United States District Court, E.D. Wisconsin
FAYEZ A. SHANAA and HAIM A. DAKWAR, D/B/A MR. F'S FOODS Plaintiff,
UNITED STATES OF AMERICA, Defendant.
DECISION AND ORDER ON DEFENDANT'S MOTION FOR
JOSEPH, UNITED STATES MAGISTRATE JUDGE
Mr. F's Foods, brought this action for judicial review of
the Food and Nutrition Service's (“FNS”)
final agency decision to permanently disqualify Plaintiff
from participation in the Supplemental Nutrition Assistance
Program (“SNAP” or “Program”).
Defendant filed a motion for summary judgment on September
12, 2016. (Docket # 24.) To date, Plaintiff has not filed a
response. Because the time to file a response has long since
passed, I will consider the motion fully briefed and decide
it on the present record. For the reasons explained below,
Defendant's motion for summary judgment is granted.
1964, Congress established the “Food Stamp
Program” for low-income individuals. Fells v.
United States, 627 F.3d 1250, 1252 (7th Cir. 2010)
(citing 7 U.S.C § 2011). In 1996, Congress set a
deadline for states to replace the paper coupons that were
used for Food Stamps with Electronic Benefit Transfer
(“EBT”) systems, “which use debit- type
cards to deduct benefits from a central location.”
Fells, 627 F.3d at 1252. In 2008, Congress changed
the name of the program to the Supplemental Nutrition
Assistance Program. Id. (internal citation omitted).
The Program is administered by the FNS division of the United
States Department of Agriculture (“USDA”).
(Def.'s Undisputed Facts ¶ 2, Docket # 27.) Retail
stores must comply with certain regulations to be a
participant in the Program. Fells, 627 F.3d at 1252;
7 U.S.C. § 2021(a)(1). The USDA has the authority to
disqualify a retail store for certain offenses including
trafficking food stamps, or exchanging food stamp benefits
for cash or something other than eligible food.
Fells, 627 F.3d at 1252 (internal citations
F's Foods is a convenience store owned by Fayez A. Shanaa
and Haim A. Dakwari located at 3246 N. 15th St. in
Milwaukee, Wisconsin. (Docket # 27 ¶ 1.) Mr. F's
Foods was an authorized participant in the Program.
(Id. ¶ 3.) The Program provides monthly
benefits to qualifying households through the use of EBT
cards. (Id. ¶¶ 5-6.) The EBT card
essentially functions as a debit card, where a customer would
swipe to make purchases and enter a personal identification
number. (“PIN”) (Id. ¶ 7.) Mr.
F's Foods is also a participant in the Women, Infant, and
Children (“WIC”) program. (See Id.
¶ 67.) The WIC program distributes paper checks to
eligible enrollees that can be used to purchase specific food
opened an investigation of Mr. F's Foods after receiving
notifications of unusual EBT transactions from its Anti-Fraud
Locator using Electronic Benefits Retailer Transactions
(“ALERT”) computer program. (Id.
¶¶ 9-12.) The investigation ran from February 2014
through April 2014 (“Review Period”).
(Id. ¶ 13.) During the investigation, FNS
identified “(1) rapid and repetitive transactions
within short time frames by the same EBT customer; (2) a high
number of excessively large dollar transactions; and (3)
excessively large purchases by a single EBT customer.”
(Id.) For example, FNS identified 20 sets of EBT
transactions conducted in less than 24 hours. (Id.
FNS identified 109 transactions for over $28.50 during the
Review Period, an amount considered to be “excessively
large” when compared to the average Wisconsin
convenience store transaction of $7.31. (Id.
¶¶ 17-18.) FNS also conducted a comparison study of
the 67 stores located within one mile of Mr. F's Foods.
(Id. ¶¶ 19-20.) Of the stores in the
comparison study, Mr. F's Foods had the highest revenue,
totalling $33, 670. (Id. ¶ 22.)
selected and compared the “shopping habits” of
four EBT customers who shopped at Mr. F's Foods during
the Review Period. (Id. ¶ 24.) FNS found that
while all four SNAP customers shopped at larger stores with
more inventory, they made large purchases at Mr. F's
Foods. (Id. ¶ 25.) For example, one customer,
identified as Household 3637, spent 77 percent of their SNAP
benefits at Mr. F's Food during the Review Period despite
living approximately 8.7 miles away. (Id.
¶¶ 26-27.) Household 3637 only made two other
transactions during the 89-day Review Period-one at Aldi for
$129 and one at Holyland Grocery and Deli for $200.
(Id. ¶ 30.)
FNS identified Household 6338, a customer who spent 72
percent of their SNAP benefits and conducted 14 out of 15
total transactions at Mr. F's Foods during the Review
Period. (Id. ¶ 32-33.) The only transaction not
completed at Mr. F's Foods was a purchase at Sam's
Club for $188. (Id. ¶ 33.) Additionally,
Household 6338 conducted four transactions on February 6,
three on February 7, two on March 13, and three on March 14.
(Id. ¶ 34.) Next, FNS identified Household 9501
who made six out of 10 total EBT transactions at Mr. F's
Foods during the Review Period. (Id. ¶ 36.) The
other four transactions took place at two different
Wal-Marts. (Id. ¶ 37.) Lastly, FNS tracked
Household 5190, a customer who made three EBT transactions
for a total of $135 in one day. (Id. ¶ 39.)
April 2014, an FNS independent contractor conducted a store
inspection of Mr. F's Foods. (Id. ¶ 40.)
During the inspection, the FNS Contractor took photographs,
observed inventory, pricing, and general store capabilities.
(Id.) Among the FNS Contractor's observations,
he noted that Mr. F's Foods contained no optical
scanners, no conveyor belts, and no shopping carts to
accommodate large purchases. (Id. ¶¶
41-42) The FNS Contractor noted that owner Fayez Shanaa
“primarily works the store himself” and the
highest profits in the store were from alcohol, tobacco, and
soda sales. (Id. ¶¶ 44-45.) Also, because
Mr. F's Foods buys goods from other stores for resale,
its prices are generally more expensive than its competitors.
(Id. ¶¶ 46-48.)
24, 2014, FNS delivered a letter charging Mr. F's Foods
with trafficking SNAP benefits. (Id. ¶ 52.) Mr.
F's Foods responded to the Charge Letter stating that
most of the large transactions involved baby formula
purchases. (Id. ¶¶ 51-52.) After receiving
receipts produced by Shanaa, FNS calculated that Mr. F's
Foods purchased 41 cans of baby formula per month (or 9.5
cans per week) during the Review Period. (Id.
¶¶ 53-54.) As a participant in the WIC program, Mr.
F's Foods asserted that most customers bought baby
formula through the WIC program and not SNAP. (Id.
¶ 55.) As of 2013, Mr. F's Foods averaged $33, 943
in WIC redemptions per year averaging out to $2, 828 per
month. (Id. ¶ 56.)
collected EBT data on baby formula purchases for each month
of the Review Period. (Id. ¶¶ 57-59.) The
February 2014 EBT data showed that 31 cans of baby formula
were bought by SNAP customers in the following prices:
“one pack of six (6) for $110.94; one pack of four (4)
for $73.96 and seven packs of three (21) for $55.47.”
(Id. ¶ 57.) Further, in March 2014, 32 cans of
baby formula were bought for: one pack of six (6) for
$110.94; five packs of four (20) for $73.96 and two packs of
three (6) for $55.47. (Id. ¶ 58.) In April
2014, 37 cans of baby formula were ...