How Foreign Thieves Are Scamming Americans on Welfare

LOS ANGELES—The man using the Wells Fargo ATM in Panorama City seemed at first like the thousands of other Californians who withdraw their welfare benefits at the beginning of each month. 

But after taking out cash the morning of March 1, the man reached into his pocket for a second debit card and withdrew more money. He then whipped out another card, and another. Within 10 minutes, he used 15 cards and withdrew nearly $3,000, according to court documents.

When investigators watching the ATM arrested him minutes later, the thief gave an alias, “Giuseppe Crescente,” and a fake British ID. He had 21 bogus debit cards in his pockets.

The mystery man turned out to be a 47-year-old Romanian national with a trail of theft convictions across Europe named Sandu Dumitrescu. Authorities say he is part of a wave of criminals, mostly from Romania, who are operating sophisticated and fast-growing welfare fraud rings.

Over the past year, the thieves have used information illegally copied from government-issued electronic benefit transfer, or EBT, cards to steal tens of millions of dollars. The intended recipients must then spend days or weeks proving they were defrauded so they can get money they had counted on for rent, groceries and other bills. 

In some cases, thieves used stolen food benefits to buy hundreds of thousands of dollars of energy drinks that police suspect they resell on the black market.

In May, Dumitrescu pleaded guilty to one count of bank fraud. He faces anywhere from several months to 30 years behind bars. His lawyer said he accepted responsibility for taking vulnerable people’s money. 

States including Texas, Oregon and New York have reported a surge in stolen EBT payments in the past year. 

Los Angeles County has been among the hardest-hit communities. Local and federal law enforcement including the U.S. Secret Service have arrested dozens of Romanian nationals for ripping off people’s EBT funds in the L.A. area since September. 

According to the county social services department, about $900,000 was reimbursed to victims of benefits card fraud in 2021. Last year, the number skyrocketed to $21.1 million. Through June of this year, the county has paid back $25 million. 

“Our offices are inundated with people coming and saying that their benefits have been stolen. It’s devastating,” said Nick Ippolito, an assistant director of the Los Angeles County Department of Public Social Services. “Those cards are about as secure as a library card. The cash is literally just there for the taking.”

The main problem, authorities say, is that EBT cards don’t have chips, leaving them vulnerable to a process called “skimming,” where thieves use a device to copy people’s card information from an ATM. They encode that information onto a different card—such as a Starbucks gift card. 

In Los Angeles, thieves fan out in the early hours of the first of the month when funds are deposited onto people’s EBT cards. They then empty the accounts before victims can use them. On a single night in September, law enforcement traced fraudulent EBT withdrawals to nearly 150 ATMs from one bank alone in the L.A. region. 

“We only have the resources to make a very limited impact on this fraud scheme,” said Dave Babcock, a senior investigator in the Los Angeles County district attorney’s office. “The people that we’ve arrested are just a very small part of this whole problem.” 

While thieves steal low-income families’ cash aid through ATM withdrawals, they can only raid EBT food benefit funds by making bulk purchases with the cloned cards. They then sell the goods, authorities said.

In January, authorities arrested a woman after she bought $158,299.42 of mostly Red Bull and Monster Energy drink purchases at a Smart & Final store in Riverside County between October and January. The woman, Beatrice Mihai, 24, used 73 different cloned cards for her purchases, investigators said. The food benefits belonged to people in New York City, Florida and California.

Mihai has pleaded guilty in a related case in federal court to conspiracy to use unauthorized access devices and faces up to five years in prison. Her public defenders didn’t respond to requests for comment. 

The U.S. Department of Agriculture, which oversees the food assistance program with states and counties, said it was trying to make the funds more secure and has launched a pilot program in five states where people can use their phones to access benefits. 

A spokeswoman for the California Department of Social Services said the agency was working to create EBT cards with security chips like many credit cards now have. The state has allocated $76.5 million for the transition, but it will likely take several years to complete, she said.

Authorities know little about the crews of Romanian nationals behind many of the schemes, including how they got wind of it. Some hail from the Romanian city of Craiova, according to the U.S. Attorney’s Office in Los Angeles. They sometimes drive luxury rental cars—Porsches and BMWs—to the ATMs they hit. Most have entered the U.S. illegally, or overstayed visas. One man entered the U.S. last October by driving a jet ski across the St. Clair River from Ontario to Michigan, according to court filings. 

Several members of the Romanian National Police traveled to Los Angeles earlier this year to help with the investigations, according to the U.S. Attorney’s Office in Los Angeles. 

Genesis Foster, a 47-year-old single mother, first had nearly all of her $925 monthly cash assistance stolen in February 2022. Someone in Whittier, 30 miles from where she lives in Los Angeles, had drained her account, she was told by a claims agent.

Foster, a student at Los Angeles City College who works several jobs there, relies on the money to pay for the two rooms she rents from her father, food and clothing for two children. She said it took 40 days to get her money reimbursed. 

Six months later, Foster went to withdraw her monthly aid and found it was gone again. Earlier this month, she went to Costco to shop for July 4 and the weeks ahead, carefully picking out bargain groceries and treats for her children. After waiting in line, she was told by the cashier her card was declined. This time, her monthly $712 in food aid was gone.

Humiliated and angry, she went to county social services, only to find the line was wrapped around the corner with people who told her they also had their benefits stolen. 

“You’re taking money and benefits from people who need it most. I don’t understand what type of person is comfortable doing that,” she said. “I don’t understand how it’s allowed to continue.”

Write to Dan Frosch at [email protected]