Back alley deals bad deal for taxpayers



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Posted on October 6, 2010 at 10:00 PM

Updated Wednesday, Oct 6 at 10:54 PM

SEATTLE -- There’s a line at the back door of a restaurant in an alley of Seattle’s International District. The reporter encounters several men who aren’t happy to see our cameras.

“You’re barking up the wrong tree,” says one man.

The reporter asks employees standing in the doorway if he can talk to the person in the photos he’s holding. Employees at the Four Seas Restaurant do not tell him who the man is.

This summer, our hidden camera was rolling as he paid cash for food stamps -- a federal crime. As we taped the encounter in the alley, federal agents were just blocks away. They stormed two businesses that they say were fronts for millions of dollars of food stamp fraud.

Our camera also recorded transactions in these stores over the summer, which paid cash for food stamps at half-price. They were then submitted to the federal food program to be reimbursed for the full amount.

Food stamps can only be used to buy basic foods, which is why addicts in particular are willing to sell them at half their value.

Our restaurant investigation

Federal authorities were not aware of the food stamp fraud at the Four Seas Restaurant.

A man who we’ll call “Rob” told us how the scheme works.

“Just about every street person downtown that gets food stamps does this -- and they immediately go straight to the crack dealer,” he said.

“You approach their back door. You knock on their back door,” said Rob.

This summer, the man at the back door would only accept a minimum of $100 in food stamps. Restaurants are not allowed to enroll in the food stamp program. So, we were told to wait in the alley while the man walked away for only a few minutes. He returned with $50 -- the cash payment for $100 in food stamps.

The Four Seas owner wouldn't talk to us on camera but later told us he didn't know what was going on at his back door. Some of the men there insisted they were not selling their food stamps.

While no one at the restaurant would tell us who this man is, we found him a block away. He ran from the reporter when he asked to talk to him. He’s the one man who has managed to stay a step ahead of the law, at least for now.

So far, federal prosecutors have charged three women with food stamp fraud, including the owner of one store that is accused of running $2 million of mostly fraudulent transactions.