SALEM - Roughly one in five Oregonians are on state food assistance.
Oregon’s 2012 budget for the Supplemental Nutrition Assistance Program, or food stamps, was $1.25 billion.
Most people use them honestly and correctly, but people cheat the system by doing things like selling their food stamps for cash.
‘John’ works with Portland’s homeless population and agreed to speak with KGW if we agreed not to identify him. He estimates a large percentage of the city’s homeless sells their 'Oregon Trail' food stamp cards to third parties or businesses for cash.
“I would say more than 50 percent,” he said. “It’s really easy to abuse.”
The problem goes beyond Portland.
“And, the people we interviewed said they primarily used the cash to buy cigarettes, liquor and drugs,” said Salem Police Lieutenant Steve Birr.
Birr said he saw the abuses first-hand in March when investigators went after a produce store for food stamp fraud.
Birr said the owner, Holver Paniague-Millan, was bilking the system for about $10,000 a month by buying people’s food stamps for fifty cents on the dollar and then using the cards to buy inventory for his business.
“There’s no names on the (Oregon Trail) cards, no photos,” Birr said. “So they are highly transferable.”
Police initially arrested nine people, but Unit 8 has learned they’ve since arrested four more and they’re not done yet.
Police are still looking for two men seen in surveillance photos released to KGW. The investigation into food stamp fraud was the first of its kind for Salem Police, Birr said.
”I think it clearly indicates the need to do more of these investigations.”
The Oregon Department of Human Services has its own team tasked with tracking down all kinds of fraud within the state’s welfare system.
Head investigator John Carter said the agency has 21 full-time investigators working throughout the state to detect fraud.
”I think we do a very good job with the resources that we do have,” Carter said. “If you were to ask me if we could use additional resources, certainly we could.”
Numbers provided by DHS show in 2012 the agency received roughly 4,000 reports of food stamp fraud. Of those, roughly 1,700 claims were substantiated, and resulted in 10 convictions.
Despite recent high-profile cases, DHS reports its fraud rate is at one-half of one percent.
Not everyone’s convinced the rate is that low.
“There’s got to be more fraud out there,” said State Representative Andy Olson.
The Albany Republican thinks lawmakers need to act in order to cut down on fraud.
One idea he has is to put people’s pictures on Oregon Trail cards, to make them harder to pass or sell.
Olson also supports limiting the number of times someone can report their Oregon Trail card lost or stolen and still receive a new one.
“I just want to stop the abuse, or at least try to gain more control of what we’re seeing right now,” Olson said. “I think it's bigger than what’s being reported.”
Meanwhile, Lieutenant Birr said he expects to encounter more cases of food stamp fraud.
“We’ve already got word of other businesses that are engaged in similar activity,” he said.
And, they’re still looking for two men, including a man seen holding an Oregon Trail card (see video above).
If you suspect food stamp fraud you can call the DHS fraud Hotline at 1-888-372-8301.