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Indictments Accuse 44 in Minnesota of Brazen Pandemic Aid Fraud

MINNEAPOLIS – The Justice Department said Tuesday that a federal grand jury had indicted 44 people on charges they ran a brazen fraud against anti-hunger programs during the coronavirus pandemic and stole $240 million by billing the government for meals they did not serve to children. which did not exist.

The Minnesota case appears to be the largest allegation of fraud uncovered in any pandemic relief program, standing out even in a period when heavy federal spending and lax oversight allowed a flurry of fraud with few recent parallels.

The Minnesota operation, prosecutors said, was particularly bold: One accused conspirator told the government he fed 5,000 children a day in a second-story apartment.

Other defendants in the case appeared to put minimal effort into hiding what they were doing, using the website to create a fake list of children they could charge for food. Others used a number-generating program to produce ages for the children they allegedly fed, causing the ages to fluctuate wildly each time the group updated its list of the nonexistent children, court papers said.

But their scheme — the details of which were reported in The New York Times in March — still pulled in millions of dollars a week, prosecutors said in court papers, because officials had relaxed oversight of the feeding program during the pandemic and because the accused fraudsters had help from a trusted insider.

That insider was Aimee Bock, the founder of a nonprofit group, Feeding Our Future, that the state of Minnesota relied on as a watchdog to stop fraud at feeding sites. But Ms. Bock did the opposite, prosecutors said: When pandemic relief programs flooded the programs with money, she used her position to bring in nearly 200 new feeding operations, she knew, submitting false or inflated invoices.

Even as the administration of Gov. Tim Walz, a Democrat, raised questions, Ms. Bock dismissed them by filing a lawsuit accusing state officials of discriminating against her group’s predominantly East African clientele.

“In effect, Feeding Our Future operated a pay-to-play scheme in which individuals who attempted to operate fraudulent websites under the sponsorship of Feeding Our Future had to kick back a portion of their fraudulent earnings,” the indictment states, according to a copy . obtained by The Times.

Mrs. Bock was indicted on charges of wire fraud and bribery involving federal programs. Other defendants were also charged with money laundering, for allegedly routing the funds they stole through a web of shell companies.

The case is one of the most prominent brought by the Justice Department as it struggles to address waves of fraud involving pandemic-era programs that funneled billions of dollars in aid into the economy, often with few strings attached and little supervision.

The Ministry of Labour’s inspector general’s office has opened 39,000 surveys. At the Small Business Administration, about 50 agents have sorted through two million potentially fraudulent loan applications. And while the high volume of cases almost ensures that some cases will not go to trial, the Minnesota prosecutor’s office signals that the Justice Department is aggressively pursuing others.

Prosecutors said the defendants spent their money on real estate in the United States, Kenya and Turkey, as well as cars and luxury goods. The Justice Department is seeking to seize many of those purchases, including more than 20 cars, more than 40 properties, guns, cryptocurrency and a Louis Vuitton bag.

The charges are accusations, and many of the defendants have said they did nothing wrong. After a series of FBI searches in January revealed the existence of the investigation, Ms. Bock told The Times that she had implemented strong anti-fraud measures and did not believe anyone in her system had broken the rules.

If there was fraud, Ms. Bock said, “every test we have in place and every protection we have in place didn’t catch it. Is it possible? Absolutely. And if they got one on us, I’ll help holding them accountable.”

Also among the defendants was a Feeding Our Future employee, Abdikerm Abdelahi Eidleh, who was accused of receiving kickbacks from people involved in the scheme. Three other defendants—including another of the nonprofit’s employees, Hadith Yusuf Ahmed—were charged via “criminal information” rather than a grand jury indictment.

The state blocked Feeding Our Future from receiving more aid money after the FBI served search warrants in the case in January. The nonprofit sought to dissolve at the time, but Attorney General Keith Ellison of Minnesota, a Democrat, blocked The movement. Mr. Ellison asked a judge to monitor the group while he investigated whether it violated state charity laws. That investigation appears to be ongoing.

As described by prosecutors, the participants targeted two federal food assistance programs administered through state governments. They were intended to feed children in after-school and summer camps. But when the pandemic hit, Congress changed programs to reach millions of children stuck at home and poured in billions of dollars more and change the rules to allow families to pick up meals.

However, as funding increased, oversight decreased: Government officials, e.g. no longer had to check feeding sites in person.

That left one last line of defense: the so-called watchdog sponsors, like Feeding Our Future. These nonprofit groups acted as conduits for money, from the states to individual feedlots, and they had to be on guard against fraud.

But the system also gave these watchdogs a reason not to bark: They could keep 10 to 15 percent of the money flowing through them.

In this case, prosecutors said, Ms. Bock’s group kept the money flowing to increase its own cut.

“The defendants took advantage of the Covid-19 pandemic – and the resulting program changes – to enrich themselves,” the indictment said.

Feeding Our Future had started before the pandemic as a small sponsor overseeing $3.5 million in funding. It has never hired an accountant and sometimes struggled with basic governance, even letting its nonprofit status lapse for a time.

But by 2021, Feeding Our Future handled $197 million in annual funding.

Under its umbrella, prosecutors said, six different groups began running similar scams. The conspirators often registered new businesses or nonprofits and quickly registered them as feeding operations under the supervision of Feeding Our Future.

Then, prosecutors said, the new groups would soon report feeding thousands of children a day — numbers that placed them among the largest feeding operations in the state — and begin reaping thousands or millions of dollars in federal payments. In Minneapolis, for example, a man named Guhaad Hashi Said told the state he served 5,000 meals twice a day at a new facility called Advance Youth Athletic Development.

The site he mentioned was an unlikely place for someone to mass-feed children: the address was a second-floor apartment.

Mr. Said was one of the defendants; the indictment said he was paid $2.9 million in federal money funneled through the state and Feeding Our Future. But the indictment said that Mr. Said delivered “only a fraction” of the meals he claimed. In an interview this year, Mr. Said he never claimed to serve 5,000 meals a day in the first place.

In 2020, Minnesota officials became concerned about the rate at which Feeding Our Future was creating new distribution sites and began to investigate them more.

In November of that year, the nonprofit responded defiantly and filed a lawsuit accusing state officials of discrimination. The suit said the state harmed children by delaying the start of Feeding Our Future’s new operations. “Every day that passes, hundreds of the state’s most vulnerable children go without much-needed meals,” it said.

Several of the locations where the state had sought to delay operations later became centers of fraud, according to prosecutors.

In response to Feeding Our Future’s lawsuit, a state judge ruled that Minnesota had not taken the necessary steps to block the payments. Then, in April 2021, frustrated state officials turned to the FBI — and continued to pay Feeding Our Future and its partners while federal agents investigated.

The state “moved quickly and repeatedly raised the issue with the federal authorities until we were able to find someone who would take the troubling spending as seriously as we were,” said Kevin Burns, a spokesman for the Minnesota Department of Education, who handled the food. – allowance.

Republicans in the state Senate released a report this month, before the charges were made public, accused the state Education Department of “dereliction of duty” for not stopping Feeding Our Future sooner.