The Department of Justice (DOJ) has announced that they have filed federal criminal charges against 47 defendants who allegedly took part in a $250 million fraud scheme related to a federally-funded child nutrition program aimed to provide nutritional relief for children during the COVID-19 pandemic.
According to FBI Director Christopher Wray:
“Today’s indictments describe an egregious plot to steal public funds meant to care for children in need in what amounts to the largest pandemic relief fraud scheme yet. The defendants went to great lengths to exploit a program designed to feed underserved children in Minnesota amidst the COVID-19 pandemic, fraudulently diverting millions of dollars designated for the program for their own personal gain. These charges send the message that the FBI and our law enforcement partners remain vigilant and will vigorously pursue those who attempt to enrich themselves through fraudulent means.”
U.S Attorney Andrew M. Luger commended the investigators “who unraveled the lies, deception, and mountains of false documentation” needed to expose the alleged fraud. According to his statements, the defendants in the case allegedly used the fund to “purchase luxury cars, houses, jewelry and coaster resort property abroad.”
Charges against the 47 defendants are cataloged in six indictments and three criminal complaints. They include conspiracy, wire fraud, money laundering, and bribery.
According to the charging documents, the defendants developed and put into motion a grand scheme intended to defraud the Federal Child Nutrition Program (FCNP). The DOJ accuses the defendants of obtaining, misappropriating, and laundering the millions of dollars in funds meant to reimburse them for the costs of serving free meals to children during the pandemic. Instead, the defendants allegedly used the funds for personal enrichment.
The FCNP is managed by the U.S. Department of Agriculture (USDA) to ensure that children in need are provided with adequate nutrition. The program is administered through state governments. In Minnesota, the program is overseen by the Minnesota Department of Education (MDE). MDE funds various sites to provide meals to needy children and reimburses them for their costs.
To participate in the program, each site must be sponsored by an authorized organization, which will submit an application to MDE for each site. The sponsor is responsible for monitoring the activities of approved sites and filing claims for reimbursement to them. The USDA sends reimbursements to the sponsor, who retains between 10-15 percent in administrative fees and provides the remainder to sites that have provided meals through the program.
During the COVID-19 pandemic, the USDA adjusted some of its participation requirements to meet the urgency of the situation. The administration allowed for-profit restaurants to provide meals and also provided for off-site food distribution to children outside of a school setting.
Aimee Bock, the founder and executive director of a non-profit called “Feeding Our Future” that sponsored sites to the FCNP, is one of the defendants being charged. The indictment against Bock accuses her of overseeing the massive fraud scheme perpetuated by her organization and the sites they sponsored. While “Feeding Our Future” oversaw only about $3.4 million in federal funds during 2019, the organization oversaw nearly $200 million in 2021.
According to the DOJ, employees at “Feeding Our Future” actively sought out individuals and entities to open FCNP sites all over Minnesota. The sites, some of which were created specifically for the purpose of deception, then fraudulently claimed that they were serving thousands of meals a day to children. Dozens of shell companies were also enrolled in the FCNP. Other shell companies were created to receive and launder the money from the massive fraud scheme.
As a part of the scheme, the defendants falsified documentation with fraudulent meal counts to support the number of children and meals they claimed they were serving each day. They provided fake invoices for food purchases they claimed were used to prepare the meals. Rosters were fabricated that contained names and ages of the children supposedly served. One roster was created from a website containing a names list. An Excel formula was created to generate random ages between seven and seventeen.
Even though “Feeding Our Future” knew the claims they were facilitating were fraudulent, they still submitted them to MDE and accepted the federal reimbursements, keeping their portion and providing the rest to the other defendants in the case. For their part in the scheme, “Feeding Our Future” pocketed over $18 million in administrative fees. Employees of the non-profit also bribed some of the companies they were sponsoring, receiving cash kickbacks or funds listed as “consulting fees” on their books, which showed the funds were paid to other shell companies to give them the appearance of legitimacy.
MDE’s efforts to do oversight were thwarted by Bock in her capacity at “Feeding Our Future.” She gave false assurances that her organization was monitoring all the sites they sponsored to ensure they were providing meals as claimed on their reimbursement reports. To keep MDE at bay, Bock countered their requests for further clarification of her efforts by accusing them of discrimination and unfair scrutiny of the sites being sponsored by her charity. MDE responded by denying further site applications. Bock and “Feeding Our Future” retaliated by filing a lawsuit that accused MDE of denying site applications as part of a discrimination policy that violated the Minnesota Human Rights Act.
After investigating the situation further, the MDE, DOJ and other agencies involved in the case found that “Feeding Our Future” had opened more than 250 sites all over Minnesota and used them to bilk the FCNP out of $240 million in funds. Defendants are accused of using the money to buy personal assets such as high-end vehicles and fund international travel. Additionally, some defendants purchased residential and commercial properties in Minnesota, Ohio, Kentucky, Kenya, and Turkey.
Special Agent in Charge Justin Campbell of the Chicago Field Office of IRS Criminal Investigation has this to say:
“Exploiting a government program intended to feed children at the time of a national crisis is the epitome of greed. As alleged, the defendants charged in this case chose to enrich themselves at the expense of children. Instead of feeding the future, they chose to steal from the future. IRS – Criminal Investigation is pleased to join our law enforcement partners to hold these defendants accountable.”
For more details on this case and a list of the defendants involved, visit the FBI site to see their full press release.