Business owner’s lawsuit against USDA complicated by civil citation | Courts

In a lawsuit filed Monday, Wilks alleges that the USDA wrongfully denied him, on the basis of lacking “business integrity,” because he is a convicted felon.

But court records show that in July 2022, while Wilks was applying to become a Supplemental Nutrition Assistance Program retailer, he was cited for acting as a licensed “other tobacco products” (OTP) retailer without the proper license.

Based on the USDA’s regulations on its website, the Food and Nutrition Service can deny applicants that “lack the necessary business integrity and reputation” to be a SNAP retailer.

One specific violation of business integrity is the “conviction of or civil judgment against the owners, officers or managers” of an establishment, according to the USDA. 

Examples in the regulations include the “Violation of Federal, State and/or local consumer protection laws or other laws relating to alcohol, tobacco, firearms, controlled substances, and/or gaming licenses ….”

Wilks’ denial letter from the USDA cited the section on conviction or civil judgment as the basis of its denial, the lawsuit said.

The lawsuit alleges that the denial was referring to his criminal conviction, even though federal courts have ruled that the USDA cannot deny SNAP retailer applications on the basis of a criminal conviction of drug offenses, the lawsuit said.

In 2006, Wilks was convicted of possession of a controlled dangerous substance with intent to distribute and using a firearm for a drug trafficking crime, court records show. He served 14 years in prison, the lawsuit said.

When asked by The Frederick News-Post about the tobacco sales citation on Wednesday, Jared McClain, an attorney representing Wilks with the nonprofit public interest law firm Institute for Justice, said it was the first time he had heard about the citation and that his firm would look into it.

On Thursday, McClain wrote in an email to the News-Post that an inspector went to the store in July 2022 after receiving a complaint that Wilks was selling hookah tobacco without a license.

In an interview on Friday, Wilks said the inspector realized they were at the wrong address, but checked Wilks’ licenses anyway.

Wilks said he had a license to sell cigarettes at the time of the inspection.

According to Jeffrey Kelly, executive director of the Maryland Alcohol, Tobacco, and Cannabis Commission, there are generally two types of tobacco licenses. One is narrowly defined for cigarettes. The other, called OTP, is like a catch-all for other tobacco products, with the exception of e-cigarettes.

Frederick Police Department Capt. Kirk Henneberry confirmed that the Maryland Alcohol, Tobacco, and Cannabis Commission inspected the store.

The inspector determined that Wilks was not selling hookah tobacco, but Wilks’ license did not cover cigars, three of which he had for sale, McClain wrote in his Thursday email.

The inspector issued a citation for violating the OTP license, with a $35 fine, McClain wrote.

Wilks said Friday he had never heard of an OTP license until the inspector mentioned it.

The inspector encouraged him to get the OTP license as soon as possible, Wilks said. The inspector assured him that if he did, “a judge would be sympathetic,” Wilks said.

Wilks said he got the proper license the next day and paid the $35 fine in January.

“A $35 fine is less than most parking tickets and deserves about as much attention,” McClain wrote.

In an email and in phone calls, the USDA press office said the agency cannot comment on pending litigation.

After being released from prison in 2018, Wilks opened the first Carmen’s Corner Store in Hagerstown in July 2019, the lawsuit said. He used money saved up from working as a FedEx driver and from his mother, for whom he named the store.

Wilks said in an interview on Wednesday that he wanted the store to be a resource in a food desert — areas with few retail outlets selling healthy and affordable foods — so that low-income individuals could have access to quality food.

About 21% of people who live in the Hagerstown area where Wilks’ store is rely on SNAP benefits, the lawsuit said.

He applied to the USDA for his store to be a SNAP retailer shortly after opening, but was “permanently denied,” the lawsuit said.

He alleges that the USDA ruled against him because of his past arrests for drug and firearm offenses.

Online court records do not indicate any citations or convictions relating to business practices before or around the time he opened Carmen’s Corner Store in Hagerstown.

Wilks opened his second store, with the same name, in Frederick in April 2021. In the area of the Frederick store, 8% of households rely on SNAP benefits, the lawsuit said.

Wilks said he wanted the Frederick location to have the same community convenience store business model, but with extra levels. For example, he wanted farmers to come in to sell produce and for it to be a platform for young entrepreneurs.

But the business model depended on his store being a SNAP retailer.

He applied again to the USDA in March 2022 for the Frederick location to be a SNAP retailer, the lawsuit said.

The agency withdrew Wilks’ application in June 2022, stating it did not receive the supplemental information despite confirming receipt earlier in the process.

Wilks resubmitted his application in August 2022, according to the lawsuit, and was denied. The USDA again cited a lack of business integrity, referring to the section on convictions and civil judgments.

Wilks filed a request for an administrative appeal of the denial in September 2022, the lawsuit said.

Since the convenience store model depended on being a SNAP retailer and was open during the pandemic, Carmen’s Corner Store had to become dynamic and fluid in what it offered to stay open, Wilks said in an interview on Wednesday.

Today, he said, it hosts events, sells hot food, uses vending machines, does advocacy and consulting for young entrepreneurs, and other services.

With its attempt to pivot to various business models, Carmen’s Corner Store has drawn criticism from some in the community.

City police also received complaints from residents about the parties, Henneberry wrote in an email Thursday. He added that the parties stopped in July 2022.

Because of these complaints, the store became one of the targets in a state bill proposed to strengthen and regulate bring-your-own-alcohol policies. The bill later was withdrawn.

The USDA permanently denied Wilks’ SNAP retailer application during the review in July 2023, calling the appeal “moot” since Wilks didn’t appeal his Hagerstown store denial in 2019, the lawsuit said.

Wilks said on Wednesday he missed the window for when he could appeal his Hagerstown denial. He said it made more sense to appeal the most recent denial for his Frederick business. Additionally, he said it made the lawsuit stronger since it showed he was denied twice.

Wilks said this lawsuit is bigger than himself and his business. It is about people who leave prison and try to be productive members of society, but continuously hit obstacles.

He pursued a similar lawsuit in June 2020, in which he sued the Small Business Administration for denying him Paycheck Protection Program loans for his Hagerstown location on the basis of his criminal conviction, federal court records show. A federal judge ruled in his favor and he was able to receive the loans.

He said on Friday that he doesn’t know if he will still have a business after the lawsuit, but if he wins, others can open their businesses and thrive.

“This is going to allow millions of individuals who have been affected by mass incarceration, social injustice, and other remnants of the draconian drug laws that were passed during the ’80s and ’90s,” he said in an interview Tuesday. “These individuals suffer today from not being economically viable.”