Andrew Dys

Who is cooperating against food stamp fraud? Rock Hill store owners who pleaded guilty

A Rock Hill convenience store continues to be the focus of ongoing prosecutions into food stamp fraud.

The store owners and employees of the former Daily Express Mart on Wilson Street caught in the multi-million dollar fraud face years in prison, and will once again be going to trial as cooperating witnesses.

So far, 19 people have been prosecuted on allegations at the Daily Express Mart of using Supplemental Nutrition Assistance Program money, better known as food stamps that since 2002 have actually been a debit card, according to the S.C. Attorney General’s Office.

Li Fang Phu, Hoang Nguyen and Dianne Phu, each of Rock Hill, pleaded guilty in federal court last year to a scheme prosecutors said was going on for years. The scam involved food stamp recipients buying a single beer or a pack of cigarettes or gasoline with a food stamps debit card and getting cash back. The store employees also profited to the tune of millions of taxpayer dollars in fraud, prosecutors said.

The three store owners face up to five years prison, seizure of assets and property, and fines. All three are now key witnesses against food stamp recipients who were in on the scam. The more people they help prosecute, the better their own deals will be, court records show.

“All three are actively cooperating, pursuant to plea agreements, with numerous ongoing cases that are being prosecuted by the South Carolina Attorney General’s Office,” a federal judicial order dated May 26 shows.

Yet those who allegedly fraudulently used food stamps could face stiffer penalties for allegations in the thousands of dollars compared to those who pleaded guilty to millions in fraud.

A food stamp fraud scam conviction of more than $10,000 carries a sentence of 10 years in prison, five years for $2,000 to $10,000, or 30 days in jail for less than $2,000.

The three store owners’ cooperation started in York County court two weeks ago in the first trial in South Carolina brought by state prosecutors against the food stamp recipients alleged to have received illegal kickbacks at Daily Express Mart from 2014 through 2016.

Arielle Elyse Mazzone, 26, was found guilty by a York County jury of fraudulent acquisition or use of food stamps less than $2,000. From July 2014 until March 2016, Mazzone exchanged her food stamps for cash and cigarettes. The jury did not convict of a more serious charge, however, and Mazzone received 30 months probation and has to pay back $1,250.

Her trial ended May 25, the day before the federal order was issued allowing an extension until at least December for sentencing of the three retailers until cooperation in state cases is finished.

Mazzone’s lawyer, 16th Circuit assistant public defender Jessica Russo, confirmed all three federal defendants testified for prosecutors during the May 22-25 trial in York against Mazzone. The three testified that as many as 60 times a day the store the employees would perform the scam.

“The witnesses against my client testified they were getting reductions in sentencing in their own cases,” Russo said.

The trial took four days and the jury declined to convict of a felony. Mazzone was convicted of a misdemeanor, Russo said. She said the cost of the state court trial, the state and federal investigation and more only ended with a restitution of $1,250.

“Monetarily, that is not worth it,” Russo said.

Prosecutors and state officials disagree, saying food stamp fraud prosecutions are vital to public integrity and proper use of taxpayer dollars to help the poor.

In 2016, South Carolina recovered $273,580.50 from 70 food stamp fraud convictions after state prosecutors formed the food stamp fraud unit in 2014.

In a statement earlier this year, Attorney General Alan Wilson said: “At only two years old, this program has shown that food stamp fraud is absolutely a problem in South Carolina. There are families and individuals who rely on this program and use it for its intended purpose. The criminals who are abusing this system are not only stealing money from taxpayers, but also from those in need.”

State figures show more than 700,000 people in South Carolina receive food stamps and 70 cases of fraud were brought last year.

The S.C. Department of Social Services investigates reports of fraud, and the attorney general prosecutes the cases. After the York County conviction two weeks ago, DSS deputy director of economic services Amber Gillum said: “The partnership between DSS and the attorney general’s office continues to be a vital component of the state’s efforts to combat fraud and abuse of public assistance benefits. We are proud of the work we have done to prevent and detect waste and abuse in the SNAP program, and to prosecute those who choose to commit fraud.”

Attorney General’s Office spokesperson Dorothy Moore declined to comment on specifics of upcoming York County cases, but confirmed 13 pending cases remain concerning the Daily Express Mart on allegations of fraud between 2014 and 2016 when the scam was shut down and the store owners and operators indicted by federal prosecutors.

Li Phu, Dianne Phu and Nguyen “have cooperated in our efforts to prosecute individuals who used the Daily Express Mart to illegally exchange their benefits,” Moore said in a statement.

Russo, the York County public defender, also is the defense lawyer for all 13 of the pending cases against other York County defendants who face potential trial for similar allegations. Russo declined comment on the status of those cases except to say she expects more trials. In those cases, if there are trials, Li Phu and Dianne Phu and Nguyen will have to testify.

And, court documents show, all three whom their own plea deals and testimony shows were the originators of the scam, will get benefits for testifying against the poor on food stamps who allegedly bit on the scam and got caught.