MINNEAPOLIS — Federal authorities have indicted 47 people in Minnesota on conspiracy and other counts in what they say Tuesday was the largest fraud scheme to date to benefit from the COVID-19 pandemic by stealing $250 million from a federal program that provides meals to children with disabilities. a low income.
Prosecutors say the defendants founded companies that claimed to provide food to tens of thousands of children throughout Minnesota, and then sought reimbursement for those meals through the U.S. Department of Agriculture’s food nutrition programs. Prosecutors say few meals were served and the defendants used the money to buy luxury cars, property and jewelry.
“This $250 million is ground,” Andy Luger, the US attorney for Minnesota, said at a news conference. “Our investigation continues.”
Many of the companies that claimed to serve food were sponsored by a nonprofit called Feeding Our Future, which filed the companies’ claims for reimbursement. Feeding Our Future founder and executive director Aimee Bock was among those charged, and authorities say she and others in her organization filed the fraudulent claims for reimbursement and received kickbacks.
Bock’s attorney, Kenneth Udoibok, said the charges “do not indicate guilt or innocence”. He said he would not comment further until he saw the charges.
In interviews after police searched multiple sites in January, including Bock’s home and offices, Bock denied stealing money and said she never saw any evidence of fraud.
Earlier this year, the US Department of Justice made the prosecution of pandemic-related fraud a priority. The department has already taken enforcement action related to more than $8 billion in suspected pandemic fraud, including indicting more than 1,000 criminal cases with losses exceeding $1.1 billion.
Federal officials repeatedly described the alleged fraud as “brutal” and denounced it as a program designed to feed children in need of help during the pandemic. Michael Paul, special agent in charge of the FBI’s Minneapolis office, called it “an astonishing display of deception.”
Luger said the government has charged more than 125 million fake meals, with some defendants making up names for children using an online random name generator. He showed one reimbursement form that claimed a site served exactly 2,500 meals a day Monday through Friday — with no kids ever getting sick or otherwise missing out on the program.
“These kids were just invented,” Luger said.
He said the government has so far recovered $50 million in money and property and expects to get more back.
The Minnesota defendants face multiple counts, including conspiracy, bank fraud, money laundering and bribery. Luger said some of them were arrested Tuesday morning.
According to court documents, the alleged plan targeted the USDA’s federal infant nutrition programs, which provide food to low-income children and adults. In Minnesota, the funds are administered by the Department of Education, and traditionally, meals were provided to children through educational programs, such as schools or daycare centers.
The sites that serve the food are sponsored by public or non-profit organizations, such as Feeding Our Future. The sponsoring agency will keep 10% to 15% of the refund funds as an administrative fee in exchange for filing claims, sponsoring the sites and disbursing the funds.
But during the pandemic, some of the standard requirements for venues to participate in federal food nutrition programs were waived. The USDA allowed for-profit restaurants to participate and allowed food to be distributed outside of educational programs. According to the indictment documents, the defendants exploited such changes “to enrich themselves”.
The documents say that Bock oversaw the plan and that she and Feeding Our Future sponsored the opening of nearly 200 federal infant nutrition program sites in the state, knowing the sites wanted to make fraudulent claims.
“The sites fraudulently claimed to be serving meals to thousands of children a day within just days or weeks of inception and despite having few or no staff and little to no experience serving this number of meals,” the site said. charge.
One example described a small retail restaurant in Willmar, western Minnesota, that typically served only a few dozen people a day. Two defendants offered the owner $40,000 a month to use his restaurant, then billed the government for about 1.6 million meals through 11 months of 2021, according to one indictment. They named the names of about 2,000 children — nearly half of the local school district’s total enrollment — and only 33 names matched actual students, the indictment said.
Feeding Our Future received nearly $18 million in federal funds for infant nutrition programs in 2021 alone as administrative fees, and Bock and other employees received additional kickbacks, which were often disguised as “consulting fees” paid to empty businesses, the cost documents said.
According to an FBI affidavit released earlier this year, Feeding Our Future received $307,000 in fees from the USDA in 2018, $3.45 million in 2019 and $42.7 million in 2020. 197.9 million in 2021.
Court documents say the Minnesota Department of Education was concerned about the rapid increase in the number of sites sponsored by Feeding Our Future, as well as the increase in fees.
The department began to scrutinize Feeding Our Future’s site applications and rejected dozens of them. In response, Bock sued the department for discrimination in November 2020, saying most of its sites were located in immigrant communities. That case has now been dropped.