11 individuals from 5 Asian food markets in San Francisco charged with felonies for defrauding SNAP/EBT (food stamps) program

SAN FRANCISCO — Eleven Asians including owners of five food markets in San Francisco were charged with criminal acts for defrauding the government's welfare program which is commonly known as "food stamps". The total loss to the government in the scheme is alleged to be over $4 million.

11 defendants are charged in 3 criminal cases based on the food markets that they were related. Most of the 11 defendants are Chinese immigrants from China and Vietnam. All 5 food markets are located in Asian business neighborhoods, Chinatown, Richmond Chinatown and Tenderloin.

According to San Francisco District Attorney Brooke Jenkins who announced the charges against 11 defendants on February 27, three government agencies, the U.S. Department of Agriculture, the U.S. Office of the Inspector General, and the San Francisco Human Services Agency, have participated in the investigation.

Among the 5 food markets listed in the criminal complaints related to 11 defendants, 3 of them are located within San Francisco Chinatown including Changyi Trading at 1018 Stockton Street, Fu Yuan Food Market at 1251 Stockton Street, and Da Chang Yuan at 860 Washington Street.

Two other food markets are Clement Dung Market at 645 Clement Street in Richmond District and H & L Super Market at 669 Geary Street in Tenderloin. The H & L market was permanently closed for some time, according to the California business license record.

11 defendants who are the owners and employees of 5 food markets face criminal charges of conspiring to fraudulently obtain government benefits from the Supplemental Nutrition Assistance Program (SNAP) which is formerly referred to as “food stamps”.

The SNAP program is under the U.S. Department of Agriculture to provide food benefits to low-income families in supplement their grocery budget, so they can afford the nutritious food essential to health and well-being.

To get SNAP benefits, members of the low income community must apply in the state where they live and meet the requirements including resource and income limits.

In California, the federal SNAP is managed by the California Department of Social Service under the CalFresh Program. California residents who meet the federal requirements can apply for SNAP benefits online or at the county social services agencies.

If applicants are found eligible, they will receive SNAP benefits on an Electronic Benefit Transfer (EBT) card, which works like a debit card. Benefits are automatically loaded into recipients' accounts each month. They can use EBT cards to buy groceries at authorized food stores and retailers.

In these 3 criminal cases, 11 defendants are alleged to have conspired together to obtain EBT cards from program recipients, and then process fraudulent transactions at various retail stores. The defendants would then split the proceeds of these fraudulent transactions 50/50 between themselves and the program recipients, the San Francisco District Attorney's Office (SFDA) said. 

"The charged defendants benefited from these fraudulent transactions by unlawfully receiving funds where no sale of goods took place. The program recipients benefited by receiving cash which could be used to purchase items that were otherwise precluded from the SNAP program," SFDA wrote.

According to the information listed in SFDA's press release, in a typical transaction, a “runner” would go to the mid-Market / Tenderloin area of San Francisco and call out “EBT” until the runner made contact with a person willing to sell their EBT benefits.

The “runner” would then take the EBT card to one of those 5 stores where an employee or owner would process transactions of between $100-$300 as if the EBT card was being used to purchase food items. Then the employee or owner would pay the EBT card holder 50% of the transaction, and keep the remaining 50% for themselves.

The criminal charges that 11 defendants face are all felonies including conspiracy, misappropriation of public money, unauthorized participation in federal Supplemental Nutrition Assistance Program (SNAP) and grand theft.

The District Attorney's Office prosecutes 11 defendants in 3 separate cases. The first case is People v. Guo Quian Lai, Quingyuan He, Xinyi Lei, and Mandy To.

Lai, He, Lei and To are owners or employees of 3 food markets in San Francisco Chinatown. The total loss of the alleged welfare fraud scheme related to 3 food markets in Chinatown is in excess of $3 million.

Changyi Trading which started in 2020 is located at 1018 Stockton Street in Chinatown. Qingyuan He is the trading company's registered owner and Guo Qiang Lai is the director, according to the California business registration records. He and Lai are both listed as defendants.

Fu Yuan Food Market which started in 2020 is located at 1251 Stockton Street in Chinatown. Da Chang Yuan LLC is located at 860 Washington Street. Both Fu Yuan and Da Chang Yuan food markets are owned by defendant Xinyi Lei.

The second case is People v. Hoang Le, Runcheng He, and Yulian Luo. The food market related to 3 defendants was H & L Super Market at 669 Geary Blvd. in Tenderloin. H & L market was registered in 2017 and was permanently closed for some time, according to public data. The alleged total loss amount for the government related to 3 defendants, Le, He, Luo, is in excess of $500,000.

The third case is People v. Dung Ngoc Huynh, Kuo Hon Wong, Conhi Truong, and Hau Dinh Ho related to the Clement Dung Market at 645 Clement Street in Richmond District. Dung Ngoc Huynh is the owner of the market with its business license registered in 2016. The alleged total loss amount related to Huynh, Wong, Truong and Dinh is in excess of $500,000.

Three cases were filed at the San Francisco Superior Court on February 27 or February 28. Defendants were arraigned in court and have waived their time for speedy trials.