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Grocery Store SNAP Defense Lawyers
|Last Updated on: 5th October 2025, 03:16 pm
Your corner store in Washington Heights processes maybe 200 EBT transactions daily, mostly small purchases under $20 – milk, bread, baby formula. Then the certified letter arrives from USDA’s Food and Nutrition Service claiming “irregular transaction patterns” based on their ALERT system flagging 47 transactions over $50 in the past quarter. What they don’t understand is that extended families shop together on the first of the month, pooling benefits for bulk purchases. But their algorithm sees fraud where you see community shopping patterns.
The USDA gives you ten days to respond. Not ten business days – ten calendar days including weekends. Miss that deadline and permanent disqualification becomes nearly automatic. The letter lists specific transactions by date and amount but not customer names, making it impossible to investigate without your own detailed records. Most bodegas don’t keep transaction-level data beyond what their POS system requires. You’re defending against accusations you can’t fully understand with records you don’t have.
Understanding SNAP Compliance Requirements
The Code of Federal Regulations, specifically 7 CFR § 278, governs SNAP retailer participation. Eligible food items include unprepared foods, seeds for growing food, and cold prepared foods meant for home consumption. Ineligible items include hot prepared foods, alcohol, tobacco, vitamins, medicines, and non-food items. But the distinctions get murky. A cold rotisserie chicken from yesterday is eligible. The same chicken heated is not. A sandwich from the deli case is eligible unless it’s toasted, then it’s not.
Training employees on these distinctions isn’t enough. You need documented training with signed acknowledgments, refresher training every six months, and clear policies posted at each register. When USDA investigators arrive – and they will – they’ll test your cashiers with trick purchases. An energy drink might be eligible (if it has a nutrition label) or ineligible (if marketed as a supplement). Your nineteen-year-old cashier making $15 an hour needs to know the difference or your store faces permanent disqualification.
Todd Spodek here – represented a Jackson Heights grocery store where one cashier accepted SNAP for hot coffee three times over two months. Total value: $7.50. USDA sought permanent disqualification claiming “trafficking” because the pattern suggested intentional violation. We proved the cashier, recently arrived from Bangladesh, misunderstood that “hot beverages” meant prepared drinks, not packaged coffee. Case resolved with warning letter, but only after $15,000 in legal fees fighting over less than $10 in questionable transactions.
How ALERT System Triggers Investigations
USDA’s Anti-Fraud Locator EBT Retailer Transactions (ALERT) system uses algorithms to identify suspicious patterns:
- Multiple high-value transactions (over $50)
- Rapid sequential transactions (multiple within 5 minutes)
- Even-dollar transactions ending in .00
- Transactions outside normal business patterns
- Unusually high average transaction amounts compared to similar stores
The system doesn’t account for legitimate explanations. A bodega near NYCHA housing sees first-of-month bulk shopping. Stores near schools see rapid transactions at 3 PM when parents pick up kids. Even-dollar amounts happen when customers ask “what can I get for $20?” But ALERT sees patterns, not context.
The trafficking charge letter arrives after ALERT accumulates enough flags, usually 90-120 suspicious transactions over three months. By then, the investigation is months old. Security footage is overwritten. Employees have moved on. Receipts are filed in boxes no one wants to search through. You’re defending against historical allegations with degraded evidence.
Criminal Prosecution Through EDNY and State Courts
When USDA refers cases for criminal prosecution, they go to either the Eastern District of New York federal court at 225 Cadman Plaza or state court through the Brooklyn DA’s office. Federal prosecution under 7 U.S.C. § 2024 carries up to five years prison and $250,000 fines. State prosecution under NY Penal Law § 155 (larceny) and § 176 (insurance fraud) can result in grand larceny charges if the amount exceeds $50,000.
The Brooklyn DA’s Office has a dedicated Public Assistance Fraud Unit that works with HRA investigators. They aggregate multiple small violations into felony-level grand larceny charges. That pattern of accepting SNAP for cigarettes, even $5 at a time, becomes grand larceny when aggregated over months. Store owners face arrest at their businesses, in front of customers and employees.
Federal prosecution is actually preferable to state. EDNY judges understand business operations and often approve deferred prosecution agreements. State court judges, especially in Brooklyn and Queens, treat store owners like common thieves. One client, owning three stores, was offered pretrial diversion in federal court but faced 2-4 years state prison on identical conduct because the state aggregated all three stores’ violations.
The Permanent Disqualification Death Sentence
Permanent disqualification from SNAP isn’t just losing food stamp revenue – it’s often bankruptcy. In East New York, Brownsville, or Hunt’s Point, SNAP benefits represent 40-60% of gross revenue for small grocers. These aren’t fancy organic markets with diverse revenue streams. They’re corner stores serving food deserts where residents have no other options.
The disqualification is truly permanent. No appeals after five years. No transferring the license to family members – USDA tracks ownership through SSNs and EINs. Sell the store? New owner can’t get SNAP authorization if you have any financial interest. One violation by one employee can destroy a family business built over decades.
The racial impact is stark. Most small grocers in NYC’s food deserts are owned by immigrants – Yemeni in Brooklyn, Dominican in the Bronx, Korean in Queens. They serve predominantly Black and Latino customers using SNAP benefits. When stores get disqualified, communities lose food access. But USDA treats every violation like intentional fraud rather than cultural misunderstanding or training failures.
Defense Strategies That Actually Work
Effective defense starts before the charge letter arrives. Implement these prophylactic measures:
Install cameras covering every register with 90-day retention minimum. Time-stamped video proving legitimate transactions defeats most trafficking allegations. Cloud storage costs $200 monthly but saves your business.
Maintain transaction logs beyond POS records. Note unusual purchases, customer names for large transactions, reasons for voids or refunds. When USDA questions specific transactions, detailed logs provide context their algorithms miss.
Document training obsessively. Weekly refreshers, signed acknowledgments, tests on eligible items. When investigators test your employees, point to training records showing good faith compliance efforts.
During investigation, never respond without counsel. That ten-day deadline can be extended with proper legal request. Initial responses lock you into positions that become problematic later. Professional representation signals seriousness and often leads to better outcomes.
Negotiating With USDA and Prosecutors
USDA offers several resolution options before permanent disqualification:
Civil Money Penalties (CMP) preserve SNAP authorization while paying fines based on violation severity. First-time violations might pay $10,000-$30,000 to avoid disqualification. For stores dependent on SNAP revenue, it’s worthwhile.
Temporary disqualification (6 months to 5 years) hurts but isn’t fatal. Stores can survive temporary loss if they prepare – extending credit to regular customers, partnering with food pantries, seeking community support.
Compliance agreements require enhanced training, additional reporting, and regular audits but maintain SNAP authorization. USDA monitors closely but stores keep operating.
The key is early negotiation before positions harden. USDA attorneys are reasonable when approached professionally with documented remediation efforts. Show you’ve terminated problem employees, enhanced training, installed better systems. They want compliance, not destruction of small businesses.
Call Now Before Your Response Deadline
212-300-5196
That USDA letter has a response deadline that’s probably next week. Every day you wait limits options. We need time to review transaction data, interview employees, gather exculpatory evidence. The ten-day deadline can be extended but only if we file the proper request before it expires.
If you’re already under criminal investigation, HRA investigators are building their case now. They’re aggregating transactions, interviewing former employees, working with USDA to establish trafficking patterns. Once arrested, negotiation becomes harder and more expensive.
Store owners often think they can explain misunderstandings directly to investigators. You can’t. USDA and HRA investigators are building criminal cases, not conducting compliance reviews. Everything you say becomes evidence against you. That innocent explanation about customer shopping patterns becomes admission of knowledge about suspicious transactions.