FORT SMITH (KFSM) — The owners of three convenience stores in Fort Smith have admitted to defrauding the IRS and the U.S. Department of Agriculture of nearly $400,000 by illegally using food stamps to buy products for resale in their stores.
Raja Khani Zaman and his two sons, Haroon “Harry” Zaman and Ahmed Zaman, all pleaded guilty Wednesday (Dec. 19) in U.S. District Court to conspiracy to traffic Supplemental Nutrition Assistance Program (SNAP) benefits.
Raja and Harry Zaman also pleaded guilty to money laundering conspiracy and filing a false tax return, according to court documents.
Federal prosecutors said the men used four primary methods in their scheme, which was carried out between 2012 and 2016 at Fenny’s, Park Mini Mart and Grand Convenience:
- Allowing SNAP recipients to purchase prohibited items at twice the price
- Purchasing SNAP benefits from SNAP recipients for cash
- Asking SNAP recipients to buy items in the Zaman’s convenience stores and providing cash in return
- Taking SNAP recipients to other stores to purchase items through SNAP for resale at the Zaman’s convenience stores
Raja and Harry Zaman would deposit the proceeds from these illegal transactions into bank accounts as legitimate earnings, which were later under-reported on their tax returns from 2013 to 2015, according to court documents.
SNAP is a federal program that offers nutrition assistance to low-income individuals and families, according to the USDA.
SNAP, commonly referred to as food stamps, is administered by the states. It’s the largest program in the domestic hunger safety net, according to the USDA.
Prosecutors estimated the Zamans owe $54,161.64 to the USDA and $344,817 to the IRS. The men have agreed to pay restitution as part of their plea deal.
Investigators used confidential informants to conduct controlled transactions of SNAP benefits that were later used to buy products for resale in the Zaman’s stores, according to court documents.
The Zamans are free on $5,000 bonds. They were required to surrender their passports and travel only within the immediate area for employment purposes.
The Zamans face up to 20 years in prison and a $250,000 fine just for trafficking SNAP benefits.
Money laundering carries a maximum sentence of 20 years and a $500,000 fine, while filing a false tax return is punishable by up to three years in prison and a $100,000 fine.
A sentencing hearing hasn’t been set.