U.S. Department of Agriculture Food and Nutrition Service Administrative Review Branch Alexandria, VA 22302 Glorious International Store, Appellant, v. Case Number: C0188756 Retailer Operations Division, Respondent. FINAL AGENCY DECISION It is the decision of the U.S. Department of Agriculture (USDA, Food and Nutrition Service (FNS, that there is sufficient evidence to support a finding that a permanent disqualification from participation as an authorized retailer in the Supplemental Nutrition Assistance Program (SNAP was properly imposed against Glorious International Store (Appellant by the Retailer Operations Division (Retailer Operations. ISSUE The issue accepted for review is whether Retailer Operations took appropriate action, consistent with 7 U.S.C. 2021, 7 CFR 278.6(a, 7 CFR 278.6(e(1(i and 7 CFR 278.6(i in its administration of the SNAP when it imposed a permanent disqualification against Appellant. AUTHORITY 7 U.S.C. 2021 and its implementing regulations at 7 CFR 279.1 provide that A food retailer or wholesale food concern aggrieved by administrative action under 278.1, 278.6 or 278.7... may file a written request for review of the administrative action with FNS. CASE CHRONOLOGY By Charge letter dated October 17, 2016, Retailer Operations informed the owner, that Appellant was charged with violating the terms and conditions of the SNAP regulations based on a USDA investigation conducted from June6, 2016 through September 6, 2016. Appellant replied to the Charge letter by letter dated October 21, 2016. By Determination letter dated December 1, 2016, Retailer Operations informed Appellant that it was permanently disqualified from participation as a retail store in the SNAP, and that the store was not eligible for a trafficking civil money penalty (CMP according to the terms of Section 1
278.6(i because the firm failed to submit sufficient evidence to demonstrate that it had established and implemented an effective compliance policy and program to prevent violations of the SNAP. The owner appealed Retailer Operations determination and requested administrative review of this action by letter dated December 7, 2016. The appeal was granted by letter dated December 9, 2016. Appellant provided additional information by cover letter dated December 13, 2016. STANDARD OF REVIEW In an appeal of an adverse action, the Appellant bears the burden of proving by a preponderance of the evidence, that the administrative actions should be reversed. That means the Appellant has the burden of providing relevant evidence which a reasonable mind, considering the record as a whole, would accept as sufficient to support a conclusion that the argument asserted is more likely to be true than not true. CONTROLLING LAW AND REGULATIONS The controlling statute in this matter is contained in the Food and Nutrition Act of 2008, as amended (the Act, 7 U.S.C. 2021, and 278 of Title 7 of the Code of Federal Regulations (CFR. 7 U.S.C. 2021(b(3(B states in relevant part, a disqualification under subsection (a shall be permanent upon the first occasion or any subsequent occasion of a disqualification based on the purchase of coupons or trafficking in coupons or authorization cards by a retail food store or wholesale food concern or a finding of the unauthorized redemption, use, transfer, acquisition, alteration, or possession of EBT cards 7 CFR 278.6(e(1(i states in relevant part, FNS shall disqualify a firm permanently if personnel of the firm have trafficked as defined in 271.2. Trafficking is defined, in part, in 7 CFR 271.2, as the buying or selling of Food Stamp [SNAP] coupons or other benefit instruments for cash or consideration other than eligible food. 7 CFR 278.2(a specifies in relevant part, Coupons [SNAP benefits] may be accepted by an authorized retail food store only from eligible households, and only in exchange for eligible food. Further, the citation specifies that Coupons may not be accepted in exchange for cash or for any other nonfood use. 7 CFR 278.6(f(1 states in relevant part, FNS may impose a civil money penalty as a sanction in lieu of disqualification when the firm is selling a substantial variety of staple food items, and the firm s disqualification would cause hardship to SNAP households. A civil money penalty for hardship to SNAP households may not be imposed in lieu of a permanent disqualification. 2
SUMMARY OF THE CHARGES During a compliance investigation, the USDA conducted six visits to Appellant from June 6, 2016 to September 6, 2016. A report of the investigation Exhibits was provided to Appellant as an attachment to the Charge letter. The investigation report included Exhibits A through F which provide full details on the results of each compliance visit. The investigation report documents that SNAP violations were recorded during six store visits and involved the sale of common nonfood items in exchange for SNAP benefits in violation of 7 CFR 278.2(a and trafficking as defined in Section 271.2 of the regulations. These common nonfood items included: paper towels and toilet paper. Exhibit D documents that SNAP benefits were accepted in exchange for cash, known as trafficking. The firm was charged with trafficking in Exhibit D and violating the terms and conditions of the SNAP regulations at 7 CFR 278.6(e(1(i. The penalty for trafficking is permanent disqualification. The violations of selling ineligible items in Exhibits A, B, C, D, E and F warrant a non-permanent disqualification period as specified in Section 278.6(e of the SNAP regulations. The lesser penalty associated with the sale of ineligible items is subsumed in the permanent disqualification sanction warranted by the exchange of benefits for cash in Exhibit D. APPELLANT S CONTENTIONS The following may represent only a brief summary of the contentions presented in this matter. However, in reaching a decision, full attention and consideration have been given to all contentions presented, including any not specifically recapitulated or referenced herein. This store stood up to two sisters daily insults, ridicules and embarrassment and unnecessary threats. There have been no time the individual used her food stamp to purchase toilet tissue or any other ineligible items at our store. If it is permitted that these individual [sic] would appear on the hearing date we would be happy. I will come to testify about what they know concerning the case. I am looking forward to establishing the truth to this allegation. The allegations were born out of jealously, hatred, and revenge as a result of several incidents which occurred at the store. The first incident occurred in early May 2016 when a female customer and her child completed a purchase for $17.25. I stated the child had a pack of crayons in her pocket (valued at $1.25. I made a comment and the woman walked angrily out of the store and slammed the door. The second incident occurred two weeks after the first. The same woman was walking her dog and the dog poop[sic] right in front of the store. She picked up a paper napkin and splashed it all over the concrete floor. I told her when next she does this again I might have to call the police. She stopped coming to the store but always give[sic] the daughter the list of what to buy with either in cash or EBT card. 3
On October 3, 2016 she came to the store with her sister or a friend. Her sister or friend searched for prices of many food products. A woman working in the store told the woman that if she doesn t want to buy anything she should please put back the products. She suddenly snapped and began using all sorts of curse words to address the said staff including threats that she would make sure the store closes down. She always questions our prices and compares them to Shoprite or CVS and mostly leaves angrily without buying anything. You can send some of your investigators to stores in the area where they have caused problems and have banned from. There is no time that the woman in question or any other woman in particular used their snap cards to purchase ineligible items. Attached are what the receipts of the printed cash register receipts look like and a copy of some credit card machine receipts. The cash register does not itemize the goods bought. Our credit card machine is not programmed to give cash back regardless of the type of card the customers use. If the customer request for receipt indicating the items bought, we will state the items bought, date, cash, credit card or food stamp and sign and attach it with the original receipt from the cash register and credit card or food stamp printout. By giving us this one life time opportunity, you would shed light on what is the truth in this case, and help you understand the problems little stores like ours are experiencing. For the past 8 years we have served the community faithfully. We believe in honesty and hard work. The owner provided two pages of evidence. One page included two cash receipts one dated 02/25/2016 and 03/24/2016. These list items all as DEPT. 12. The second page includes six copies of merchant copies of EBT receipts. ANALYSIS AND FINDINGS It is important to clarify for the record that the purpose of this review is to either validate or to invalidate the earlier decision of Retailer Operations. This review is limited to what circumstances were at the basis of Retailer Operations action at the time such action was made. The USDA conducts investigations of the compliance of retail food stores with applicable rules and SNAP regulations in part to ascertain the nature and extent of violations that may be occurring. The USDA Exhibits clearly demonstrate a pattern of violations at Appellant that occurred over time. As described in Exhibit D provided in the investigative report, the most egregious violation, trafficking, occurred when firm personnel exchanged cash for SNAP benefits. In addition, common ineligible items were sold on multiple occasions. The regulations establish that an authorized food store may be disqualified from participating in the program when the store fails to comply with the Act or regulations because of the wrongful conduct of an owner, manager, or someone acting on their behalf. The owner of Appellant is liable for all violative transactions handled by either paid or unpaid store personnel. Regardless of whom the owner of a store may utilize to handle store business, ownership is accountable for the proper handling of 4
SNAP benefit transactions. To allow the store owner to disclaim accountability for the acts of persons whom the owner chooses to utilize to handle store business would render virtually meaningless the enforcement provisions of the Food and Nutrition Act of 2008, as amended, and the enforcement efforts of the USDA. The review process does not include in-person hearings. Rather, the Act and Regulations provide that any firm aggrieved by an administrative review determination may seek judicial review of the determination in federal court or a state court of record having competent jurisdiction. In such event, trial de novo proceedings ensure the firm of a full evidentiary hearing on the agency action at issue. A record of participation in the SNAP with no previously documented instance of violations does not constitute valid grounds for dismissal of the current charges of violations or for mitigating the impact of the violations upon which they are based. 7 USC 2018 (b(7(e. As noted, the charges of violations are based on a USDA investigation. All transactions cited in Charge letter are thoroughly documented. A review of this documentation has yielded no indication of error or discrepancy in any of the reported findings. Rather, the investigative record is specific and accurate with regard to the dates of the violations, the exchange of SNAP benefits for the purchase of non-food items, the exchange of benefits for cash, and in all other critically pertinent detail. As such, ownership s contentions, do not constitute valid grounds for dismissal of the current charges of violations, or for mitigating the impact of those charges. The owner provided no evidence to support the contentions advanced. The Report of Investigation details a series of violative transactions which occurred from June 6, 2016 to September 6, 2016. The contended incidents with two unidentified females do not support that Appellant did not sell ineligible items, or that no trafficking occurred at Appellant when store personnel allowed $10.00 in SNAP EBT benefits to be exchanged for $10.00 in U.S. currency as detailed in Exhibit D. The receipts provided of EBT sales are standard merchant copies and do not disprove trafficking or the sale of ineligible items as described in the investigative report. The original cash receipts simply show that items are not itemized, all items listed as DEPT. 12. CIVIL MONEY PENALTY To be considered eligible for a trafficking CMP a firm must establish, by substantial evidence, its fulfillment of each of the four criteria of the SNAP regulations at 7 CFR 278.6(i within the timeframe specified. The firm did not submit timely evidence for consideration for a trafficking CMP in lieu of permanent disqualification as described in the cited regulation. Accordingly, Retailer Operations correctly determined that Appellant did not qualify for a trafficking civil money penalty in lieu of a permanent disqualification. 5
CONCLUSION The review of the evidence in this case supports that program violations did occur at Appellant. The charges of violations are based on a USDA investigation and all transactions cited in the Exhibits to the Charge letter were thoroughly documented. A review of this documentation has yielded no indication of error or discrepancy in any of the reported findings. Rather, the investigative record is specific and accurate with regard to the dates of the violations, the exchange of SNAP benefits for cash and ineligible items, and in all other pertinent detail. The contentions advanced by Appellant do not constitute, by preponderance of evidence, grounds for dismissal of the current charges of violations. Retailer Operations also properly determined that Appellant did not meet the regulatory criteria to be eligible for a trafficking CMP as stipulated by the regulations. Trafficking carries a penalty of permanent disqualification. Therefore, Retailer Operations decision to impose a permanent disqualification against Appellant is sustained. RIGHTS AND REMEDIES Your attention is called to Section 14 of the Food and Nutrition Act of 2008 (7 U.S.C. 2023 and to Section 279.7 of the Regulations (7 CFR 279.7 with respect to applicable rights to judicial review of this determination. Please note that if a judicial review is desired, the Complaint, naming the United States as the defendant, must be filed in the U.S. District Court for the district where Appellant s owner resides or is engaged in business, or in any court of record of the State having competent jurisdiction. If any Complaint is filed, it must be filed within thirty (30 days of receipt of this Decision. Under the Freedom of Information Act (FOIA, it may be necessary to release this document and related correspondence and records upon request. If we receive such a request, we will seek to protect, to the extent provided by law, personal information that if released, could constitute an unwarranted invasion of privacy. MADELINE VIENS ADMINISTRATIVE REVIEW OFFICER January 10, 2017 DATE 6