EVERETT — A police raid on a downtown mini-mart Tuesday morning was the culmination of a 17-month investigation into food-stamp fraud.
Fraz A. “Tony” Mushtaq, 34, the owner of the A One Smoke &Grocery store at Everett and Colby avenues, is suspected of paying people cents on the dollar for access to their state food-benefits cards.
He also is under investigation for allegedly buying and selling merchandise shoplifted from area stores, money laundering and selling an illegal form of synthetic marijuana known as “spice,” police say.
Everett police believe a significant amount of the store’s inventory has been ill-gotten, said Lt. Jim Duffy, who leads the special investigations unit.
The police department has received complaints about the store for several years, he said.
On Tuesday, while Everett Police Chief Kathy Atwood was outside the store turning away customers, passersby asked whether the cops were investigating rumors of food-stamp fraud and drug trafficking.
Mushtaq and his brother, Ayaz Ahmed, 37, both of Everett, were arrested Tuesday morning and booked into the Snohomish County Jail.
The investigation started gaining momentum in fall 2012 when police established a relationship with an informant who reportedly was delivering stolen goods to the store.
“That opened the door for us,” Duffy said.
Police believe the amount of stolen merchandise moved through the store, including pop, energy drinks and cigarettes, could total in the millions of dollars. Careful financial investigation has documented hundreds of thousands of dollars in questionable transactions, Duffy said.
“For us, the case is really significant because of the impact it has on our community and the taxpayers and the amount of money that’s involved,” he said.
The U.S. Department of Agriculture’s Office of Inspector General assisted with the investigation. So did the U.S. Marshals Service and the U.S. Attorney’s Office.
Local grocery stores, including Safeway and QFC, donated merchandise for undercover detectives to sell to Mushtaq as part of the sting. The USDA also supplied “undercover” food-stamp cards.
The informant and undercover detectives sold Mushtaq balances on their food cards, as well as reportedly stolen goods, for as low as 14 cents on the dollar and never more than 50 cents on the dollar, Duffy said.
Mushtaq also reportedly would provide hand-written shopping lists of items he needed for people to purchase with their cards or steal and then sell to him to stock his store, police said. People who got caught shoplifting told local grocery stores about the lists.
“He would put out lists to these drug addicts and alcoholics whom he would prey on for their addictions,” Duffy said.
During the investigation, Mushtaq was seen on multiple occasions carrying stacks of the food cards, each wrapped with a piece of paper with the PIN numbers and details about the balance, according to police. One stack of cards was described as a half-inch thick.
Records showed his store computer equipment was used to check balances on cards more than 500 times. That involved more than 300 cards over about 18 months, police say. It’s unusual for a cardholder to check the balance at a location and then not make a purchase, according to investigators. After checking the balance at his store, Mushtaq then allegedly would make a large purchase at a bigger store.
Mushtaq also allegedly would sell cardholders items not approved for the card purchases, such as cellphone minutes and cigarettes.
He allegedly was recorded on surveillance cameras at local grocery stores using other people’s cards to shop.
He’d also take people shopping for him and meet back up in the parking lot afterward, police say.
One shopping trip alone netted 39 half-cases of Pepsi, according to police.
“He’d go out to a local business and just load up,” Duffy said.
In 2012, the Armed Forces Disciplinary Control Board warned people in the military not to enter the store because it was selling illegal “spice” and “bath salts” drug compounds.
Police allege that Mushtaq stored drugs and merchandise at his house in Everett. There was little storage room in the 800-square-foot strip-mall store. A photo from an undercover operation showed cases of soda and other drinks stacked in his garage seven feet high. There was too much merchandise in the garage to fit a vehicle inside.
“There’s only an aisle to walk in within the three-car garage,” Duffy said.
Mushtaq is from Pakistan and became a U.S. citizen a couple of years ago, Duffy said. Investigators believe he was sending money from his store back home to Pakistan.
They found no evidence the money was being used there for any improper activities, Duffy said.
While serving a warrant at Mushtaq’s house on Tuesday, police found several additional food-stamp cards, Duffy said.
“There’s no reason for him to have EBT cards at his house,” Duffy said.
Mushtaq was booked for investigation of food-stamp trafficking, trafficking in stolen property and delivering a controlled substance, Everett police spokesman Aaron Snell said. Detectives also expect to recommend charges of money laundering and criminal profiteering.
His brother was booked for investigation of trafficking in stolen property.
During their investigation, Everett police obtained a judge’s permission to record undercover operations.
Mushtaq is seen on video buying stolen goods at least three times, Duffy said. To convict someone of trafficking in stolen property, police must prove the person knew the merchandise was stolen.
Undercover officers left no doubt.
“He knew it was stolen because we told him,” Duffy said. “He’d say, ‘Really? Oh yeah? I need more.’”
Rikki King: 425-339-3449; firstname.lastname@example.org.