MINNEAPOLIS (AP) — Federal authorities charged 47 people in Minnesota with conspiracy and other charges Tuesday in what they say Tuesday was the largest fraud scheme to have exploited the COVID-19 pandemic by stealing $250 million from a federal program providing meals to low-income children.
Prosecutors say the defendants set up businesses that claimed to provide food to tens of thousands of children across Minnesota and then sought reimbursement for those meals through the U.S. Department of Agriculture’s nutrition programs. Prosecutors say few meals were actually served, and the defendants used the money to buy luxury cars, real estate and jewelry.
“That $250 million is the bottom,” Andy Luger, the US Attorney for Minnesota, said at a news conference. “Our investigations continue.”
Many of the companies claiming to serve food were sponsored by a nonprofit organization called Feeding Our Future, which submitted the companies’ claims for reimbursement. Feeding Our Future founder and executive director Aimee Bock was among those accused, and authorities say she and others within her organization filed the fraudulent claims for reimbursement and received kickbacks.
Bock’s attorney Kenneth Udoibok said the indictment “does not indicate guilt or innocence.” He said he would not comment further until he saw the indictment.
In interviews after law enforcement raided multiple locations in January, including Bock’s home and offices, Bock denied stealing money and said she never saw evidence of fraud.
Earlier this year, the US Department of Justice made prosecuting fraud related to the pandemic a priority. The department has already taken enforcement action related to more than $8 billion in alleged pandemic fraud, including indictments in more than 1,000 criminal cases with losses in excess of $1.1 billion.
Federal officials have repeatedly called the alleged fraud “brazen” and denounced it as a program aimed at feeding children in need of assistance during the pandemic. Michael Paul, special agent at the FBI’s Minneapolis office, called it “an amazing display of deception.”
Luger said the government was billed for more than 125 million fake meals, with some defendants making up names for children using an online random name generator. He showed a reimbursement form claiming that one location served exactly 2,500 meals each day Monday through Friday — without a child ever falling ill or otherwise missing from the program.
“These kids were just made up,” Luger said.
He said the government has recovered $50 million in money and property so far and expects more recoveries.
The Minnesota defendants face multiple charges including conspiracy, wire fraud, money laundering and bribery. Luger said some of them were arrested Tuesday morning.
According to court documents, the alleged program targeted the USDA’s state child nutrition programs, which provide food for children and low-income adults. In Minnesota, funds are administered by the state Department of Education, and children have historically been provided with meals through educational programs such as schools or daycares.
The places where the food is served are sponsored by public or non-profit groups like Feeding Our Future. The sponsoring agency retains 10% to 15% of the refund funds as an administration fee in exchange for submitting applications, sponsoring the websites, and disbursing the funds.
However, during the pandemic, some of the standard requirements for sites to participate in federal nutrition programs have been waived. The USDA allowed for-profit restaurants to participate and distribute food outside of educational programs. The indictment documents say the defendants took advantage of such changes “to enrich themselves”.
The documents say that Bock oversaw the program and that she and Feeding Our Future sponsored the opening of nearly 200 federal child feeding program sites statewide, knowing the sites intended to file fraudulent claims.
“The websites fraudulently claimed to be serving meals to thousands of children daily within just a few days or weeks of their inception, despite the fact that they have few, if any, employees and little to no experience serving that quantity of meals” , according to the indictment.
One example described a small shop in Willmar, western Minnesota, that typically served only a few dozen people a day. Two defendants offered the owner $40,000 a month to use his restaurant and billed the government for around 1.6 million meals for 11 months in 2021, according to an indictment. They listed the names of about 2,000 children — nearly half of the local school district’s total enrollment — and only 33 names matched actual students, the indictment said.
Feeding Our Future received nearly $18 million in federal child feeding programs in administrative fees in 2021 alone, and Bock and other employees received additional kickbacks often disguised as “consulting fees” paid to shell companies, fee documents say.
According to an FBI affidavit unsealed earlier this year, Feeding Our Future received reimbursements from the USDA of $307,000 in 2018, $3.45 million in 2019 and $42.7 million in 2020. Reimbursements increased to $197.9 million in 2021.
According to court documents, the Minnesota Department of Education was increasingly concerned about the rapid increase in Feeding Our Future-sponsored sites, as well as the increase in reimbursements.
The department began reviewing Feeding Our Future’s applications more carefully and turned down dozens of them. In response, Bock sued the department in November 2020 for alleged discrimination, saying the majority of its websites are in immigrant communities. This case has since been dropped.
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