The Scam Remains the Same

A $15 million food-stamp con reveals a remarkably durable racket.

Queens of the Stone Age, with And You Will Know Us by the Trail of Dead and Burning Brides Agora Theatre, 5000 Euclid Avenue 7:30 p.m. Tuesday, September 10, $18.50 advance/$20 day of show, 216-241-5555.
While there were customers who used food stamps to - buy Bud Light at Bowie's, there also were single - mothers who needed Huggies for their kids. - Walter  Novak
While there were customers who used food stamps to buy Bud Light at Bowie's, there also were single mothers who needed Huggies for their kids.
The faded red words painted on the front of Bowie's Market announce "We Accept Food Stamps & WIC." It's no longer true -- the store stopped taking welfare coupons three years ago. But when it did, a more precise pitch might have read, "We Accept Food Stamps & WIC for Beer, Cigs & $$$."

There was, however, scant reason to advertise the East Side market's illicit dealings. Word spread on its own.

"Everyone knows a lot of stores around here let people buy things [with food stamps] they're not supposed to," Craig Wilson says. The 29-year-old public housing administrator is talking outside Bowie's, after picking up a bag of chips. "It's illegal, but it's kind of a barter system, too. If somebody needs to buy light bulbs, and all they have is stamps, the stores sell it to them."

At Bowie's, on East 79th near Kinsman, customers also could score liquor and cigarettes, or swap their stamps for cash. So could patrons of four other small groceries owned by Abdellatif and Shahrazan Abuzahrieh -- known to most as Louie and Rose -- and their business partner, Ali Jaber Faiz. If it was against the law, the scheme nonetheless held mutual benefit: Customers got what they wanted; the Abuzahriehs and Faiz got rich.

The trio fleeced at least $15 million from federal coffers starting in 1994, laundering money through dozens of banks in Northeast Ohio and the Middle East. Authorities finally bagged them, in March 2001, after a two-year probe. In July, Louie and Faiz pleaded guilty to welfare fraud and were sentenced to 41 months; Rose received three years' probation. Another indicted accomplice was arrested last month and awaits trial. A fifth alleged conspirator remains at large in Jordan.

The bust ranks as Northeast Ohio's biggest for food-stamp abuse. The next largest weighs in at a mere $2.5 million, and most tip the scales at less than $100,000. But apart from its size and the element of Mideast intrigue, this con differs little from the sort that has dogged the food-stamp program since its birth in 1964. It is, federal officials shrug, just another example of the fact that fraud happens.

"There are 5,000 authorized food-stamp outlets in Ohio," says Lawrence Rudmann, regional spokesman for the Department of Agriculture, which oversees the program. "No system is foolproof. Inevitably, someone is going to try to cheat."

The scams haven't changed with the times. The two most durable: After buying stamps off customers at a discounted rate -- usually 50 cents on the dollar -- vendors redeem the benefits for full cost with the government. Store owners also allow welfare recipients to buy non-food items, then ring up the sale as a food-stamp purchase and charge a higher price.

What looks like a nickel-and-dime swindle sustains a major racket. A 2000 federal study estimated that vendors bilk the program of $660 million every year. That's down from $815 million a decade earlier -- a drop ascribed to the switch from paper stamps to electronic benefits cards. Still, $660 million isn't exactly like dipping into the take-a-penny jar.

"The system kind of begs for [fraud], in a way," says Assistant U.S. Attorney Richard Blake, co-prosecutor on the Abuzahrieh and Faiz cases. "You got a drug addict who needs a hit and a store owner who wants money. The addict takes his $50 in food stamps, gets $25 in cash at the store, then goes down the street and makes a buy." The owner turns around and bills the government $50. Presto: instant profit.

Court records show the Abuzahriehs and Faiz combined illegal sales and creative bookkeeping to reap their fortune. In 1996, for example, they redeemed $493,000 in food-stamp and WIC coupons through Bowie's. The figure represented a whopping 99 percent of total food sales at the cramped, five-aisle market. The next year they went further, redeeming $636,000 -- an impossible 124 percent of total food sales.

The threesome racked up similar percentages at their other stores: Hough Savmor on East 66th, Midtown Savmor on East 105th, Moe's Food Mart on East 116th, and Sunshine Food Market on Parkwood Drive. Hough and Midtown were the cash cows, milking as much as $2.3 million in welfare coupons in one year.

The scheme afforded the Abuzahriehs and Faiz lifestyles far away from the urban blight their stores wallowed in. Louie and Rose owned two large houses in Westlake and five cars. Faiz drove a Mercedes, and authorities found $470,000 in cash in his Westlake home when they arrested him. (Attempts to reach Louie, who's already incarcerated, and Faiz were unsuccessful. Rose declined comment.)

Despite the huge numbers, authorities broke the case only after receiving an anonymous tip in 1999. The Northern Ohio Organized Crime Task Force spent the next two years monitoring the five stores and scouring their financial records.

In court, defense attorneys portrayed the Abuzahriehs and Faiz as absentee owners who were unaware that employees rang up beer sales as milk or traded stamps for cash. Officials counter that Louie and Faiz were control freaks with prior convictions for food-stamp fraud. They recount the story of a clerk who testified that Faiz once made her reimburse him 13 cents when he learned that her till was short at the end of a shift.

"They weren't absentee owners," says Secret Service agent Tom Lynch. "Who had all the money, the homes, the cars?"

Yet Bowie's regulars couldn't care less about the ill-gotten loot. Instead, they're grateful the store owners were willing to operate markets in some of Cleveland's poorest neighborhoods. While there were customers who used food stamps to buy Bud Light and Winstons, there also were single mothers who needed Huggies and Crest.

"Some people, they can't afford to buy other necessities," says Gerald Patterson, who works at a nearby coffee shop. "What are they supposed to do?"

Adds Dominique Giles, a frequent customer: "What the owners did was wrong, but it's not like you don't see other stores doing the same thing."

Among the hundreds of food-stamp retailers in Northeast Ohio, 30 were disqualified from the program last year; another 26 had been banned through June of this year. As much as the numbers offer proof of pervasive fraud, however, there's another way to interpret them: The stores give people what they want.

In areas where Tops, Giant Eagle, and Heinen's are as distant as Iceland, downscale groceries like Bowie's respond to the market demands of poverty. Where authorities see food-stamp abuse, welfare recipients see economic reality.

"The people in the projects who come to this store, they can't pay those prices at Tops," says a Bowie's cashier, who asks that her name not be used. "They can't even get to those stores in the first place."

"I don't like that they only gave people 50 cents for a dollar [of welfare coupons]," says David Odum, who buys beer at the store. "But I know that someone on food stamps has to get by."

Orville Stifel, who represented the Abuzahriehs, contends they turned a legitimate profit from in-store check-cashing services, processing about $1 million a month at Midtown Savmor alone. "These stores were like lifesavers for people."

Not anymore. Of the five markets seized by authorities, only Bowie's and Sunshine remain open, and both will close in the next couple of months. For Bowie's faithful, that's the true crime.

"I don't want to see this place shut down," Patterson says. "A lot of people rely on it."

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