Taibbi Highlights Hypocrisy Of Punishment Of Wall Street Vs. Main Street

In an article at Rolling Stone, Matt Taibbi contrasts the story of a woman who committed food stamp fraud and recieved a harsh penalty with the fraudsters of Wall Street, who, at worst, got slaps on the wrist for their crimes. Taibbi

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In an article at Rolling Stone, Matt Taibbi contrasts the story of a woman who committed food stamp fraud and recieved a harsh penalty with the fraudsters of Wall Street, who, at worst, got slaps on the wrist for their crimes. Taibbi explains:

Last week, a federal judge in Mississippi sentenced a mother of two named Anita McLemore to three years in federal prison for lying on a government application in order to obtain food stamps.

Apparently in this country you become ineligible to eat if you have a record of criminal drug offenses. States have the option of opting out of that federal ban, but Mississippi is not one of those states. Since McLemore had four drug convictions in her past, she was ineligible to receive food stamps, so she lied about her past in order to feed her two children.

The total "cost" of her fraud was $4,367. She has paid the money back. But paying the money back was not enough for federal Judge Henry Wingate.

Wingate had the option of sentencing McLemore according to federal guidelines, which would have left her with a term of two months to eight months, followed by probation. Not good enough! Wingate was so outraged by McLemore’s fraud that he decided to serve her up the deluxe vacation, using another federal statute that permitted him to give her up to five years.

He ultimately gave her three years, saying, "The defendant's criminal record is simply abominable …. She has been the beneficiary of government generosity in state court."

Compare this court decision to the fraud settlements on Wall Street. Like McLemore, fraud defendants like Citigroup, Goldman Sachs, and Deutsche Bank have "been the beneficiary of government generosity." Goldman got $12.9 billion just through the AIG bailout. Citigroup got $45 billion, plus hundreds of billions in government guarantees.

All of these companies have been repeatedly dragged into court for fraud, and not one individual defendant has ever been forced to give back anything like a significant portion of his ill-gotten gains. The closest we've come is in a fraud case involving Citi, in which a pair of executives, Gary Crittenden and Arthur Tildesley, were fined the token amounts of $100,000 and $80,000, respectively, for lying to shareholders about the extent of Citi’s debt.

Neither man was forced to admit to intentional fraud. Both got to keep their jobs.

Anita McLemore, meanwhile, lied to feed her children, gave back every penny of her "fraud" when she got caught, and is now going to do three years in prison. Explain that, Eric Holder!

Taibbi is right to be outraged. This is another in a long line of false crises pushed by Republicans that, instead of targeting real problems, target populations that can't speak up for themselves as well or who already suffer from low public approval. For decades, conservatives have targeted the recipients of government assistance programs, trying to pain anyone in one of these programs as part of the "unworthy poor" who are "stealing" from the rest of us. These campaigns heavily target the most vulnerable of the 99 percent and few people are willing to defend the targets.

Think Progress recently pointed out the weakness of the conservative argument against the food stamp program:

But as the Center on Budget and Policy Priorities found, SNAP errors are currently at an all-time low, with errors accounting for less than three percent of the program’s cost:

"To ensure that benefits are provided only to eligible households and in the proper amounts, SNAP has one of the most rigorous quality control systems of any public benefit program and, in recent years, has achieved its lowest error rates on record. In fiscal year 2009, even as caseloads were rising, states set new record lows for error rates. The net loss due to errors equaled only 2.7 percent of program costs in 2009. There is no evidence that program errors are driving up SNAP spending."

During the recession, SNAP has been critical for reducing poverty and pumping money into local economies.

It's clear that food stamp fraud is not a real issue. If anything, the biggest problem in the program comes not from program recipients, but stores that accept food stamps, who are committing significant fraud:

A criminal swindle of the nation's $64.7 billion food stamp program is playing out at small neighborhood stores across the country, where thousands of retailers are suspected of trading deals with customers, exchanging lesser amounts of cash for their stamps.

Authorities say the stamps are then redeemed as usual by the unscrupulous merchants at face value, netting them huge profits and diverting as much as $330 million in taxpayer money annually a year. But the transactions are electronically recorded and federal investigators, wise to the practice, are closely monitoring thousands of convenience stores and mom-and-pop groceries in a push to halt the fraud.

Known as food stamp trafficking, the illegal buying or selling of food stamps is a federal offense that has resulted in 597 convictions nationwide and $197.4 million in fines, restitution and forfeiture orders, over the past three years, according to the U.S. Department of Agriculture's Office of the Inspector General. The USDA last month awarded a 10-year contract worth up to $25 million to SRA International to step up the technology used to combat fraud.

...

Last year, 931 stores nationally were dismissed from the food stamp program for trafficking and 907 others were sanctioned for lesser violations — 37 percent of the nearly 5,000 retailers being investigated.

So the real significant fraud in food stamps comes from retailers -- who are being caught in significant numbers already. On top of that, the president is ramping up enforcement, which is already good. So, again, this isn't a problem that is costing the government or the taxpayers much money in the big picture. The combined fraud rates from individuals and retailers is like 3.5 percent of a $65 billion program, accounting for less than $3 billion annually. The entire realm of fraud for the entire program is less than numerous individual cases of fraud on Wall Street. And that's not even to go into the subsidies, tax relief and bailout money the Wall Street fraudsters got.

Conservatives complain about a few anecdotes of millionaires getting food stamps because of loopholes as if the anecdotes were proof of broader problems. They complain of Barack Obama pushing more to get people enrolled in the program than to prevent fraud, as if making sure that people eat during bad economic times is somehow a crime. And they complain about the lack of inspectors able to pursue fraud cases, despite it being their push for downsizing government that led to that shortage.

Taibbi adds another thought:

Here’s another thing that boggles my mind: You get busted for drugs in this country, and it turns out you can make yourself ineligible to receive food stamps.

But you can be a serial fraud offender like Citigroup, which has repeatedly been dragged into court for the same offenses and has repeatedly ignored court injunctions to abstain from fraud, and this does not make you ineligible to receive $45 billion in bailouts and other forms of federal assistance.

As part of the fraud hysteria promoted by Republicans, people are given penalties way out of proportion with the crimes they are committing. In particular, poorer people are given these penalties. What the proponents of these types of laws -- denial of food stamps because of drug use -- are literally saying is that the punishment for drug use should be starvation.

About Kenneth Quinnell

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