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In re Abdelaziz

decided: January 21, 1988.


Appeal from a judgment of the United States District Court for the Northern District of New York (Thomas J. McAvoy, Judge) affirming the Food and Nutrition Service's decision permanently disqualifying a retail food store and its individual owners from participation in the food stamp program. Because disqualification of a store's individual owners is appropriate where, as here, the owners controlled the operation of the store and personally trafficked in food stamps, we affirm.

Timbers, Winter and Pratt, Circuit Judges

Author: Winter

WINTER, Circuit Judge:

Farid M. Abdelaziz and Abe Abraham, at all pertinent times sole or co-owners of Midland Meat Town, Inc., personally purchased at a fifty percent discount food stamps for cash from an undercover police officer so their store could redeem the stamps at a profit. As a result, the Food and Nutrition Service ("FNS") disqualified them individually and their store from the food stamp program, a decision upheld by the district court. In this appeal, Abdelaziz and Abraham have raised a question as to whether the sanction of disqualification may be levied against them individually as well as against the corporate entity. This would seem a question that virtually answers itself. Those who unlawfully traffic in food stamps should not be allowed to continue their illegal ways simply by reincorporation. However, when the government addressed this question in its brief, it stated that Abdelaziz and Abraham were in fact neither charged with violations by the Food and Nutrition Service nor personally disqualified, the disqualification applying only to the firm. The government soon changed its mind, but only after transforming this into a case requiring some discussion. We affirm.


The relevant facts can be briefly summarized. Midland Meat Town, Inc. is a medium-sized grocery store in an economically depressed neighborhood in Syracuse, New York. Abdelaziz and Abraham were co-owners of the store until November 1984, when Abraham purchased Abdelaziz's interest in the firm.

In December 1984, Abdelaziz and Abraham were arrested for misuse of food stamps in violation of N.Y. Soc. Serv. Law § 147 (McKinney 1983). Both men subsequently entered guilty pleas to misdemeanor charges arising out of their trafficking in food stamps. The FNS thereafter wrote Abdelaziz that it was charging "you, doing business as Midland Meat Town, Inc." with unlawful trafficking in food stamps in violation of 7 C.F.R. § 278.2(a) (1985). The letter recited that on March 19, 1984, Abdelaziz had accepted $280 in food stamps from an undercover officer in exchange for $140 in cash, and that on May 8, 1984, both Abdelaziz and Abraham had similarly exchanged $300 in stamps for $150 in cash. The letter stated, "[y]our store is being considered for disqualification from the Food Stamp Program."

The Food Stamp Act provides that disqualification of a retail store shall be "permanent upon the first occasion of a disqualification based on the purchase of coupons or trafficking in coupons." 7 U.S.C. § 2021(b)(3) (1982). On March 6, 1986, the FNS notified Abdelaziz and Abraham (whose sudden emergence as a party to the proceeding is unexplained but fortunately not disputed) that the "Midland Meat Town, Inc., under the co-ownership of Farid M. Abdelaziz and Abe Abraham," was being permanently disqualified from participation in the food stamp program. An FNS Review Officer subsequently denied a request to lift the disqualification, stating, "the decisions by the Northeast Regional Office to disqualify Midland Meat Town, Inc., Syracuse, New York from permanent participation are . . sustained."

Notwithstanding that the disqualification letter of March 6, 1986 was seemingly limited to the corporation, Abdelaziz, and Abraham, as well as Midland Meat Town, Inc., sought judicial review of the FNS decision, and, pursuant to 7 U.S.C. § 2023(a) (Supp. IV 1986), a trial de novo was held before Judge McAvoy, who upheld the disqualification as to Abdelaziz and the corporation. He reserved decision as to Abraham, however, who testified that he had not intended to purchase food stamps from the undercover female officer, that he had never seen food stamps in the officer's possession, and that he had given the $150 in cash to Abdelaziz so that Abdelaziz could have a "good time" with the officer. In a subsequent opinion, Judge McAvoy held that Abraham had knowingly trafficked in food stamps and was thus properly disqualified from participation in the food stamp program. Specifically, the court found that "Abdelaziz and Abraham shared direction and control of the corporation and acted as its agents in all matters, including the handling of food stamps," and that Abraham, contrary to his testimony, had handed the $150 directly to the officer. Judge McAvoy clearly intended to disqualify Abdelaziz and Abraham as well as the corporation.

On appeal, Abdelaziz and Abraham filed a short brief that raised statutory and due process issues, both meritless and both disposed of infra. As a final issue, the following point, quoted in full, was made:



1. The Food Stamp Program Regulations provide at page 20, section 278.6(B) for a charge letter against "any firm considered for disqualification or imposition of a civil money penalty."

Nowhere in the regulations is provision made for such a charge letter against the individual appellants Abdelaziz and Abraham who at the time of the alleged trafficking were officers and shareholders of the firm. They ...

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