. Farenthold. Thank you, Mr. Chairman.
I would like to deal with something that I hear about from
my constituents, and that is the stretching of actually items
that qualify under the program. For instance, I received a
photograph from a constituent of a sign outside of a place that
prepares pizzas to order, they just don't cook them. So
apparently it qualifies under the letter of the law, but
certainly I wouldn't think under the spirit of the law.
The sign out there says Accepts the Lone Star Card, which
in Texas is our method for doing that. You also see an instance
of grocery stores and convenience stores also offering quite a
few hot food items that I would think would not qualify under
the program.
I guess I will address this to Ms. Fong. What are you all
seeing with respect to that and what can we do to combat that?
Ms. Fong. We, as far as I know, have not received any
allegations along those lines that would indicate fraud or
criminal activity. I would defer to the Under Secretary because
I think it is really a policy question.
Mr. Farenthold. All right. Mr. Secretary?
Mr. Concannon. I would be happy to try to answer it. To the
second part of your question, when you look at, first of all,
consumers in the program cannot buy hot foods, period. They can
buy frozen foods, and there are pizza chains that have been
admitted into the program over time. I mentioned earlier in my
testimony one of the definitions of who is eligible for the
program in terms of the 231,000 providers is set in the statute
through the Farm Bill, and it requires a minimum number of
certain food groups, it is that we refer to as the depth of
stock requirement; and I would like to see that strengthened
because----
Mr. Farenthold. Let me follow up on that maybe with Ms.
Hatcher, because we have the technology now in place through
UPC codes that we can actually determine what items are
qualified and don't qualify, and I guess, if you wanted to get
into a Big Brother scenario, could actually probably link up
who is buying what. And with the cost of UPC readers $20, $30
to hook up to a PC, I can't imagine any store being too small
to implement it. Do you see some technological solutions to
these problems?
I will let you answer it and then I will come back to the
Under Secretary.
Ms. Hatcher. Sure. Well, I guess the question about hot
foods, that one is already taken care of now because our
members, and we educate them very clearly, hot foods are not
eligible, and we code in anything that is a hot food item as
ineligible in the store. Then I think his question on the pizza
thing, it would depend exactly. If it is a frozen pizza in the
frozen section, then it would be eligible; if it is a heated
pizza that is in the deli area, it would not be eligible.
Mr. Farenthold. It just strikes me a made to order pizza
cooked or not cooked is stretching it.
Mr. Under Secretary, I guess my question to you is do you
see a technological solution? Again, another complaint that I
hear consistently from constituents is people will go in and
buy highly processed food with low nutritional value. I don't
want to get into the business of dictating what people do and
don't eat, but to some degree our money, our rules. I mean,
what do you see as an optimum situation there?
Mr. Concannon. Unfortunately, on the processed food
question, I am not talking about those mini carrots that come
from larger carrots, I am talking about processed food that has
too much sodium and too many trans fats and so on, all of us,
unfortunately, as Americans eat more processed food than any
Country in the world.
So we are trying, through another part that I have
responsibility for, the Center for Nutrition Policy, to
encourage Americans to eat healthier, more fruits and
vegetables, My Plate, it is a very simple but I think a very
effective icon. And we are also encouraging access to farmer's
markets for, in your case, Lone Star beneficiaries to try to
nudge them, direct them to buying healthier, often locally
grown foods.
But I still remain very interested in increasing the
requirement for these small stores to have better choices of
fresh fruit, healthier foods for people, rather than just the
overabundance of processed food.
Mr. Farenthold. All right, I see my time has expired. Thank
you very much.
Chairman Issa. I thank the gentleman. All time has expired.
I want to thank our panel of witnesses. I think this was
informative. Contrary to what might have been perceived, this
was a limited hearing, limited to businesses who in fact
defraud the government and deny our children, that 22 million
or more children, the receipt of the actual food rather than
trading 50 for 100.
Our intention is to allow for at least five days for
members who are not able to get here for questions to
supplement by asking all of you questions. Would you agree to
respond to them if you get them in writing?
Mr. Concannon. Certainly.
Chairman Issa. I want to thank you. I also would like to
ask unanimous consent that any witness who thinks of something
that you didn't say that wants to supplement their own record
be allowed to do so. Without objection, so ordered.
We stand adjourned.
[Whereupon, at 11:08 a.m., the committee was adjourned.]

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