USDA charges 6 in $66M food stamps scheme — calling it ‘one of the largest’ such fraud cases in US history

Victoria Vesovski | MoneyWise | Wed, June 4, 2025

The U.S. Department of Justice has charged six people — including a fraud investigator with the U.S. Department of Agriculture (USDA) — for allegedly orchestrating “one of the largest food stamp scams in U.S. history,” siphoning tens of millions from the Supplemental Nutrition Assistance Program (SNAP).

According to the U.S. Attorney’s Office for the Southern District of New York, the group ran a fraudulent network of about 160 unauthorized electronic benefit transfer (EBT) terminals across the New York area. These machines processed more than $30 million in illegal SNAP transactions, part of a larger scheme that generated an estimated $66 million in unauthorized benefits.

Prosecutors allege that the group accepted bribes and submitted fraudulent USDA applications to obtain SNAP approval for unqualified stores. One of the defendants, USDA employee Arlasa Davis, is accused of selling confidential government information to the very criminals she was meant to stop.

“This fraud was made possible when USDA employee Arlasa Davis betrayed the public trust by selling confidential government information to the very criminals she was supposed to catch,” U.S. Attorney Perry Carbone said in a press release. “Their actions undermined a program that vulnerable New Yorkers depend on for basic nutrition.”

What is SNAP?

SNAP — formerly known as the food stamp program — is the country’s largest federal nutrition assistance program. It provides monthly benefits to help low-income families buy groceries and reduce food insecurity, serving an average of 42.1 million people per month in 2023.

In fiscal year 2023, the federal government allocated nearly $112.8 billion to SNAP, according to the USDA’s Economic Research Service. About 94% of that went directly to households trying to keep food on the table. The remaining 6% covered state administrative costs, according to the Center on Budget and Policy Priorities.

But questions about oversight are growing. U.S. Secretary of Agriculture Brooke Rollins told Fox Business she believes that 20 to 30% of the program’s annual funding — now estimated closer to $200 billion — may be lost to fraud. The recently uncovered $66 million scheme, she says, is “just the tip of the spear.”

“It’s time for real, effective change,” Rollins said.

An inside job

Federal officials say the scheme began back in 2019, when Michael Kehoe allegedly created a network to supply unauthorized EBT terminals to small businesses across the New York area.

According to prosecutors, Kehoe and his associates falsified USDA applications, misused license numbers and altered key documents to get fraudulent retailers approved for SNAP.