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SEATTLE -- The scene is hardly cold, but already criminals are back at work in a Seattle business district. The KING 5 Investigators have uncovered more food stamp fraud in a neighborhood raided by federal agents just four months ago.

How it works

For several weeks, KING 5 crews watched the activity in and around the Viet Wah Supermarket. The business is a long-time merchant on the block near 12th Avenue South and South Jackson Street in Seattle.

A man we call Peter showed KING 5 how the scheme works. Peter receives $130 in food stamps each month loaded onto a state-issued debit card called a Quest Card. Peter waited outside the Viet Wah, until a woman motioned him over to her.

She asked me how much, he said. I told her 50 , and she gave me 25 dollar in cash.

The woman took Peter s food stamp card and asked him for his PIN. She returned it to him a few minutes later, with the $25 in cash. Peter later confirmed that $50 in food stamps had been deducted from his card.

Trading food stamps for cash is a state and federal crime.

Yet, over several weeks, KING 5 watched these transactions again and again out in the open.

The crimes against the $70 billion federal food stamp program are especially surprising in this part of Seattle s International District because federal agents conducted major raids at 12th and Jackson four months ago.

In October, they arrested three people in raids on the Hop Thanh supermarket and Seattle Chinese Herb and Grocery.

They accuse the businesses of paying half price cash for food stamps and redeeming them for full value from the federal government, earning $2.5 million profit in one year alone.

The federal investigation spanned three years.

At the Viet Wah, it seems they've learned from their neighbor's downfall.

The rice ruse

In one transaction, Peter was escorted into the store and instructed to buy bags of rice and soy sauce. At the register, more than a hundred dollars was deducted from his food stamp card. Out in the parking lot, he was paid in cash and told to leave the rice behind.

The lady got my receipt, handed me the money and the shopping cart went right into a roll-up door, said Peter. Obviously, it went around to be put on the shelf again to be re-sold.

We watched several transactions where bags of rice were purchased but left behind. The fraudsters appear to be evading the type of cash register records presented as evidence in the recent federal cases. The stores scanned food stamp cards so fast and frequently, it was obvious they weren't actual grocery transactions. The rice ruse may throw off inventory monitoring that federal agents use to detect food stamp fraud by merchants.

Each time we saw the transactions, Cuc Pham, 57, appeared to be calling the shots.

No, I don t give. I don t give, Pham said in broken English when KING 5 asked her why she was giving people cash for their food stamps.

When asked why she was doing the same things that people up the street had just been arrested for Pham answered, I don t know. I go home now.

Pham walked away.

The response

The United State s Department of Agriculture, which runs the food stamp program, has refused to discuss these fraud cases with KING 5. Officials at the Food and Nutrition Service of the USDA and the Office of Inspector General, which investigates fraud, declined on-camera interviews.

Representatives of the Viet Wah denied that the store is in any way involved in the fraud. Viet Wah Trading Corporation HR manager Annie Nguyen says the store has twice called police when they ve noticed food stamp trafficking in their parking lot. Store manager Dien Vuu also denied that the Viet Wah is involved in food stamp fraud and blamed the problem on people who are outside the store in the parking lot.

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