Welfare Fraud Probe Nets Prison Time for Three Karaein Brothers and Orders to Pay Back More Than a Million Dollars
GRAND RAPIDS, MI—U.S. Attorney Patrick Miles announced today that brothers Emad, Jawad and Khader Karaein were sentenced by U.S. District Judge Janet T. Neff for their roles in multiple schemes to defraud the federal government in connection with subsistence benefits.
On August 5, 2014, the three defendants, along with other family members, were charged with multiple federal offenses alleging that they engaged in fraud while operating the Middle Eastern Market (“MEM”) in Grand Rapids, Michigan. One fraudulent scheme alleged against them was that they allowed customers receiving federal subsistence benefits to obtain cash and other prohibited items in exchange for the federal funds allotted to the customers. This fraudulent activity resulted in a large amount of federal welfare money being deposited into the MEM bank account. The charges further alleged that the Karaein brothers individually signed up for federal welfare benefits for themselves and their families. They did not disclose the MEM bank account and other sources of income that would have disqualified them from receiving the benefits and therefore fraudulently obtained food assistance, cash assistance and Medicaid benefits.
During December, 2014, Emad, Jawad and Khader Karaein each entered a guilty plea to one of the charges pending against them. In each case, the defendants agreed that the sentencing judge could consider all of the fraudulent conduct charged in arriving at the appropriate sentence. In exchange for these guilty pleas, the government agreed to dismiss the charges pending against their wives and other family members.
On June 2, 2015, Judge Neff sentenced Emad Karaein to a prison term of 34 months, to be followed by 36 months of supervision after release from prison. Emad Karaein was also ordered to pay restitution totaling $1,271,983 to the state and federal governments. Judge Neff sentenced Jawad Karaein on July 13, 2015. He received a prison term of 30 months, to be followed by supervised release of 24 months and restitution of $1,271,983. Khader Karaein was sentenced on August 13, 2015 and received a prison term of 12 months, to be followed by supervised release of two years and restitution of $1,272,713.
U.S. Attorney Pat Miles stated, “We work hard to stamp out fraud involving welfare benefits whenever we see it, because the taxpayers have the right to demand that the money they provide for these programs goes to those who are in need. Any unscrupulous person thinking of illegally taking advantage of the public welfare system should take notice—if you do it, you will find out the hard way that it is not worth it.”
USDA Office of Inspector General, Special Agent-in-Charge Anthony V. Mohatt stated: “The Supplemental Nutrition Assistance Program and Women, Infant, and Children program were created to provide food and nutrition to those who truly need this assistance. Those who are involved in fraud and abuse of SNAP, WIC, and other USDA programs will be aggressively pursued by our office. Our joint investigation with the Federal Bureau of Investigation (FBI) and Michigan Department of Health and Human Services (MDHHS) has brought to justice Emad Karaein, Jawad Karaein, and Khader Karaein from Middle Eastern Market who obtained approximately $1.2 million from the SNAP and WIC programs through illegal schemes. The USDA Office of Inspector General will continue to dedicate resources and work with our federal and state law enforcement partners in order to protect the integrity of these programs and to prosecute those who commit fraud.”
This case was investigated by the Department of Agriculture, Office of Inspector General, the Federal Bureau of Investigation, and the Michigan Department of Health and Human Services, Office of Inspector General. The case was prosecuted by AUSA Timothy VerHey.