New Mexico EBT Funds Used In Liquor Stores, Casinos, Smoke Shops, and Hooters

By Jim Scarantino on November 28, 2012
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Booze, blackjack, butts and babes.

New Mexico welfare funds turned up in surprising places in a two month period of EBT card transactions examined by New Mexico Watchdog.

The money is supposed to be used for life’s essentials to help needy New Mexico families with children.  A prior report showed transactions on New Mexico-issued EBT cards in 45 states in the two month period we studied.  A closer look shows the state’s welfare funds being used in ways and places that don’t exactly fit the picture of a struggling family that can make ends meet only with public cash assistance.

EBT stands for “electronic benefit transfer.”  It works the same as a debit card.  The EBT card is charged each month with a fresh monetary value that can be used for direct purchases or cash withdrawals.  Cash back can also be given on purchases.

We examined all the EBT transactions for November and December 2011, and a partial list of transactions in October 2011.  The vast majority of transactions showed cash withdrawals or purchases in businesses that do not on the surface raise suspicions.  Such businesses include grocery stores, discount clothing stores, Walmarts, Walgreens and convenience stores.  Of course, cash withdrawn at an ATM in those businesses could have been used to purchase liquor, cigarettes, and other articles that are not the intended purpose of the funds.  There is simply no way of knowing how the cash was used.

A significant number of transactions of New Mexico’s welfare funds are withdrawn and/or spent inside businesses that by their very nature suggest baby food, diapers or utility bills were not the reason these welfare funds were accessed.

The transactions we analyzed were conducted on EBT cards issued by the New Mexico Human Services Department under the Federal Temporary Assistance to Needy Families program.  EBT card holders may withdraw cash at ATMs in any state.

Booze

New Mexico EBT cards were used to withdraw cash or make purchases inside liquor stores around the country.

In Albuquerque, EBT transactions occurred frequently at Oasis Liquors on East Central in Albuquerque.  For instance, on December 1, 2011, cash withdrawals were made inside Oasis Liquors in the amounts of $200, $40 and $20.  On that same day, $100 was withdrawn inside Ray’s Liquors in Las Cruces, $20 inside the Monte Carlo Liquors and Steakhouse in Albuquerque, $32 inside Ace Liquors in Los Angeles, and $100 inside the Grace O’Malley Irish Pub in Ruidoso.  A purchase of $13.76 was also made at the Joy Party liquor store in Harrison Township, Michigan.

Frequent cash withdrawals and/or purchases were made in this two month period at Oasis Liquors and Ray’s Liquors, as well Freeway Liquors, Downtown Liquors and the Bird of Paradise liquor stores in Albuquerque.  Repeated, but less frequent use of EBT cards occurred in the Monte Carlo Liquors and Steakhouse and the Grace O’Malley Irish Pub.

We also found repeated EBT transactions at Kelly’s Brew Pub in Albuquerque in sums of $120 and up.

New Mexico watering holes also saw EBT withdrawals and/or purchases.  $60 was withdrawn inside the Lotus Nightclub and VIP Ultralounge in Albuquerque.  There is a $10 cover charge to get inside the establishment.

The Library bar in downtown Albuquerque saw several withdrawals of cash on its premises, as did the Launchpad bar a few blocks west on Central Avenue.  Like the Lotus Nightclub, the Launchpad usually demands a cover charge for admittance.

Multiple purchases were made at the Pecos Bar in Santa Rosa.  Cash withdrawals of $200 and $120 occurred on the same day in the Alamogordo VFW.  Someone with a New Mexico EBT card cashed out $40 inside the Moose Lodge in Las Cruces.  The same amount was withdrawn inside the Knuckleheads Bar on Coors Boulevard in Albuquerque.

We also found multiple purchases and/or cash withdrawals at two liquor stores in Hesperia, California, and liquor stores in Independence, MO, Wilmington, CA, Whittier, CA, Los Angeles, CA, Mesa, AZ, Grand Rapids, MI, and Harrison, MI.

Blackjack

The New Mexico Human Services Department has acted aggressively to prevent welfare recipients from withdrawing cash on their EBT cards inside casinos.  But that may not be enough.  We found multiple large cash withdrawals from ATMs located outside or close to casinos along the US 285 corridor between Santa Fe and Espanola.  We found multiple cash withdrawals at an ATM identified as “Camel Rock” in the Department’s records.  This ATM is located at 10 Camel Rock Road, Santa Fe, which is the address of the Valero gas station and convenience store outside the Camel Rock Casino.

We found multiple withdrawals of New Mexico welfare funds at casinos outside the state’s borders.  For instance, $280 was withdrawn on November 1 and again on December 1 at the Speaking Rock Casino in El Paso, Texas.  $100 was withdrawn at the Skydancer Casino in Belcourt, North Dakota.  A total of $260 was withdrawn on one day at Aces Up in Bridge City, Texas.  Someone with a New Mexico EBT card withdrew $200 in cash inside the El Capital Casino in Hawthorne, Nevada.  $300 was withdrawn from an ATM outside the Hawaiian Gardens Casino in Hawaiian Gardens, California.

Babes

Cash withdrawals of New Mexico welfare funds were made from inside the Knockouts strip club in downtown Albuquerque.  We also found withdrawals inside Hooters bars in Albuquerque and Las Cruces.  On December 1, for instance, $360 of welfare funds on someone’s EBT card was accessed from inside the Las Cruces Hooters.  Three weeks later, $280 was accessed from inside the Albuquerque Hooters.

We classified the EBT transactions inside the Library and Knuckleheads bars under “Booze.”  But a quick look at their websites and Facebook pages provides enough reason to put them in this category, as well.

Butts

New Mexico EBT cards were used to withdraw cash or make purchases in smoke shops around the country.  In Albuquerque, EBT cards were used multiple times as the Oasis, M&M and Ray One smoke shops.  For instance, on December 1, four withdrawals of $100 each took place inside the M & M Smoke Shop.  NMHSD records show purchases as well as cash withdrawals inside the smoke shops.

Some of these stores sell more than cigarettes.  The Oasis, for instance, features a hookah lounge. Bongs and pipes can also be purchased in some of these stores.

Outside the state, New Mexico EBT cards were used at Old Town Tobacco in Carson, California, the Tobacco Store in West Monroe, Louisiana, Beer and Tobacco in Independence, Missouri, and the On Auk Mor Smoke Shop, a tax free smoke shop on an Indian reservation near Scottsdale, Arizona.

Hitting the Slopes, Knocking Down Pins

One New Mexico welfare recipient used their EBT card to withdraw $200 in cash at the Sipapu Ski Resort.  Another welfare recipient used their EBT card to tap $100 in cash at Leisure Bowl in Albuquerque.

Pizza, Lots of Pizza

Nearly two thousand dollars in cash was withdrawn from inside the NYPD pizza restaurant in downtown Albuquerque in the short time period we examined.  On October 1 alone, $520 in cash was tapped from inside this pizza establishment (which also sells beer and wine).  This business is located just about one block away from the Knockouts strip club and the Library bar where we found other EBT transactions and sits at the gateway to Albuquerque’s night life zone along Central Avenue.  The back door to the Lotus Nightclub and VIP Ultralounge is across the street.

EBT cards were used to make multiple purchases at pizza parlors in El Paso, Artesia, Roswell, Carlsbad

At the Pied Piper Pizza in Las Cruces, $340 was withdrawn in three transactions on November 1.

We found EBT withdrawals and purchases at other restaurants across the country, like $40 at a Burger King, $80 at a House of Waffles, and four withdrawals of $100 each at Rose Donut in Inglewood, California.

Shopping Spree

Welfare funds were withdrawn in cash or used to make purchases frequently at Dillard’s department stores.  Dillard’s describes itself as an upper-end retailer featuring “fine clothing, brand name electronics and home decor.”  On December 1, $420 was withdrawn at the Dillard’s at Cottonwood Mall in Albuquerque.  The next day $300 was withdrawn at a Dillard’s in El Paso and $600 at a Dillard’s in Las Cruces.  On Noveber 2, $400 was withdrawn inside a Dilliard’s in Farmington.  On October 1, $1,420 was accessed from inside Dillard’s stores in Santa Fe, Las Cruces, Albuquerque, and El Paso and Odessa, Texas.

Whole Foods is beyond the budgets of many people who would not qualify for public assistance, but we found New Mexico welfare funds being used to purchase this chain’s pricey items every month.  Consider this excerpt showing just one day’s transactions at Whole Foods stores (click on image to enlarge):

 

New Mexico Welfare Funds Leaving the Country?

We came across several unusually large expenditures at United States Post Offices.  For instance, a New Mexico EBT card was used to make a $331.10 purchase at the USPS office in Organ, New Mexico on December 5.  A purchase of $380 using a New Mexico EBT card was made in a Las Cruces USPS office on November 1–with $378.90 cash back on top of that purchase.  On November 7, again at the Organ USPS office, someone made a purchase of $380.  In Columbus, New Mexico, a New Mexico EBT card was used to make a $241.10 purchase in a USPS office on November 10.

Maybe these hundreds of dollars of welfare funds were spent on postage.  More likely, they were spent on money orders so that New Mexico welfare funds to be sent to someone other than the approved recipient.  USPS offers domestic as well as international money orders.

We also found hundreds of dollars intended for food, clothing and rent spent or withdrawn in cash at Greyhound bus terminals, the Miami airport and motels near the El Paso airport.

How Bad is EBT Abuse and What Is Being Done?

We have provided just a brief glimpse at about two months’ EBT transactions in one of the country’s least populous states.  Our review of these limited sample is by no means exhaustive.

EBT fraud and abuse is a growing problem around the country.  This is to be expected from a program that distributes billions of dollars in cash that can be spent on anything, anywhere, without any accountability.

In our next report we will review other investigations of this problem and discuss what the New Mexico Human Services Department is doing about it.

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13 Comments For This Post So Far

  1. TH
    10:17 am on November 29th, 2012

    Yay!

    Let’s get drunk, smoke, ski, gamble, buy some cool duds, & health food!

    We’ll finish the night with pizza & strippers!

    While we’re at it, we can send some money orders to our buddies so they too can enjoy the good life.

    What? EBT is accepted in other states? VACATION TIME! Is it accepted internationally? I know a great bistro in Paris!

    After all, it’s tough being needy. So glad others are working so we don’t have to!

  2. Jim Scarantino
    10:43 am on November 29th, 2012

    The Whole Foods data needs a little explanation I forgot to include. The column at the far right indicates the amount of a purchase. The column to the left of that indicates cash back. E.g., at the Santa Fe Whole Foods store on this data someone used an EBT card to buy $226.88 of food and got $100 cash back.

  3. Jim Scarantino
    10:45 am on November 29th, 2012

    I said $226.88 of “food” but the money may have been spent on anything sold in the Whole Foods store, from massage oils to Italain wine to organic argula. There is simply no way of knowing what the money was used to purchase.

  4. fsm_47
    12:17 pm on November 29th, 2012

    back to the stamps to be only used in a store..

  5. paulwhite
    1:14 pm on November 29th, 2012

    I’d like to know more about what is being done to address this issue. Please include this information in your followup. If there is anything we can do as citizens please let us know.

  6. Kane O
    5:00 pm on November 29th, 2012

    Way to make the businesses look bad, when the entire problem is not them! The problem is the system that allows these folks to get debit cards from the get go! What do you expect small business owners to do? Ask each customer where they got the cash they are using from? Let us all be realistic here, this is one reason why Small Business Owners suffer. Armature reporting like this is one of the reasons why small businesses go out of business.

    The funny part is how you forget that most of the taxes made in the state comes from the same businesses these folks spent their money at! In other words, you might be liable for the loss of potential jobs and potential profits just because you made these businesses look like the welcome this sort of behavior. GOOD JOB!

  7. Kane O
    7:06 pm on November 29th, 2012

    Quit deleting comments. You got your chance to say what was on your mind, let the people comment and don’t be a Nazi!

  8. wesley
    7:45 pm on November 29th, 2012

    I’m curious as to where you are getting your data on the smoke shops, especially the info on oasis. I know for a fact that you cannot use an ebt card to purchase anything in that store. And its been like that since they opened. The owner keeps a close eye on his business and I’m sure if you would like to get the correct information he will be more than happy to speak to you.

  9. Jim Scarantino
    1:52 pm on November 30th, 2012

    To Kane O: Your earlier comment was not deleted. Since you had not previously commented on this site, your comment did not appear instantaneously until it received approval from the administrator. The author of this story has been on the road and was delayed in reviewing pending comments. Thank you for sharing your thoughts with us and our readers.

  10. Trevor
    10:42 pm on December 11th, 2012

    This story is bogus. EBT funds can only be used for food items as the transactions are coded for specific bar codes related to food stuffs. CASH ASSISTANCE is a program separate from EBT but the funds are deposited and used via your EBT card. There is no way to purchase any non food items with an EBT card. If there are liquor purchases on an EBT card it can only come from someone who has cash assistance and is using their card for it. This story is bogus lies.

  11. Jim Scarantino
    3:29 pm on December 12th, 2012

    Trevor: We are reporting exactly what the EBT transaction records report. The EBT cards are being used in the locations we reported. Cash is being withdrawn inside the liquor stores, bars, smoke shops, etc. If you want to believe that someone paid the cover fee at a nightclub to gain access to the ATM inside the club so they would have cash to buy food for their family, please feel free to do so. But cash withdrawals of hundreds of dollars in a Hooters, for instance, raise legitimate cause for concern that the program is being abused.

  12. Trevor
    5:10 pm on December 12th, 2012

    I’m sorry sir but you do not understand how the EBT/Cash Assistance system works. Cash Assistance transactions are used via the EBT card and will show up on EBT transactions. As I stated, EBT funds are coded to be used with items that are on the EBT database via approved bar codes and CANNOT be used on anything else, THE TRANSACTION WILL BE DENIED AUTOMATICALLY. When you stated you saw a transaction where someone bought items at Whole Foods Market (which is an approved store on the EBT system) and then received $100 cash back, the only way that is possible is if the person had Cash Assistance and took out $100 via their EBT card. Again, the EBT card is used to access Cash Assistance funds. Cash Assistance can be used as a Debit Card and AGAIN (why is this hard to understand…), the EBT card has dual use with the Cash Assistance program. What raises my concerns with your report is that EBT transaction cannot be tampered with by vendors or the card holder. There is a database of approved EBT items and they can only be used with them. The only way to circumvent this is if the business owner scans a food item and replaces the transaction with an item of equal value. If you still believe liquor, etc is being used with EBT funds, you should provide the research to show how they tamper with the EBT Database System. It still seems you don’t understand that Cash Assistance, which is exactly that; cash, is deposited to an account connected to an EBT card. The pictures you’ve shown are exactly what I’m talking about; cash taken out or used with an EBT card because it is also the card for Cash Assistance.

    Just a side note, the only possible legitimate fraud via EBT is if someone lends their card to another person to buy food then that person pays the EBT card holder 1/2 (standard trade value) the amount used for food, i.e., $200 used for food would equal $100 cash.

  13. Jodie Jaramillo
    4:14 am on February 8th, 2014

    There is EBT, then there is TANF. Both use the ebt card for transactions. You can not pull money from your ebt account, because that program is specifically for food only. So this study is very misleading and falsified. Do your research! Not many get TANF because the paper work is a pain in the ass.

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