We are requesting an extension through fiscal year 1985 in the authorization for administrative funds for the commodity supplemental food program. Certain technical improvements regarding this funding will also be proposed.

SUMMARY

I should like to close by summarizing the goals we have set in preparing our legislative package for the Food Stamp Program, the largest domestic food assistance program in terms of total program benefits.

It is the result of a thorough examination of the program. The proposal enhances measures Congress already has enacted. We believe its provisions directly design benefits to meet the food needs of low income households. Our language expressly eliminates the subsidization or duplication of other programs which meet non-food household expenditures. It will control administrative costs, further reduce fraud, error and abuse, and improve program efficiency in meeting the nutritional needs of eligible Americans. The bill's provisions will create, we believe, minimum disruption to State operations as the new rules are implemented.

This proposal fully supports the President's objectives in attacking inflation and other economic ills. It tailors the program to the overall recovery process to result in targeted nutrition assistance for needy households. As we look forward to the next few years, we want to ensure that the program is an affordable, efficient one which clearly meets the needs of those households requiring food assistance. The outside influences on the program-inflation and unemployment-ultimately must be controlled.

I appreciate the opportunity to appear before the Committee and would like to respond to any questions you might have.

TABLE 1.-ADMINISTRATION'S PROPOSED SAVINGS, FISCAL YEAR 1982

Delete 3 month projection of price index, delete increases in dependent care/medical expense deductions

CHART 1

Total Federal and Non-Federal Cost (Obligations) of Food Stamp Program Nominal and Real Dollars

1

2

3

4

5

6

8

CHART 3.-GROSS ELIGIBILITY STANDARD 130 PERCENT OF POVERTY LINE JULY 1981-JUNE 1982

[The following information was subsequently supplied by Mr. Magee, see p. 82 for the oral statement of Mr. Magee.]

Hon. JESSE HELMS,

U.S. DEPARTMENT OF AGRICULTURE,

OFFICE OF INSPECTOR GENERAL,
Washington, D.C., June 23, 1981.

Chairman, Committee on Agriculture, Nutrition, and Forestry,
U.S. Senate, Washington, DC.

Dear Mr. CHAIRMAN: On the occasion of my appearance April 2, 1981, before the Committee, you asked that I submit information regarding the problems encountered by our Special Agents in food stamp investigations by reason of a lack of full law enforcement powers.

In response to this request, I am enclosing a packet documenting the problem and the past efforts to obtain relief. As you will see, this material reflects a definition of the problem in 1979 to the Attorney General with illustrations of actual experiences, an updated supplement for 1979-1980, representative letters from United States Attorneys, previous legislative initiatives and related matter.

We will be grateful for any support and assistance you may be able to provide. If there is a need for additional information, please call upon me.

Sincerely,

Attachments.

ROBERT E. MAGEE, Acting Inspector General.

OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF AGRICULTURE, LAW
ENFORCEMENT AUTHORITY FOR OIG SPECIAL AGENTS

CONTENTS

Letter, Inspector General to Attorney General, August 23, 1979.

Supplement with additional illustrative incidents justifying law enforcement authorities, 1979-1980.

Representative letters from United States Attorneys.

Letter, Secretary of Agriculture to Director, OMB, May 3, 1978, proposing law enforcement authority for inclusion in "Criminal Code Reform Act of 1978." Excerpt, S. 1722, Criminal Code.

Letter, U.S. Marshal Service, August 29, 1980, advising of discontinuance of deputizations as Special Deputy U.S. Marshals.

Proposed controls for firearms training and issuance-Office of Inspector General, USDA.

To: The Attorney General.

U.S. DEPARTMENT OF AGRICULTURE,
OFFICE OF INSPECTOR GENERAL,
Washington, D.C., August 23, 1979.

From: Thomas F. McBride, Inspector General, U.S. Department of Agriculture. Subject: Law enforcement authorities for Special Agents of the USDA Office of Inspector General.

Over the past several years the number of major criminal investigations conducted by Special Agents of USDA's Office of Inspector General has shown a marked

increase. This is due in part to the growth and change in USDA programs. The Food Stamp program in 1970 amounted to one billion dollars. Today it is at almost seven billion dollars. Other fraud-vulnerable programs, particularly rural multi-family housing loan programs, and meat inspection and grading activities, have grown similarly. OIG investigators in years past concentrated on "farmer" programsgrain shortages, missing farmer loan collateral, misrepresentations for price support payments and less serious employee misconduct cases. That has changed. Today OIG agents investigate cases involving criminal rings involved in multi-million dollar food stamp trafficking and allied criminal activities such as bank or food stamp outlet robberies and burglaries, fencing of stolen goods, sales of narcotics and corruption of public officials; serious bribery cases, particularly in the meat inspection and grading programs; and complex interstate white-collar crime schemes preying on our multi-billion dollar loan programs.

Changing skills of OIG Special Agents have mirrored this changing workload. In place of the more pedestrian and less hazardous tasks of interviewing farmers, conducting grain inventories, counting cattle and examining USDA office files, OIG Special Agents increasingly work undercover, provide undercover backup, develop informants, conduct often dangerous surveillance, use sophisticated electronic monitoring and surveillance techniques, interview career-criminal subjects and witnesses, and participate in searches and arrests.

OIG presently has 280 Special Agents including supervisory personnel. So far, in fiscal year 1979, the work of these Special Agents resulted in 530 indictments. Recently we checked, using a 6 month test period in 1977 where we had final data on case dispositions, and found the conviction rate compared to indictments on OIG cases to be 93.6 percent. The biggest single category of cases, and the area where we most need law enforcement authorities, are Food Stamp cases. In fiscal year 1978 we conducted 865 investigations and used about 30 percent of our resources in this program with most of the cases involving trafficking activities. A total of 185 indictments were obtained in fiscal year 1978 in such cases.' Surveillance, undercover operations, and consensual monitoring are common techniques in Food Stamp investigations.2

Here are some examples of recent trafficking cases:

Baltimore, Md.

A 17 month OIG undercover investigation in cooperation with State, county and city police, culminated June 14, 1979, with 34 Federal indictments and 21 indictments in Baltimore City and Baltimore County. Operation "Fencerider" involved a number of suspected fences of stolen property who had moved into the Food Stamp trafficking field. Local and State officers had not been able to penetrate these operations which involved a number of persons with criminal records. Stolen property including appliances, weapons and explosives was purchased by the undercover Agents for Food Stamps in transactions totaling more than $70,000. U.S. Attorney Russell T. Baker wanted to utilize OIG Agents to execute arrest and search warrants and suggested to our General Counsel that it be authorized under Rule 41, Federal Rules of Criminal Procedure-which provides that a warrant "be directed to a civil officer of the United States authorized to enforce or assist in enforcing any law thereof." The General Counsel advised the U.S. Attorney that the Department has historically taken the position that OIG Agents do not have authority to serve arrest or search warrants in defending civil suits brought under the Federal Tort Claims Act (28 U.S.C. 2671 et seq.). The U.S. Attorney was obliged to arrange for substantial numbers of city and county police to effect the large scale arrests. Due to the constant danger to which these unarmed Agents were exposed and the uncertainty of adequate backup at all times, Assistant U.S. Attorney Bob Trout explored possibilities of arming the Agents as Special Deputy U.S. Marshals. This was not possible and eventually arrangements were made with the Commander of the State Police for permits which would allow Agents to carry arms for the duration of this particular operation.

New York City

In April 1978, following 20 months of investigation and surveillance, Ranbar Packing Company, a Queens meat and poultry wholesaler, and the company trea

Of the total of 530 indictments so far this fiscal year, 304 were for Food Stamp trafficking offenses or offenses detected in investigations of these cases (receiving stolen property, narcotics sales, illegal possession or sale of firearms, etc.). A full breakdown of OIG investigative workload is attached.

2 Since July 1, 1978, we have obtained approval from the Department of Justice for 158 initial consensual monitorings and 136 extensions of prior approvals. While it is too soon to have the results of these for this year, we monitored 52 conversations during the previous fiscal year with results to date being 26 indictments, 9 convictions and 15 prosecutions pending.

surer were indicted for trafficking more than $460,000 in stolen and embezzled Food Stamps. The scheme employed by this wholesaler was to alter Redemption Certficates tendered by numerous groceries to Ranbar with lawfuly acquired Food Stamps in payment for wholesale deliveries, to accommodate the many thousands of Food Stamps generated by theft and embezzlement. The investigative task was to trace backwards all Ranbar Food Stamp deposits, reconcile individual store records to prove the alteration of Redemption Certificates and to carry on surveillance during irregular hours throughout Brooklyn, Queens and Manhattan to identify the collection routes and sources of the illegal Food Stamps. The corporation was fined $520,000 (the largest criminal fine ever levied in the Eastern District) and the treasurer sentenced to three years. The actual owner and operator of this firm and its parent company, Ranchers Packing Corporation, Peter Castellana, is a member of one of the principal organized crime families in New York. The convictions have set the stage for the withdrawal of both Federal meat and poultry inspection, which would have the effect of terminating interstate commerce for the firm (United States v. Martin Gitlitz and Ranbar Packing, Inc., S.D. N.Y.). Brooklyn, NY.

OIG Agents conducted surveillance in dangerous areas over several months of an egg wholesaler whose Food Stamp redemptions had increased 1,000 percent in a few months. A trafficking operation reaching the level of $2,000,000 in illegal Food Stamps was established and fourteen suspects were indicted and later convicted. U.S. Marshals had to be brought in for the arrests because the OIG Agents lacked this authority. (United States v. Collazo, et al, S.D. N.Y.) Philadelphia, Pa.

OIG Agents and Postal Inspectors carried out a hazardous surveillance over several weeks in a van in a dangerous neighborhood in South Philadelphia. Several hundred persons were photographed while passing Food Stamps and Authorization to Purchase documents, illegally bought or stolen from the mails, through a slot in a storefront door for cash. An OIG undercover Agent made several transactions to provide uncontestable evidence. Several subjects were arrested and thousands of dollars in Food Stamps were seized in a raid by the Philadelphia Police SWAT Team, called in because the suspects were known to be armed. None of the OIG Agents in this operation were authorized to carry weapons or make arrests. (United States v. John McCullough, et al, E.D. Pa.).

A Democratic Committeeman and Bill Clerk for the City Council, together with his son, who operated a delicatessen, were arrested after buying a total of $5,000 in Food Stamps at discount from undercover OIG Special Agents. There had been three previous transactions and on one of these occasions the Committeemen displayed a pistol and threatened to shoot them if they turned out to be Federal agents. (United States v. Allan Fisher, E.D. Pa.).

A number of equally significant trafficking investigations are presently underway. In all of these investigations OIG Special Agents have had to work undercover in dangerous situations. Backup has to be provided, search and arrest warrants must be executed and, on occasion, at-the-scene arrests made. To carry out these operations we have had either to rely on our own, unarmed and unauthorized, agents or solicit the help of local or state police, or other Federal law enforcement agencieshelp that is often difficult to obtain. In a major trafficking case in New York, our Agent was staked out at a Check Cashing concern, through cooperation of the owner, when the suspect Postal employee entered and completed a transaction of stolen ATP cards with the involved check cashing employee. Had the Agent had authority to make an arrest, this case would not have required the additional efforts in surveillance and tracing used ATP's that was necessary to conclude the case. (United States v. Stukes, S.D. N.Y.).

The second major area where we need law enforcement authorities is in our own meat inspection and grading investigations. During fiscal year 1978 and through July this year, our investigations have resulted in 65 indictments in this program area, with a substantial number of these involving bribery or corruption. A recent case (United States v. Philip Jaffe, D. N.J.) is typical of our work in this program. Jaffe, a Supervisory Meat Inspector, pled guilty to soliciting a $3,000 bribe from a meat packer and was sentenced to two years. However, this case was almost lost because of our lack of law enforcement authority. Our lengthy surveillance of Jaffe and use of a body recorder on a cooperating meat company employee had established a pattern of extortion. The FBI was brought in when the arrest was anticipated-the plan being for an OIG Agent concealed in a warehouse to radio the arrest teams when the money changed hands. The FBI opted to use their radios and the FBI radio used by our Agent was inoperative and he could not signal when the transaction was observed. The arrest teams let Jaffe pass, thinking the deal had not