How an alleged plot exploited the pandemic to raise $250 million

MINNEAPOLIS (AP) — The Justice Department has charged 47 people in Minnesota in what prosecutors called a $250 million scheme to defraud a federal meals program.

Prosecutors said only a fraction of the money went to feed the children, with the rest being laundered by shell companies and spent on real estate, luxury cars and travel.

Here’s a look at how the alleged scheme works, according to court documents:

ROOTS OF THE ALLEGED PLAN

The defendants are accused of targeting federal child nutrition programs that provide free meals to low-income children and adults. The money comes from the United States Department of Agriculture, under the supervision of state governments. In Minnesota, the funds are administered by the state Department of Education, with meals traditionally provided to children through schools and daycares. The sites that serve 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 exploit the relaxed rules and steal tens of millions of dollars by falsely claiming they were providing food for children.

Others quickly joined, and the scheme became what Luger called the biggest pandemic-related fraud in the United States.

HOW IT WOULD HAVE WORKED

Several companies have applied to provide meals to low-income children, with many using Feeding Our Future as a sponsor to seek funds, according to court documents.

Authorities allege that Feeding our Future employees recruited others to open program sites across Minnesota that inflated the number of children and meals they served, or served none at all. The non-profit organization then submitted bogus reimbursement claims, receiving administrative fees of 10% to 15% on top of kickbacks from people who wanted to join the scheme, according to the charges.

The charges say the scheme used shell companies who forged invoices showing meals were served and submitted fake attendance lists claiming to list the names and ages of the children fed each day.

The FBI says one company claimed to serve meals to 300 children a day in January 2021. In February 2021, the group claimed it provided daily meals to 3,290 children. In total, the group got $3.6 million in refunds in 2021, according to an FBI affidavit. Almost that sum was deposited in his bank account and then most of it went to another company. Little was used to buy food.

FEEDING OUR FUTURE

Feeding Our Future was created in 2016 to help poor and minority communities obtain federal food program funding. The nonprofit quickly became the largest independent sponsor of such programs in Minnesota.

Founder Aimee Bock told the Star Tribune this year that she employed 65 staff members who spoke 17 languages ​​and worked with 140 contractors to deliver 100,000 meals a day to children in Minnesota.

An FBI affidavit traced the nonprofit’s increase in reimbursements: $307,000 in 2018, $3.45 million in 2019, $42.7 million in 2020, and $197.9 million in 2021.

Bock said she never stole any money and saw no evidence of fraud among her contractors. Feeding Our Future disbanded in February.

POSSIBLE RED FLAGS

Court documents indicate that the Ministry of Education became concerned about the rapid growth in reimbursements and the number of sites sponsored by Feeding Our Future. The department said it contacted the USDA in the summer of 2020 and began reviewing applications from the nonprofit site. In one case, the agency denied a claim for a group that claimed in March 2021 that it served 5,000 children a day after-school snacks and suppers; the FBI called this an “extremely high number of children”.

The Department of Education surrendered to the FBI in April 2021, and the FBI began investigating the following month. Last January, officers raided several properties, including the offices of Feeding Our Future and Bock’s home.

Feeding Our Future received $244 million in federal reimbursements through food nutrition programs between 2018 and 2021, the FBI said. Department of Education data puts the nonprofit’s total repayments at $268.4 million over the same years.

Billing documents released Tuesday indicate that Feeding our Future fraudulently obtained and disbursed more than $240 million in program funds during the pandemic.

Prosecutors say almost none of the money was used to feed the children, but was instead used to buy real estate, cars and other luxuries, including a half-million-dollar apartment in Kenya , lakeside homes in Minnesota, expensive trips, and multiple properties in Minneapolis.

OTHER LEGAL BATTLES

After the Department of Education stepped up its scrutiny, Feeding Our Future sued the agency in November 2020. Feeding Our Future alleged discrimination, among other things, saying many of the groups it works with are from minority communities .

In December 2020, the Department of Education stopped approving new site applications for Feeding Our Future. The following March, the ministry halted all payments to the group. But in April 2021, a state judge ruled the agency lacked the authority to stop payments and ordered repayments to continue. The case was dismissed after the FBI investigation became public in January.

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