FORT SMITH -- Three men pleaded guilty in U.S. District Court to violating the federal food-stamp program.
Raja Khani Zaman and his son Haroon pleaded guilty Wednesday before Western Arkansas Chief U.S. District Judge P.K. Holmes III to conspiracy to traffic in Supplemental Nutrition Assistance Program [food stamps] benefits, conspiracy to commit money laundering and filing false income-tax returns.
Another man, Ahmed Zaman, pleaded guilty to conspiracy to traffic in food-stamp program benefits.
After the plea hearings, all three were released on $5,000 signature bonds. Sentencing will follow completion of a presentence investigation.
They face up to 20 years in prison and a fine up to $250,000 on the food-stamp trafficking charge, 20 years and a fine up to $500,000 on the money-laundering charge, and up to three years and a fine up to $100,000 on the tax-return charge.
Raja and Haroon Zaman had been under investigation since July 2013 over food-stamp activities at three Fort Smith convenience stores, which the government said they were equal partners -- Fenny's at 3515 Towson Ave., Park Mini Mart at 3601 Park Ave., and Grand Convenience, also called Valero, at 4201 Grand Ave.
The government filed a civil forfeiture action over food-stamp violations against Raja and Haroon Zaman in 2016 to seize $156,720 in cash and three cars belonging to Haroon Zaman.
Federal agents found the money in a January 2016 raid at Raja Zaman's home. A search warrant affidavit said the money was found in places such as under mattresses, in sports coat pockets and in a SpongeBob SquarePants tin.
The forfeiture case was dismissed in early 2018. The cars were returned to Haroon Zaman, but the cash was ordered held in trust to pay restitution or a forfeiture judgment stemming from any criminal action that would arise in the case.
Plea agreements the three signed in August that were filed in court Wednesday said the food-stamp violations resulted in a loss of $54,161.64 to the U.S. Department of Agriculture, which administers the program.
The tax-return charges against Raja Zaman said he underreported his business income for 2013, 2014 and 2015 by $344,817. Haroon Zaman underreported his business income for those years by $327,522, the plea agreements showed.
The plea agreements listed multiple ways in which the men violated the food-stamp program. They would allow beneficiaries to use their food-stamp cards to buy items prohibited under the program at twice the price of the items.
They would take beneficiaries, or send them, to other stores to use their cards to purchase items for resale in the Zamans' convenience stores, then pay the recipients 50 cents cash for every dollar they spent.
The government said the Zamans committed money laundering by reselling products in their convenience stores that were purchased elsewhere for them by cooperating food-stamp recipients, according to court records.
The plea agreements listed 18 specific acts in which the Zamans violated the food-stamp program. In one case, Jan. 16, 2014, according to the plea agreements, Raja Zaman took a confidential informant to a warehouse store and had him spend $595.04 in benefits to buy products for resale in the Zaman convenience stores. Zaman paid the informant $250 for his participation.
A government affidavit said one grocery store owner told agents he saw the Zamans making large soda and water purchases with food-stamp cards, loading the purchases into a truck and driving them to the Fenny's convenience store and unloading them.
State Desk on 12/21/2018