Fraudtastic

The Food Stamp Program, which is designed to allow low-income individuals to purchase food, utilizes an Electronic Benefit Transfer (EBT) System. The EBT system works much like an automated teller machine at a bank, with recipients being able to use a personal identification number to access the benefits provided by the government at authorized food stores.

Malkhasyan, who owned the Hollyfood Mart chain of markets in downtown Los Angeles and South Los Angeles, as well as a store called Alina's in downtown Los Angeles, purchased and authorized employees such as Atikyan to purchase benefits. During a series of undercover operations at Malkhasyan's stores, agents simply sold the benefits on EBT cards for half of their face value. Malkhasyan subsequently redeemed all of the Food Stamp benefits through his participation in the Food Stamp Program or at other retail outlets, according to court documents.

Malkhasyan's four stores have redeemed more than $10 million worth of Food Stamp benefits over the past several years, and investigators believe that nearly two-thirds of that figure are fraudulent transactions. The scheme was shut down when Malkhasyan was arrested in November.

Malkhasyan and Atikyan are scheduled to be sentenced by Judge Otero on September 24. At sentencing, Malkhasyan faces a maximum statutory sentence of 60 years in federal prison, and Atikyan could be sentenced to as much as 30 years in prison. As part of a plea agreement with the government, Malkhasyan has agreed to forfeit well over $100,000 and a 2006 Merdedes-Benz.

This case is the result of an ongoing investigation by the Office of Inspector General for the United States Department of Agriculture.