Federal Sentencing Enhancement in EBT Card Fraud Case
The following federal case arose in Guam, but was appealed to the U.S. Ninth Circuit Court of Appeals, whose rulings have binding effect over federal matters arising in California, so we present it, as its facts involve fraud with what is formerly known as the federal Food Stamp program.
The Supplemental Nutrition Assistance Program (SNAP), formerly known as the federal Food Stamp program, is a federal program that “permits low-income households to obtain a more nutritious diet through normal channels of trade by increasing food purchasing power for all eligible households who apply.” 7 U.S.C. § 2100. States and U.S. territories are provided funding to administer SNAP benefits. 7 U.S.C. § 2013(a).
In Guam, SNAP is administered through the Guam Department of Public Health and Social Services (DPHSS). DPHSS provides SNAP recipients with an Electronic Benefits Transfer (EBT) card, which like a debit card that can be used at authorized stores to buy certain food products. Each EBT card has a card number imprinted on it.
Each cardholder has a PIN (personal identification number) that, like a debit card PIN, must be entered at the point of sale to complete the transaction.
Marites M. Barrogo, who was not a SNAP beneficiary, was the owner and operator of Laguna Best Restaurant and Catering in Harmon, Guam. From 2015 to 2020, Barrogo bought SNAP benefits from various individuals at a substantial discount, and then used those benefits to buy bulk food items for her restaurant.
Barrogo used two different methods to traffic SNAP benefits. From 2015 to 2018, Barrogo regularly purchased SNAP benefits from co-defendant Stephanie Muna. Approximately once a month, Muna would give Barrogo her EBT card and PIN and Barrogo would purchase bulk food items for Laguna Best such as vegetables, frozen meat and other items. Barrogo would typically use $600 worth of SNAP benefits each month, for which she would pay Muna $400 in cash.
During this period, Muna recruited at least four other SNAP beneficiaries to sell their benefits to Barrogo in a similar manner.
The second method is Barrogo would have SNAP beneficiaries use their own EBT card and their own PIN to buy $600 worth of bulk food and then they would sell it to Barrogo for $400 in cash.
In June 2018, the DPHHS Investigation and Recovery Office began investigating Barrogo. At that point, she had used $15,625 in SNAP benefits from Muna. The reason the investigation began is because SNAP beneficiaries typically bought small food quantities for personal use and the stores suspected the purchased bulk food items were being bought for a business.
In 2021, a grand jury indicted Barrogo on two counts of unauthorized use of SNAP benefits in violation of 7 U.S.C. § 2024 and one count of conspiracy to use, transfer, acquire, alter or possess SNAP benefits without authorization in violation of 7 U.S.C. § 2024 and 18 U.S.C. § 371.
Barrogo pled guilty to the conspiracy count. As part of her plea agreement, she stipulated to a two-level authentication feature sentencing enhancement under U.S.S.G. § 2B1.1(b)(11)(A)(1), which was based on her used of EBIT cards and PINs to purchase food. The other two charges were dismissed as part of the plea.
With a two-level increase for use of an authentication feature, the Sentencing Guidelines range was 10 to 16 months in federal prison.
The district court judge handling her case sentenced Barrogo to ten months in federal prison and three years of supervised release and ordered Barrogo to pay $18,752.30 in restitution.
Barrogo appealed the two-level sentencing enhancement for use of PINs, arguing that PINs are not an authentication feature because the PIN was not physically on the EBIT card.
The Ninth Circuit Court of Appeals in Honolulu, Hawaii affirmed the sentencing enhancement because an authentication feature is a property that provides a way to identify individuals and the Sentencing Guidelines further define “authentication” feature to include codes or sequences of numbers that can be used to determine whether the person holding the card is truly the person the card was issued to. Using this definition, PINs are an authentication feature.
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