The owners of a West Baltimore carryout pleaded guilty yesterday to defrauding the federal government of at least $500,000 by buying the stamps at a cut-rate price and redeeming them at face value.
Sentencing for the three family members, who owned and operated J&J; Carryout and Grocery in the 1200 block of Laurens St., will be March 9 at U.S. District Court in Baltimore.
L Each could receive five years in prison and a $250,000 fine.
Jung Pak, his mother, Ok Sun Pak, and his brother, Chong Pak, were charged earlier this month with paying 60 cents in cash for $1 in food stamps. Under federal law, the stamps must be used to purchase food and cannot be swapped for cash.
Court papers say that the stamps were redeemed at face value and that three family members used more than $126,000 obtained in the scheme for credit card accounts, insurance, a graveyard marker, jewelry and a television set.
They also paid college tuition and bought a 1994 Honda Accord and a 1993 Acura Legend, court documents say.
The federal indictment follows a yearlong investigation by the inspector general's office for the U.S. Department of Agriculture, which authorizes stores to accept food stamp vouchers.
Chief investigator Shane T. Gilmore said in court papers that officials unveiled the scheme by using undercover officers to make the illegal transactions, by reviewing store receipts, by videotaping customers and by sorting through the store's trash.
Court papers say that in 1992 the store reported $146,000 in food sales and $186,500 in gross sales.
But a review of food stamp redemption records for 1993 indicated that the store redeemed $673,456 in USDA food stamp coupons.
Also, the court papers say, more than 70 percent of the transactions were in even dollar amounts, leading investigators to question whether the stamps had been used to buy food.
Investigators also used video cameras to monitor J&J; customers. "A majority of these individuals entered the store, stayed inside for a few minutes, and then exited the store with no grocery items in hand," court documents say.
A look through the store's trash on Dec. 6, 1993, and on Feb. 10, 1994, disclosed a handwritten note for "2 Pepsi" and "$170," the documents say.
According to court papers, the investigation also showed that the Paks had a pattern of "unusual" withdrawals from the First National Bank of Maryland in Woodlawn, cashing checks written to themselves for $1,000 to $5,000, and requesting $20, $10 and $5 denominations.