Last week, officials from the U.S. Department of Homeland Security Investigations, the

Last week, officials from the U.S. Department of Homeland Security Investigations, the NYS Department of Health and the NYS Attorney General’s Office raided delis and bodegas in Chinese neighborhoods in Manhattan, Brooklyn and Queens. As many as 25 store owners were detained and many charged with allegedly accepting WIC vouchers in exchange for cash and pocketing a percentage of the value. Sing Tao Daily reported on the practice in Manhattan’s Chinatown:

Law enforcement entities raided shops in Chinatown on November 20 in a crackdown on welfare fraud. The raids came in response to accusations of fraud involving Women, Infants, and Children (WIC) vouchers, a government program to help mothers in low-income families purchase baby formula and food.

Exchanging WIC vouchers for cash and other goods beyond what the law allows is an open secret in Chinatown. The scam has gone on for years and has quickly grown in scope.

On some Chinatown streets, including East Broadway, Market and Eldridge, shops display signs advertising that they accept WIC vouchers and food stamps. The shelves of these shops are stocked with more than baby formulas and children’s vitamins – there are also fish oil vitamins for adults, and even ginseng. Many of these shops help customers deliver packages to their hometowns in Fujian, China, using their WIC vouchers as money.

According to insiders, these shops not only offer designated goods that can be purchased by WIC vouchers, they also allow customers to buy products not covered by WIC. Customers can also use the vouchers to purchase items and send them to families in China. Many people who receive WIC vouchers are immigrants from Fujian, who want to send merchandise bought with the vouchers back to China.

Besides allowing customers to purchase goods not allowed by the program, most shops also offer cash for the vouchers. In at least the past five years, the regular exchange rate is 80 percent of the face value of the vouchers.

Loopholes in the welfare system

In New York State, WIC voucher beneficiaries receive their vouchers every three months. Families with babies under 1 year old receive $300 to $400 worth while families with children between 1 and 5 receive $150. New York State has tightened the procedures now and require parents on welfare to do a blood test for their children every three months, get a doctor’s report and fill out a nutrition status form.

Parents have to take their children with them and bring the doctor’s report to the welfare office located in the hospital to claim their vouchers for the next quarter. But in many other states, the procedure is not as strict. Many states only require parents to take their children to the office once a year to claim the vouchers for the entire year.

Many Fujian immigrants who send their children to China to be raised by relatives there, and therefore are no longer eligible, are still getting the vouchers without reporting their kids’ whereabouts to authorities.

Ms. Zhang, who has been receiving the vouchers, said many hospitals only want to fulfill the requirements on paper and don’t often check the authenticity of the documents and the kids. As long as you bring a kid and present the documents, you can get the vouchers. There are too many loopholes in the process.

Customers and shops are happy

On every voucher there are instructions printed, such as the designated goods that are allowed, and the volume and price limits. But in the Chinese community, no one seems to care about the instructions. They can be used to purchase not only nutritious baby food but also ginseng supplements and everyday groceries. Some shops even told customers: get whatever you like. And if you don’t mind losing 20 percent off face value, you can also get cash.

According to people who know, the 80 percent exchange rate is an unspoken agreement among the shops. Vouchers for cash is indeed a popular scheme among new immigrants. Some shops even do it as a side business to make profit on the 20 percent difference, a typical example of demand driving the supply.

In the community, some people who get paid in cash are not honest on their tax returns so that they can be considered low-income and are eligible to claim many welfare programs such as public housing, food stamps and WIC.

Some community leaders said with the influx of Chinese immigrants in recent years, more and more Chinese are receiving WIC, and the demand for vouchers for cash is getting bigger too. An increasing number of shops, motivated by the profits, are picking up business. This helps the rapid growth of the market of voucher abuse and illegal exchange. But now this fraud has caught the attention of the authorities. Law enforcement officials have been raiding Chinatown shops. Arresting people should teach a good lesson to the community.

By Fan Chen Via Sing Tao Daily
Translated by Rong Xiaoqing from Chinese