Minneapolis (AFP) – Federal authorities charged 48 people in Minnesota with conspiracy and other charges in what they said Tuesday was the largest fraud scheme linked to the pandemic to date, stealing $250 million from a federal program that provides meals to low-income children.
Prosecutors say the defendants set up companies that claimed to serve tens of thousands of children across Minnesota, and then demanded that those meals be reimbursed. Through the USDA Food Nutrition Programs. Prosecutors say few meals were actually served, and the defendants used the money to buy luxury cars, property and jewelry.
“That $250 million is the floor,” Andy Luger, the US Attorney for Minnesota, said at a news conference. “Our investigation is continuing.”
Many of the companies that claim to serve food have been sponsored by a non-profit organization called Feeding Our Futurethat filed companies’ claims for compensation. Feeding Our Future and its CEO, Amy Bock, were among the accused, and authorities say she and others at her foundation filed fraudulent claims for compensation and took bribes.
Bock’s attorney, Kenneth Oedebok, said the indictment “does not indicate guilt or innocence.” He said he would not comment further until seeing the indictment.
In interviews conducted after law enforcement searched several locations in January, including Facebook’s home and offices, Facebook denied stealing the money. She said she had never seen evidence of fraud.
Earlier this year, the US Department of Justice made the pandemic-related fraud prosecution a priority. The ministry has already taken enforcement actions related to more than $8 billion in suspected epidemic fraudincluding indictments in more than 1,000 criminal cases involving losses of more than $1.1 billion.
Federal officials have repeatedly described the alleged scam as “brazen,” and have decried that it involved a program intended to feed children who need help during the pandemic. Michael Ball, the special agent in charge of the FBI’s Minneapolis office, called the matter “a stunning display of deception.”
Luger said the government received a bill for more than 125 million fake meals, with some of the accused concocting names for children using a random online name generator. He offered one compensation model that claimed a site served exactly 2,500 meals a day Monday through Friday — with no child ever getting sick or missing the program.
“These kids were simply invented,” Luger said.
So far, he said, the government has recovered $50 million in money and property and expects to recover more.
The defendants in Minnesota face multiple charges, including conspiracy, electronic fraud, money laundering and bribery. Luger said some of them were arrested on Tuesday morning. Authorities announced 47 indictments at the press conference; The Star Tribune and The New York Times reported that the charges were filed on Tuesday, the 48th. A spokesperson for the US attorney general did not immediately respond to a message.
According to court documents, the alleged scheme targeted the US Department of Agriculture’s federal child nutrition programs, which provide food for low-income children and adults. In Minnesota, funds are managed by the state Department of Education, and children have historically been served meals through educational programs, such as schools or daycares.
Sites that provide food are sponsored by public or non-profit groups, such as Feeding Our Future. The sponsoring agency retains 10% to 15% of the reimbursement funds as an administration fee for submitting claims, sponsoring sites, and disbursing funds.
But during the pandemic, some standard requirements for sites to participate in federal food nutrition programs have been waived. The USDA allowed for-profit restaurants to participate, and allowed food distribution outside of educational programs. The indictment documents say the defendants took advantage of these changes to “enrich themselves”.
The documents show that Bock oversaw the scheme and that she and Feeding Our Future sponsored the opening of nearly 200 federal child feeding program sites across the state, knowing that the sites intended to make fraudulent claims.
“The sites fraudulently claimed to serve meals to thousands of children daily within just days or weeks of being formed, despite very few, if any, staff, and little or no experience in serving that volume of meals,” according to the indictments.
One example described a small storefront restaurant in Wilmar, in west central Minnesota, that typically served a few dozen people a day. Two of the defendants offered the owner $40,000 a month to use his restaurant, then the government billed about 1.6 million meals during 11 months of 2021, according to one indictment. The indictment said they listed the names of about 2,000 children — nearly half of the total registered in the local school district — and only 33 names that matched actual students.
Feeding Our Future received nearly $18 million in Federal Child Feeding Program money in management fees in 2021 alone, and Bock and other employees received additional kickbacks, often disguised as “advising fees” paid to shell companies, according to shipping documents.
According to an FBI affidavit disclosed earlier this year, Feeding Our Future received $307,000 in damages from the USDA in 2018, $3.45 million in 2019, and $42.7 million in 2020. The repayment amount jumped to $197.9 million in 2021.
Court documents indicate that the Minnesota Department of Education has been increasingly concerned about the rapid increase in the number of sites sponsored by Feeding Our Future, as well as the increase in reimbursement.
The department began examining Feeding Our Future’s requests more carefully, denying dozens of them. In response, Facebook sued the administration in November 2020, alleging discrimination, saying the majority of its locations were in immigrant communities. This case has since been dismissed.
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