Three people from Rock Hill were sentenced in federal court in Columbia Wednesday for conspiracy to defraud the United States in a $5 million food stamp fraud case that prosecutors said was "unparalleled in South Carolina." Li Phu, 55, described a Andrew Dys adys@heraldonline.com
Three people from Rock Hill were sentenced in federal court in Columbia Wednesday for conspiracy to defraud the United States in a $5 million food stamp fraud case that prosecutors said was "unparalleled in South Carolina." Li Phu, 55, described a Andrew Dys adys@heraldonline.com

Crime

Rock Hill trio organized ‘elaborate’ $5M food stamp fraud, called SC’s largest ever

By Andrew Dys

adys@heraldonline.com

February 07, 2018 02:33 PM

COLUMBIA

In what prosecutors said was the largest case of food stamp fraud in South Carolina history, a pair of Rock Hill immigrants who ran a $5 million scheme were sentenced to prison Wednesday. A third defendant was sentenced to probation.

The scheme cheated the federal government out of as much as $90,000 a month for years, prosecutors said. But the sentences, handed down in federal court in Columbia, were shortened because all three helped prosecute “poor people” who misused food stamps to buy gas, cigarettes and beer at a store that operated almost exclusively as a food stamp mill, prosecutors said.

The conspirators overcharged the food stamp program and kept the extra money, prosecutors said. Food stamp rules prohibit them from being used to buy nonfood items.

“This fraud is unparalleled in South Carolina,” said Jim May, assistant U.S. attorney. “It was astronomical how much fraud was going through this store.”

Help us deliver journalism that makes a difference in our community.

Our journalism takes a lot of time, effort, and hard work to produce. If you read and enjoy our journalism, please consider subscribing today.

The scheme leader, Li Phu, 55, an immigrant from China who pleaded guilty last year, was sentenced to two years in prison. She spent at least six years at two different stores, overcharging those described by prosecutors as “poor people” on food stamps for illegal sales of gas, cigarettes and beer, and then pocketed the difference. The U.S. Department of Agriculture Supplemental Nutrition Assistance Program is commonly known as food stamps.

Hoang Nguyen, an immigrant from Vietnam, and Phu’s daughter, Dianne Phu, also pleaded guilty last year to conspiracy to defraud the United States.

An average South Carolina store does about $1,200 a month in food stamp purchases, May said.

The two stores in the scheme, first the Gas on the Spot at Heckle Boulevard and South Cherry Road, and later the Daily Express Mart near downtown Rock Hill, pocketed as much as $90,000 a month, prosecutors said.

It remains unclear what happened to the $5 million. Li Phu only had about $60,000 in assets, which the government has seized, testimony showed.

Phu and Nguyen have to collectively pay back the $5 million over the rest of their lives, testimony showed.

Judge Mary Geiger Lewis called Li Phu “the organizer and leader” of an “elaborate and extensive cheating” conspiracy. The public must know that such theft will not be tolerated, and it is not enough to just pay back the money, Lewis said.

Phu “knew exactly what she was doing,” Lewis said in court. “There needs to be punishment that others can see. This was a huge loss.”

Phu, who needed a Chinese interpreter, did not comment in court.

Phu ran the plot with Nguyen and her daughter as employees at the Gas on the Spot store, which she owned until it closed in 2013, testimony showed.

Then Nguyen, 29, approached Phu about opening a new store, the Daily Express Mart near downtown Rock Hill, where the fraud continued until it was discovered by federal agents in 2015, prosecutors said.

Nguyen “fell in lockstep with Ms. Phu and continued the fraud,” said May.

The Daily Express store had almost no cash customers, and catered almost exclusively to food stamp clients, said Nguyen’s lawyer, Jim Morton of Rock Hill. But Nguyen did what Li Phu asked him to do and received almost none of the money.

“Everything was controlled and organized” by Phu, Morton said in court.

Nguyen said in court he committed the ongoing crimes because his father was sick.

“I am sorry, I made a really bad mistake,” Nguyen said in court. “I answer for what I did.”

Nguyen was sentenced to 366 days in prison, or a year plus one day.

Li Phu’s daughter, Dianne Phu, 23, was sentenced to probation. Prosecutors say she helped police and federal agents with the case after it was discovered. Dianne Phu was acting under the direction of her mother, said her lawyer, prosecutors and the judge.

All three faced up to five years in prison for the stolen $5 million, but received less time because each helped the S.C. Attorney General’s office prosecute food stamp recipients from Rock Hill who were also part of the Daily Express Mart fraud.

In 2017, South Carolina prosecuted 60 food stamp cases and recovered about $209,000, said the S.C. Attorney General’s office. Nine cases were in York County from the Daily Express Mart, testimony showed Wednesday.

The three defendants testified for prosecutors in two York County cases that went to trial and secured convictions; they were prepared to testify in other cases that led to guilty pleas and orders for repayment of stolen benefits.

About 700,00 people in the state recieve food stamps.