L.A. cracking down on scams along skid row

LOS ANGELES – Skid row in Los Angeles has become a magnet for fraud schemes that use the area’s homeless population to rip off the federal government, authorities said last week as they launched a crackdown on the activities.

In the past few months, state and federal investigators have busted two food-stamp scams, one of which involved a merchant who allegedly gave homeless people 50 cents on the dollar for their stamps, then charged the entire value – $6 million – to the government.

In November, officials filed charges against a MacArthur Park-area clinic for allegedly rounding up homeless people with Medi-Cal or Medicare cards and giving them a battery of medical tests charged to government programs. Authorities allege the bogus tests cost taxpayers at least $1.6 million.

A hospital in South Los Angeles is under investigation to determine whether it recruited homeless people for short stays at federal expense, according to law enforcement sources.

The incidents are the latest crime problem in skid row, a section of downtown that is home to an estimated 10,000 homeless people and the largest drug-dealing bazaar in Los Angeles. The city is in the midst of a major effort to clean up the district.

But police worry that these latest scams are helping fuel skid row’s drug trade by allowing homeless people to get cash to buy drugs.

“We have taxpayer money meant for food being converted to cash that goes to buy drugs from dealers and gang members,” said Andrew Smith, a Los Angeles Police Department captain who oversees policing on skid row.

In May, officers arrested eight people for allegedly running a crack cocaine ring in skid row. They found numerous food-stamp debit cards in the hotel room where the ring operated. Detectives concluded the suspects were holding the cards as collateral for drug purchases.

Homeless advocates said skid row is an easy target for scam artists because many transients receive government assistance. Though the government places strict limits on what can be bought with food-stamp cards, they said unscrupulous merchants with food-stamp card readers can cheat the system.

Stores that accept the food-stamp cards use an ATM-like machine in which people swipe their cards to purchase items. The machines, which require a personal-identification number, were designed to reduce fraud.

But prosecutors alleged that in both skid row cases, the defendants used the machines to charge homeless people for items. Instead of food, the transients received a fraction of the dollar value credited to their cards, and the suspects recouped the full amount from the federal government, they said.