Food stamp fraud defendants flood the court

Many of the suspects arrested in the food stamp fraud bust known as Operation Gold Card appeared in court Tuesday afternoon. Future dates were set, but the cases did not advance much behind scheduling the next steps in the sprawling legal proceeding.

As of Tuesday, 49 suspects had been arrested for allegedly trading their state benefits for cash. Sixty-five suspects were identified in the investigation, which means 16 people are still being sought by the authorities.

Operation Gold Card was launched last spring in the wake of the multi-agency drug bust known as Operation Trojan Horse.

A source pointed local and federal law enforcement officers to a meat market and taco stand in Klamath Falls where the owners were allegedly ringing up customers with phony purchases in order to trade them cash for the electronic benefits contained on their Oregon Trail Cards, at the rate of 50 cents on the dollar.

Arrests began early in the morning of May 10 at several locations. The three alleged ringleaders in the operation — Jose Moreno-Hernandez, Rafael Ortega-Vargas and Severo Toro-Castellon — were arrested in the first day.

Detective Eric Shepherd, Klamath County Sheriff’s Office, said all the identified suspects are Klamath County residents. The 16 who are unaccounted for are still thought to be in the area as well.

“They’re all locals. These guys are not going to flee … I don’t think they have the means to relocate,” Shepherd said. “They may not even know that they’re wanted.”

Some of the wanted suspects are transients, making them hard to locate, or frequent guests of the county jail, meaning law enforcement officers will probably run into them eventually.

The food stamp fraud operation is thought to have made $12,000 to $20,000 a month. It may have been running for the past five years.

“It’s an easy system to defraud; it’s temptation. People are out of work, out of money, they’re looking for a way to get an extra dollar,” Shepherd said of the lure of the fraud operation. “You can’t buy certain things on a Oregon Trail Card you can buy with cash.”

Court hearings

Judge Marci Adkisson’s courtroom was packed Tuesday afternoon with Gold Card suspects and other, unrelated defendants. It was standing room only as people stood in the aisle and spilled out into the hallway.

Moreno-Hernandez and Ortega-Vargas were both present in restraints, as neither has posted their bail amounts.

Currently held in lieu of a $1 million bail bond, Moreno-Hernandez had previously pleaded not guilty to 10 charges. His trial date was set for July 2 at 9 a.m.

A settlement offer in the case should be prepared by the end of the week. District Attorney Rob Patridge said in court the state is waiting for additional information from the KCSO.

“It will take a while,” Patridge noted. “We believe there are funds stashed elsewhere as well.”

Ortega-Vargas, held in lieu of $750,000, had his trial also set for July 2. Patridge noted there might be pending immigration issues with both suspects.

According to Patridge and his deputy DAs, offers and discovery information should be completed for the rest of the Gold Card suspects by the end of this week.

Other cases

Detective Shepherd said several other food stamp fraud cases have sprung up around Oregon. Last week in Beaverton, a man accused of running a scheme similar to the alleged dealings in Klamath Falls was sentenced to 16 years in prison.

According to the Oregonian, 42-year-old Mahmoud Tajgerdu was trading cash for benefits out of his meat market and gas station. He may have been able to steal more than $1 million from the welfare system.

Several of Tajgerdu’s employees were charged in the case as well, according to the Oregonian.