The Illinois LINK card program allows people who get food stamps to receive their monthly, pre-set amount of benefits electronically. They can then use a card that looks like a credit or debit card, and works the same way: the cardholder swipes it through a machine at the grocery store and enters a pin number. Investigators said that's where investigators say the problems began.
"It's virtually the Wild West when it comes to the operation we're talking about here," Cook County Sheriff Tom Dart said.
Sheriff Dart said the investigation, dubbed Operation Broken Link, began last year and targeted suburban convenience stores that allegedly traded food stamp benefits provided by the government for cash.
"Retailers say they have $30 billion in losses a year, about $77 million in Illinois state tax lost in revenue," said Dave Williams, Cook County State's attorney office.
Authorities first got a tip about the illegal activity in May of 2010. Detectives were able to identify a number of stores in the city and suburbs that were giving customers cash back on their LINK cards, a violation of the federal programs rules. Many of the same stores are accused of also dealing in stolen merchandise.
"Our officer went in, said that he stole the merchandise and asked the owner if he was interested in buying it. The owner would turn around and offer a price – and they would negotiate a price of what he would pay for these items," said an undercover cop.
Authorities say LNR Family Store used LINK card fraud to generate revenue of up to $40,000 a month. Investigators say in February an employee there asked an undercover officer to use his LINK card to buy more than $ 200 in frozen pizzas, the vendor then resold them in the store at nearly five times the original cost.
"Basically we were given $100 for those 200 pizzas and the next time we went in the store, they were priced for $4.99 a piece," said Sergeant Tim O'Donnell, Cook County Sheriff's Police.
LNR Family Store owner Sam Haddad says police made a mistake when they arrested him on May10th because he only bought the Maywood store five weeks ago.
I told them we don't have LINK. There's no machine. There's no paperwork. We're still waiting for it. They wouldn't believe me," Haddar said.
Meanwhile, area residents say the STING dealt another blow to their already struggling neighborhood. "It's close. It's easy for me to walk to. Others are not as close. I've got to walk all the way to 9th," said Kiond Garner.
The owners of LNR say they have an attorney and plan on fighting the charges and trying to re-coup their losses.