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Feds charge dozens in Minnesota in alleged scheme to steal $250 million in pandemic aid

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Federal authorities charged 47 people in Minnesota with conspiracy and other counts on Tuesday in what they said was an enormous scheme that took advantage of the Covid-19 pandemic to steal $250 million from a federal program that gives meals to low-income children.

Prosecutors say the defendants created firms that claimed to offer food to tens of 1000’s of youngsters across Minnesota, then sought reimbursement for those meals through the U.S. Department of Agriculture’s food nutrition programs. Prosecutors say few meals were actually served, and the defendants used the cash to purchase luxury cars, property and jewellery.

“This $250 million is the ground,” Andy Luger, the U.S. attorney for Minnesota, said at a news conference. “Our investigation continues.”

Most of the firms that claimed to be serving food were sponsored by a nonprofit called Feeding Our Future, which submitted the businesses’ claims for reimbursement. Feeding Our Future’s founder and executive director, Aimee Bock, was amongst those indicted, and authorities say she and others in her organization submitted the fraudulent claims for reimbursement and received kickbacks.

Bock’s attorney, Kenneth Udoibok, said he would not comment until he’s had a likelihood to see the indictment, but that the indictment “doesn’t indicate guilt or innocence.”

In an interview in January after law enforcement searched her home and offices, amongst other sites, Bock denied stealing money and said she never saw evidence of fraud.

Earlier this yr, the U.S. Department of Justice made prosecuting pandemic-related fraud a priority. The department has already taken enforcement actions related to greater than $8 billion in suspected pandemic fraud, including bringing charges in greater than 1,000 criminal cases involving losses in excess of $1.1 billion.

The defendants in Minnesota face multiple counts, including conspiracy, wire fraud, money laundering and bribery.

In line with court documents, the alleged scheme targeted the USDA’s federal child nutrition programs, which offer food to low-income children and adults. In Minnesota, the funds are administered by the state Department of Education, and meals have historically been provided to kids through educational programs, resembling schools or day care centers.

The sites that serve the food are sponsored by public or nonprofit groups, resembling Feeding Our Future. The sponsoring agency keeps 10% to fifteen% of the reimbursement funds as an administrative fee in exchange for submitting claims, sponsoring the sites and disbursing the funds.

But through the pandemic, a few of the standard requirements for sites to take part in the federal food nutrition programs were waived. Amongst them, the USDA allowed for-profit restaurants to participate, and allowed food to be distributed outside educational programs. The charging documents say the defendants exploited changes in this system’s requirements “to complement themselves.”

Luger said the scheme involved greater than 125 million fake meals, with some defendants making up names for youngsters through the use of a web based random name generator. He displayed one form for reimbursement that claimed a site served exactly 2,500 meals every day Monday through Friday — with no children ever getting sick or otherwise missing from this system.

“These children were simply invented,” Luger said.

He said the federal government has thus far recovered $50 million in money and property and expects to recuperate more.

The documents say Bock oversaw the scheme and that she and Feeding Our Future sponsored the opening of nearly 200 federal child nutrition program sites throughout the state, knowing that the sites intended to submit fraudulent claims. “The sites fraudulently claimed to be serving meals to 1000’s of youngsters a day inside just days or perhaps weeks of being formed and despite having few, if any staff and little to no experience serving this volume of meals,” in keeping with the indictments.

Feeding Our Future received nearly $18 million in federal child nutrition program funds as administrative fees in 2021 alone, and Bock and other employees received additional kickbacks, which were often disguised as “consulting fees” paid to shell firms, the charging documents said.

In line with an FBI affidavit unsealed earlier this yr, Feeding Our Future received $307,000 in reimbursements from the USDA in 2018, $3.45 million in 2019 and $42.7 million in 2020. The quantity of reimbursements jumped to $197.9 million in 2021.

Court documents say the Minnesota Department of Education was growing concerned concerning the rapid increase within the number of web sites sponsored by Feeding Our Future, in addition to the rise in reimbursements.

The department began scrutinizing Feeding Our Future’s site applications more rigorously, and denied dozens of them. In response, Bock sued the department in November 2020, alleging discrimination, saying nearly all of her sites are based in immigrant communities. That case has since been dismissed.

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