MINNEAPOLIS (AP) — The Justice Department has indicted 48 people in Minnesota in what prosecutors have described as a $250 million scheme to defraud a state food program.
Prosecutors said only a fraction of the money went to feeding children, while the rest was laundered through shell companies and spent on real estate, luxury cars and travel.
Here’s a look at how the alleged scheme worked, according to court documents:
ROOTS OF THE ALLEGED SCHEME
The defendants are accused of wanting to target federal child feeding programs that provide free meals to children and low-income adults. The money comes from the US Department of Agriculture under the supervision of the state governments. In Minnesota, funds are administered by the state Department of Education, with meals provided to children through schools and daycares in the past. Sites serving the food are sponsored by authorized public or non-profit groups.
Some standard program requirements have been relaxed during the COVID-19 pandemic; for-profit restaurants were allowed to participate, and food could be distributed outside of educational programs.
Minnesota U.S. Attorney Andy Luger said Tuesday that a small group of people hatched a plan to take advantage of the relaxed rules and steal tens of millions of dollars by falsely claiming they were feeding children.
Others soon followed, and the scheme grew into what Luger called the largest pandemic-related scam in the United States
HOW IT SUPPOSEDLY WORKS
According to court documents, several companies applied to provide meals to low-income children, many of whom used Feeding Our Future as a sponsor to seek funding.
Authorities allege that Feeding our Future employees recruited others to open program locations across Minnesota who inflated the number of children and meals they served or didn’t serve at all. The nonprofit then filed false claims for reimbursement and received an administration fee of 10% to 15% in addition to kickbacks from people who wanted to join the program, the indictment said.
The charges say the scheme used shell companies to falsify bills showing meals were served and filed fake attendance lists that allegedly list the names and ages of the children being fed each day.
According to the FBI, one company said it was serving meals to 300 children a day in January 2021. As of February 2021, the group said it provided meals to 3,290 children daily. In all, the group received $3.6 million in refunds in 2021, according to an FBI affidavit. Almost as much was deposited into his bank account, most of which then went to another company. Little was used to buy groceries.
NUTRITION OF OUR FUTURE
Feeding Our Future was founded in 2016 to help poor and minority communities secure funding for the federal feeding program. The nonprofit organization quickly became the largest independent sponsor of such programs in Minnesota.
Founder Aimee Bock told the Star Tribune this year that she employed 65 people who spoke 17 languages and worked with 140 subcontractors to distribute 100,000 meals a day to children in Minnesota.
An FBI affidavit traced the nonprofit’s increasing reimbursements: $307,000 in 2018, $3.45 million in 2019, $42.7 million in 2020, and $197.9 million in dollars in 2021.
Bock said she never stole any money and saw no evidence of fraud at her subcontractors. Feeding Our Future disbanded in February.
POSSIBLE RED FLAGS
Court documents say the Department of Education became increasingly concerned about the rapid growth in reimbursements and the number of websites sponsored by Feeding Our Future. The department said it reached out to the USDA in the summer of 2020 and began reviewing the nonprofit’s site applications. In one case, the agency denied an application for a group that claimed in March 2021 to serve 5,000 children a day an after-school snack and dinner; the FBI characterized this as “an extraordinarily large number of children.”
The Department of Education contacted the FBI in April 2021, and the FBI began investigating the following month. Last January, officers searched multiple properties, including Feeding Our Future’s offices and Bock’s home.
Feeding Our Future received $244 million in federal reimbursements from food nutrition programs between 2018 and 2021, the FBI said. Department of Education data put the nonprofit’s total reimbursements for those same years at $268.4 million.
Indictment documents released Tuesday say Feeding our Future fraudulently received and paid out more than $240 million in program funds during the pandemic.
Prosecutors say almost no money was used to feed children, but was instead used to buy homes, cars and other luxuries, including a half-million-dollar condo in Kenya, lakefront homes in Minnesota, expensive trips and several Real Estate in Minneapolis.
OTHER LEGAL FIGHTS
After the Department of Education stepped up its scrutiny, Feeding Our Future sued the agency in November 2020. Among other allegations, Feeding Our Future claimed discrimination and said many of the groups it works with belong to minority communities.
As of December 2020, the Department of Education stopped approving new Feeding Our Future site applications. By the following March, the department stopped all payments to the group. But in April 2021, a state judge ruled that the agency did not have the power to stop payments and ordered reimbursements to proceed. The case was dropped after the FBI investigation became public in January.