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Juan Perdomo ran M&R Supermarket in Newark, which accepted Supplemental Nutrition Assistance Program (SNAP) payments through government-issued debit cards issued to families in need.
The federally funded program, formerly known as food stamps, allows users to purchase food, but the benefit cannot be exchanged for cash.
Authorities say Perdomo, along with his son, Jose, and wife, Maria Rodriguez, did just that, exchanging SNAP benefits for cash with an undercover law enforcement agent nearly a dozen times.
In one case, for instance, a recipient used a SNAP card to buy $5 worth of items, according to a federal complaint.
The store debited $75, gave the customer some cash from the overage and banked the rest, says the complaint, on file in U.S. District Court in Newark.
Red flags blared for investigators after M&R redeemed around $2.9 million in SNAP benefits in an 11-month period – and a reported $5.6 million over less than three years.
Looking closer, authorities found a large number of transactions for more than $50 at the small grocery store.
Both men eventually pleaded guilty to SNAP fraud.
The elder Perdomo also pleaded guilty to aiding in the preparation of a fraudulent tax return.
Jose Pedorno, who also pleaded guilty to money laundering, was sentenced Thursday in U.S. District Court in Newark to 15 months of home detention and five years of probation.
His father was sentenced to 38 months in federal prison, all of which he must serve. There’s no parole in the federal prison system.
Both were also ordered to pay $4.8 million in restitution to the U.S. Department of Agriculture.
Juan Perdomo also was ordered to pay $400,099 in restitution to the IRS and was also sentenced to three years of supervised release.
The charges against Rodriguez, who is listed as the store’s owner, are still pending.
U.S. Attorney Craig Carpenito explained the way SNAP works:
“Every SNAP recipient receives an Electronic Benefit Transfer (EBT) card, similar to a debit card, to use to make purchases. Every retailer authorized to accept SNAP benefits has an EBT terminal. Food purchases are made by swiping the card at the terminal.
“After the customer enters a Personal Identification Number (PIN), the EBT terminal verifies the PIN, determines whether the customer’s account balance is sufficient to cover the proposed transaction, and informs the retailer whether the transaction should be authorized or denied.
“The amount of the purchase is deducted electronically from the SNAP benefits reserved for the customer and the purchase amount is credited to the retailer’s designated bank account.”
An undercover law enforcement agent made 11 “purchases” at M&R Supermarket, where Juan and Jose Perdomo exchanged money for SNAP benefits, Carpenito said.
Bank records also showed Juan Perdomo making several cash withdrawals of more than $10,000 each from the store’s account, as well as several checks cashed for similarly large amounts by Jose Perdomo, the U.S. attorney said.
Carpenito credited special agents of the U.S. Department of Agriculture – Office of Inspector General, the U.S. Department of Homeland Security, Homeland Security Investigations (HSI), and IRS - Criminal Investigation with the investigation leading to the guilty pleas and sentences, secured by Assistant U.S. Attorney Samantha Fasanello of his Criminal Division in Newark.
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