Mansi et al v. United States of America

Filing 72

ORDER entered by Judge Ortrie D. Smith. Judgment is entered in defendant's favor. (Kanies, Renea)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION

JALAL MANSI, BILAL HIJAZ and
JAMAL MANSI d/b/a OLIVE CAFE
and OLIVE CAFE, INC.,
Plaintiffs,
vs.
UNITED STATES OF AMERICA,
Defendant.

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Case No. 11-0903-CV-W-ODS

ORDER AND OPINION SETTING FORTH
FINDINGS OF FACT AND CONCLUSIONS OF LAW
IN SUPPORT OF JUDGMENT FOR DEFENDANT
Pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, and based on all
files, records, memoranda, and arguments of counsel for all parties, both orally and in
writing, the Court makes the following findings of fact and conclusions of law. Judgment
is entered in Defendant’s favor.

I. FINDINGS OF FACT
The United States Department of Agriculture’s Food and Nutrition Service (“FNS”)
operates the Supplemental Nutrition Assistance Program (“SNAP”), formerly known as
the food stamp program. SNAP utilizes an Electronic Benefit Transfer (“EBT”) system,
and SNAP recipients obtain their benefits through an EBT card. SNAP benefits may be
redeemed only in exchange for eligible food items from retail food stores that have been
approved to participate in SNAP. Authorized stores have an EBT machine that allows
eligible purchases to be processed with an EBT card.
Olive Café was approved by FNS to participate in the SNAP program as a food
retailer. Rashid Khalaf, a former manager at Olive Café, conducted most of the
transactions between August 2010 and December 2010 until he stopped working at the

store sometime in December 2010. Olive Café owners Jamal Mansi or Bilal Hijaz
conducted all transactions in January 2011. Between August 2010 and January 2011,
Olive Café made more than $95,000 in sales through the SNAP program.
On November 16, 2010, Donna Donovan, an investigator with FNS, made a store
visit to Olive Café. Her report noted that Olive Café had one cash register, one adding
machine, one EBT terminal, and no optical scanning device. The report also noted that
grocery items were priced ending in a cents value of $0.99.
On May 23, 2011, FNS sent Plaintiffs a letter (“May 23, 2011 Letter”) informing
them of 267 suspicious transactions that were indicative of SNAP benefit trafficking
between August 2010 and January 2011. Trafficking includes buying unapproved
products with SNAP benefits and trading benefits for cash. The flagged transactions
included 21 transactions in August 2010 ending in $0.00. One of these transactions was
for $50.00. FNS also found 6 sets of transactions made in a rapid succession of time too
short to be credible and 100 sets of back-to-back transactions made from the same SNAP
account in a short period of time. For example, on January 22, 2011, after a transaction
for $28.52, 2 minutes and 52 seconds later a second transaction was made by a different
household for $362.71. Another suspicious transaction occurred on Olive Café on
January 6, 2011. After a transaction for $235.18, 2 minutes and 45 seconds later a
second transaction was made by the same household for $118.98. On September 4,
2010, a $240.89 transaction occurred at a superstore 21 miles from Olive Café.
Twenty-five minutes later, a transaction at Olive Café totaling $333.00 was processed for
the same SNAP household. Finally, FNS found 140 transactions exceeding the average
transaction for stores of the same size/type by 300%. One of these instances occurred
in the months of October through December 2010 when one household made single
monthly transactions at Olive Café of $748.78, $681.46 and $592.37, respectively, while
it made multiple smaller purchases throughout the month at Price Chopper, located less
than a mile from Olive Café.
FNS received no response to the May 23, 2011 Letter. On June 8, 2011, FNS
issued a final determination letter to Olive Café, permanently disqualifying it from
participating as a SNAP retailer. Olive Café requested an appeal, but failed to provide
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any documentation in support of the appeal. On August 11, 2011, the administrative
review officer issued a Final Agency Decision and Olive Café was permanently
disqualified from participating as a SNAP retailer.

II. CONCLUSIONS OF LAW
SNAP benefits may only be used to purchase food from stores that have been
approved to participate in the program. 7 U.S.C. § 2013(a); 7 C.F.R. § 278.2(a).
Trafficking is “the buying or selling of coupons, ATPS cards or other benefit instruments
for cash or consideration other than eligible food.” 7 U.S.C. § 271.2. A store that makes
a trafficking violation is permanently disqualified from participating in the program. 7
U.S.C. § 2021(b)(3)(B); 7 C.F.R. § 278.6(e)(1)(i). Permanent disqualification occurs
even for a single instance of a violation. 7 U.S.C. § 2021(b)(3)(B). However, a civil
monetary penalty may be imposed in lieu of permanent disqualification for trafficking if
there is substantial evidence that (1) the store had an effective policy and program in
effect to prevent violations and (2) the ownership of the store was not aware of, did not
approve of, did not benefit from, and was not involved in the conduct of the violation. 7
U.S.C. § 2021(b)(3)(B); 7 C.F.R. § 3.91.
A store that is permanently disqualified from participating in SNAP may bring an
action for judicial review by filing a complaint against the United States in federal district
court. 7 U.S.C. § 2023(a)(13). Issues of fact are tried de novo in the district court.
Sims v. U.S. Dep’t of Agric. Food & Nutrition Serv., 860 F.2d 858, 862-63 (8th Cir. 1988).
Plaintiffs bear the burden of proving that the store was improperly disqualified either
because there were no violations or because they are entitled to be sanctioned with a civil
monetary penalty in lieu of permanent disqualification. See Fells v. United States, 627
F.3d 1250, 1253 (7th Cir. 2010). If Plaintiffs meet this burden, the penalty imposed by
FNS may be set aside only if it is shown to be arbitrary and capricious. Estremera v.
United States, 442 F.3d 580, 585 (7th Cir. 2006).

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III. DISCUSSION
In this case, Plaintiffs seek judicial review of FNS’s Final Agency Decision
permanently disqualifying Olive Café from participating in the SNAP program. FNS
identified four categories of suspicious SNAP transactions at Olive Café between August
2010 and January 2011. These include: (1) 21 transactions in August 1010 that ended
in $0.00; (2) 6 sets of transactions that were made in a rapid succession in time frames
too short to be credible; (3) 100 sets of back-to-back transactions made from the same
SNAP account in a period of time too short to likely be credible; and (4) 140 transactions
that exceeded the average transaction for stores of the same size/type by 300%. The
Court finds that there was at least one or more instance of trafficking.1 Although not
required to justify permanent disqualification, the Court finds a trafficking violation
occurred in each category outlined by FNS.
First, the Court finds that one instance of trafficking occurred in August 2010
totaling $50.00. The evidence shows that Olive Café grocery items were priced ending
in a cents value of $0.99. It is very unlikely that a transaction would end in $0.00 with a
pricing structure ending in $0.99. In addition, a store visit report noted that Olive Café did
not round off purchase totals. Whether or not this notation was accurate, if Olive Café
was rounding totals as a general business practice, there would have been consistent
flags in the system of this occurring every month and not just the 21 times in August 2010
alone.
Next, the Court finds that several “rapid succession in time” transactions and
“back-to-back” transactions were trafficking, including two in January 2011. On January
6, 2011, a household made a transaction at Olive Café for $235.18. Two minutes and 45
seconds later the same household made a second purchase for $118.98. Also, on
January 22, 2011, a transaction was completed for $28.52. Two minutes and 52
seconds later a different household completed a transaction totaling $362.71. These

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Although the Court does not discuss each instance of trafficking, the Court does not find
that they did not occur. There is simply no need to discuss each and every violation once
the Court finds that at least one violation occurred.
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transactions were made too close in time to be credible. The number of grocery items in
these purchases would require more time for the first transaction to be completed,
bagged up, and moved out of the way and for the second transaction’s price to get
calculated—especially when there was only one cash register, one adding machine, one
EBT machine, limited space for check-out, and no conveyor belt or optical scanning
device.
The Court finds that trafficking also occurred on September 4, 2010, when a
$240.89 transaction was made at a superstore 21 miles from Olive Café, and only 25
minutes later, a transaction at Olive Café totaling $333.00 was processed for the same
SNAP household. These back-to-back transactions made by the same SNAP
household occurred too close in time to be credible. There was not enough time for the
customer to leave the superstore, load the groceries in the car, drive 21 miles to Olive
Café, select more than $300 worth of groceries, and have the items totaled up and the
transaction completed all in 25 minutes. Olive Café had limited space to check-out
items, no optical scanning devices, and only one cash register. Plaintiffs testified that
they believed this type of transaction occurred because sometimes a customer would
phone-in an order. However, Plaintiffs have failed to present any documentary
evidence, such as orders taken in advance by phone, to show that the transaction in
question was only for SNAP eligible food items and totaled amounts deducted from SNAP
EBT accounts.
Finally, the Court finds trafficking occurred with one EBT household in the months
of October through December 2010. This household made single monthly transactions
at Olive Café of $748.78, $681.46 and $592.37 while making multiple smaller purchases
throughout the month at Price Chopper, which was located less than a mile from Olive
Café. The most expensive SNAP eligible food items at Olive Café included whole lamb
and goat for $130-$140 each, canned milk for $27.99, cooking oil for $24.99, and 10
pounds of rice for $17.99. Even if this household purchased a whole goat as well as one
of each of the more expensive items in the store, the purchase total would not even be
near the price of its transactions.
Critically, Plaintiffs did not carry their burden to give an innocent explanation for
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each violation. Plaintiffs provided various explanations about how the flagged
transactions could have been legitimate. Rashid Khalaf, a former manager at Olive
Café, and Jamal Mansi, an owner of Olive Café, testified that they frequently gave
customers discounts by rounding down a purchase total, but never gave SNAP
customers cash back because it was against their religion. They also testified it was not
unusual to have transactions close in time because sometimes customers would call in
orders and the groceries would be bagged up and the price calculated ahead of time.
Then, as soon as the customer arrived, the purchase would be rung up and the only thing
the customer had to do was swipe his or her EBT card. Khalaf and Mansi said that
sometimes customers would have two carts and transactions would be rung up
separately and that it was not unusual for customers to come in once a month and make
big purchases. Plaintiffs also presented testimony of a few Olive Café customers who
testified they often made large purchases, would sometimes call in an order ahead of
time, and never asked for nor received cash back because it was wrong or against their
faith. They testified that sometimes they received a discount where their purchase total
was rounded down
It is possible that some of the 267 suspicious transactions were legitimate.
However, Plaintiff’s generalizations about customer shopping habits, Olive Café’s
business practices, and certain religious customs are not helpful to Plaintiff’s cause
because they cannot point to specific transactions that were legitimate. A plaintiff must
demonstrate that each violation was not trafficking; general allegations will not suffice.
Kahin v. United States, 101 F. Supp. 2d 1299, 1303 (S.D. Cal. 2000).
Because the Court has concluded that at least one instance of trafficking occurred,
it must now determine whether Olive Café is entitled to the lesser punishment of a civil
monetary penalty. In this case, Plaintiffs failed to show they are entitled to be sanctioned
with a civil monetary penalty in lieu of permanent disqualification for three independent
reasons. First, the Court finds no evidence that Olive Café had an effective policy and
program in effect to prevent violations. To the contrary, Jamal Mansi, one of the owners,
testified that he did not know that he could conduct an EBT balance inquiry and instead
required customers to make a purchase in order to check their balance. The Court finds
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there is no way to have an effective program in place to prevent SNAP violations when the
store owners did not fully understand the program and EBT system. Second, the Court
finds that the Olive Café owners participated in the trafficking. At least two of the
trafficking violations the Court found occurred in January 2011 and were conducted by
either Jamal Mansi or Bilal Hijaz, owners of Olive Café. Third, all the owners benefited in
the trafficking by redeeming the SNAP transaction benefits, totaling more than $95,000
between August 2010 and January 2011. Accordingly, a civil penalty in lieu of
permanent disqualification is not an option.

III. ORDER
It is hereby Ordered that judgment be entered in favor of Defendant.

IT IS SO ORDERED.

/s/ Ortrie D. Smith
ORTRIE D. SMITH, SENIOR JUDGE
UNITED STATES DISTRICT COURT

DATE: March 22, 2013

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