Security News: Jury Convicts Father And Son Of Multiple Conspiracies In Extensive Food Stamp Fraud Scheme

OAKLAND – A federal jury yesterday convicted son Ali Mugalli Hassan and father Mugalli Ahmed Hassan of multiple counts involving government benefits fraud and conspiracies to commit such fraud, announced United States Attorney Stephanie M. Hinds and United States Department of Agriculture Office of Inspector General (USDA-OIG) Western Region Special Agent in Charge Dustin Cladis. The verdicts follow a one-week jury trial before United States Chief District Judge Phyllis J. Hamilton in Oakland. 

Ali Mugalli Hassan, 32, of Alameda, and Mugalli Ahmed Hassan, 50, also of Alameda, were charged on March 14, 2019, in a multiple count superseding indictment along with another family member, co-defendant Ahmed Ahmed Hasan Dharahan, 41, of Oakland. The superseding indictment alleged the defendants defrauded the United States Department of Agriculture (USDA) by unlawfully trafficking federal food stamp benefits from 2014 through 2017.  

Yesterday afternoon, a jury convicted son Ali and his father Mugalli of all four charges against them. Specifically, son and father were each convicted of conspiracy to defraud the United States; government benefits fraud greater than $5,000; conspiracy to commit wire fraud; and wire fraud. 

According to evidence presented at trial, Ali Mugalli Hassan owned and operated a convenience store on International Boulevard in Oakland. Members of Ali’s family served as cashiers at the store, including his father Mugalli Ahmed Hassan and his uncle Ahmed Ahmed Hasan Dharahan. The convenience store was an authorized vendor for the USDA’s Supplemental Nutritional Assistance Program (SNAP), formerly known as the Food Stamp Program. SNAP helps economically disadvantaged persons pay for essential food items for themselves and their families. Program recipients receive their benefits via an electronic benefits transaction (EBT) card, which operates much like a debit card but limits purchases to program-eligible items. The store conducted a high-volume of SNAP transactions, including redeeming over $2.3 million in SNAP benefits between August 2014 and November 2017. 

Trial evidence showed that the defendants conducted fraudulent SNAP transactions through the convenience store by charging purchases on the customers’ EBT cards, when in reality the customers received few or no SNAP-eligible products. The defendants kept approximately half the value of the fraudulent transactions and returned the remainder in cash to the customers. As part of the scheme, the defendants also kept customers’ EBT cards and used the federal benefits assigned to those cards at other stores to purchase items to sell at their own convenience store. 

Evidence at trial described numerous instances of this fraud over multiple years. For example, evidence showed that the defendants engaged in 10 fraudulent transactions with undercover agents as well as over a hundred additional fraudulent transactions shown on surveillance video. The evidence further showed that the defendants’ store engaged in over $2.3 million in SNAP transactions over an approximately three-year period, in contrast to the average medium grocer in Alameda County that redeemed just $520,000.

The federal jury today convicted Ali Mugalli Hassan and Mugalli Ahmed Hassan of one count of conspiracy to commit benefits fraud and to defraud the United States in violation of 18 U.S.C. § 371, which carries a maximum penalty of five years imprisonment. Ali Mugalli Hassan and Mugalli Ahmed Hassan were each also convicted of one count of benefits fraud greater than $5,000 in violation of 7 U.S.C. § 2024(b), one count of conspiracy to commit wire fraud in violation of 18 U.S.C. § 1349, and one count of wire fraud in violation of 18 U.S.C. § 1343. Before trial began Mugalli Ahmed Hassan also pleaded guilty to nine other charged counts of wire fraud in violation of 18 U.S.C. § 1343. Each conviction of a violation of 7 U.S.C. §2024(b) and of 18 U.S.C. §§ 1349 and 1343 carries a maximum sentence of 20 years imprisonment. All of the above counts of conviction carry a maximum fine of $250,000. However, any sentence for these convictions will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. 

United States Chief District Judge Phyllis J. Hamilton scheduled a sentencing hearing for both defendants on December 8, 2022. Both defendants remain out of custody pending sentencing. 

Co-defendant Ahmed Ahmed Hasan Dharahan’s case is still pending. A trial date has not yet been set in his case.

Assistant U.S. Attorneys Abraham Fine and Molly Priedeman prosecuted the case at trial with the assistance of Patricia Mahoney, Kay Konopaske, and Leeya Kekona. The prosecution is the result of an investigation by the USDA-OIG with the assistance of the Oakland Police Department, the U.S. Marshals Service, and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).