Dozens charged in “largest pandemic fraud in the United States”

03:11

MINNEAPOLIS — Federal prosecutors on Tuesday unveiled stunning indictments against dozens of Minnesotans in what U.S. Attorney Andrew Luger called “the largest pandemic fraud in the United States.”

Court documents name 47 people defendants, including Aimee Bock, the founder and CEO of the nonprofit organization Feeding Our Future. The accusations revolve around an alleged scheme to defraud a federal child nutrition program of $250 million that should have been used to feed children across the state during the peak of the pandemic.

“Their goal was to make as much money for themselves as they could while falsely claiming to feed children during the pandemic,” Luger said. “As alleged in these indictments, over a short period of time, these 47 defendants engaged in a brazen scheme of staggering proportions.”

Prosecutors said just a fraction of the money went toward feeding kids, with the rest laundered through shell companies and spent on property, luxury cars and travel.

ROOTS OF THE ALLEGED SCHEME

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 U.S. Department of Agriculture, with oversight from state governments. In Minnesota, the funds are administered by the state Department of Education, with meals historically provided to kids through schools and day care centers. Sites that serve the food are sponsored by authorized public or nonprofit groups.

Feeding Our Future had been a sponsor prior to the pandemic, and officials said in 2019 the group dispersed some $3.4 million. By 2021, however, that number ballooned to a whopping $200 million.

“No one participating in this scheme legitimately could imagine they could hire staff, purchase food, store food, handle the logistics involved in this process, make meals, serve them, and still make millions of dollars,” Luger explained. “It's still not possible.”

Bock, however, allegedly thought it was at least possible to create the illusion that it could happen by exploiting the U.S. government's relaxing of program requirements due to the COVID-19 pandemic. Those included allowing for-profit restaurants to participate in making meals for kids; food was also allowed to be distributed outside educational programs.

“During the pandemic once we sent all those kids home and shut down the schools, the kids weren't at school. That's what enabled a fraud scheme like this to thrive because people could not question whether kids were receiving food or could not question or raise a red flag had the children been in school,” Erica MacDonald, the former U.S. Attorney for the District of Minnesota, told WCCO. “The (lack of) site visit was a really important one. We're talking about this alleged scheme and reporting children that just didn't exist.”

HOW IT ALLEGEDLY WORKED

Several companies applied to provide meals to low-income children, prosecutors described, adding many used Feeding Our Future as a sponsor to seek funding.

Authorities allege Feeding our Future employees recruited others to open program sites across Minnesota that inflated the number of children and meals they were serving – or didn't serve any at all. The nonprofit then submitted false claims for reimbursement, receiving an administrative fee of 10 percent to 15 percent in addition to kickbacks from people who wanted to join the scheme, the charges allege.

Court documents also describe how the scheme used shell companies that falsified invoices showing meals were served and submitted fake attendance rosters purporting to list the names and ages of children being fed each day.

“No one got sick, no one missed a meal, no one was away. Same children, every day, every week,” Luger quipped.

The FBI says one company claimed to be serving meals to 300 kids a day in January 2021. By February 2021, the group claimed it was providing daily meals for 3,290 children. In all, the group got $3.6 million in reimbursements in 2021, according to an FBI affidavit. Nearly that much was deposited into its bank account, then most of it went to another company. Little was used to buy food.

FEEDING OUR FUTURE

Feeding Our Future was formed in 2016 to help poor and minority communities secure 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. She added the she's working with 140 subcontractors to distribute 100,000 meals a day to Minnesota children.

An FBI affidavit traced the nonprofit's rising 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 money and saw no evidence of fraud among her subcontractors. Feeding Our Future dissolved in February.

Bock's attorney, Kenneth Udoibok, told WCCO Tuesday that she continues to stand by her past claims that she never stole any money.

Udoibok said it's a relief to have more clarity of knowing what the charges are, but “at the same time, an indictment is just the beginning of a criminal process. It does not in any way indicate guilt or innocence.”

POSSIBLE RED FLAGS

Court documents say the Department of Education grew concerned about the rapid growth in reimbursements and the number of sites sponsored by Feeding Our Future. The department said it reached out to the USDA in the summer of 2020 and began scrutinizing the nonprofit's site applications. In one case, the agency denied an application for a group that claimed in March 2021 it was serving an after-school snack and supper to 5,000 kids a day; the FBI characterized this as “an exceedingly large number of children.”

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

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

OTHER LEGAL BATTLES

After the Department of Education increased 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 in minority communities.

By December 2020, the Department of Education stopped approving new site applications for Feeding Our Future. By the following March, the department halted all payments to the group. But in April 2021, a state judge ruled that the agency didn't have the authority to stop payments and ordered that the reimbursements continue. The case was dismissed after the FBI investigation became public in January.

Bock on Tuesday was among the defendants who made their first court appearances. Of the 47 defendants, however, prosecutors conceded some had already fled the country.

IMPACT ON NONPROFITS FIGHTING HUNGER

People who work to fight hunger say fortunately, there were enough real programs during the peak of the pandemic to help children. But now, child hunger is becoming a problem once again.

“We have heard countless stories of the hardships families have faced in recent months,” said Rachel Sosnowchik with the Second Harvest Heartland food bank. “We're coming off one of the hungriest summers in recent memory … We've seen the end of federal programs that were essential in families making ends meet throughout the pandemic.”

One of the programs that ended was free school meals for all. Parents now seeking help paying are encouraged to fill out an Application for Educational Benefits. Schools will have more information and can assist families in the application.


Cap Expand Partners sharing news from: www.cbsnews.com

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