MINNEAPOLIS – The Justice Department said on Tuesday that a federal grand jury indicted 44 people on charges they blatantly cheated on anti-hunger programs during the coronavirus pandemic, stealing $240 million by paying the government for meals they didn’t serve to children who didn’t exist.
The case, in Minnesota, appears to be the largest scam discovered in any pandemic relief program, striking even in a time when massive federal spending and lax oversight have allowed. series of scams with some recent similarities.
The Minnesota operation was particularly audacious, prosecutors said: An alleged mastermind told the government he had feed 5,000 children a day in a second floor apartment.
The other defendants in the case appear to have gone to great lengths to disguise what they were doing, using the website listofrandomnames.com to create a fake list of children they could charge for food. Others used a number generator to generate ages for the children they were supposed to be raising, causing the ages to fluctuate wildly every time the team updated the list of those nonexistent children. , court papers said.
But their plan – the details of which are reported in The New York Times in March – still raking in millions of dollars a week, prosecutors said in court papers, because government officials relaxed oversight of the feeding program during the pandemic and because the alleged scammers had help from a trusted insider.
That insider is Aimee Bock, founder of a nonprofit group, Feeding Our Future, which the State of Minnesota relies on as a watchdog to prevent fraud at feeding sites. But Ms Bock did the opposite, the indictment said: “As pandemic relief programs flooded the programs with funds, she took advantage of her position to carry out nearly 200 new feeding operations that she knew of. is to have submitted false or inflated invoices.
Even when the government of Governor Tim Walz, a Democrat, raised questions, Ms. Bock dismissed them by filing a lawsuit and accusing state officials of discriminating against the client group. East Africa of her group.
“In fact, Feeding Our Future operates a pay-to-play program in which individuals seeking to operate fraudulent websites under the sponsorship of Feeding Our Future must repay a portion of the proceeds from their fraud,” an indictment said. obtained by The Times.
Ms. Bock was charged with wire fraud and bribery related to federal programs. The other defendants were also charged with money laundering, for allegedly routing the funds they stole through a website of shell companies.
This case is one of the most prominent to be launched by the Department of Justice as it aims to tackle a wave of scams related to pandemic-era programs that have sent billions of dollars in aid into the economy, often have few constraints and little supervision.
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The Office of Inspector General of the Ministry of Labor has been opened 39,000 surveys. At the Small Business Administration, about 50 agents sorted through two million potentially fraudulent loan applications. And while the high volume of cases, all but guaranteed that some will go unsolved, the prosecutions in Minnesota signal that the Justice Department is moving aggressively into others.
The indictment said the defendants spent money on real estate in the United States, Kenya and Turkey, as well as buying 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 duffle bag.
The indictments are accusations, and many of those prosecuted have said they did nothing wrong. After a series of FBI searches in January revealed the existence of the investigation, Mrs Bock told The Times that she has put in place strong anti-phishing measures and doesn’t believe anyone in her system has broken the rules.
Then, if there is fraud, Bock said, “every test we do and every safeguard we have in place fails to catch it. Is it feasible? Sure. And if they overtake us, I’ll hold them accountable. “
Also among those indicted is a Feeding Our Future employee, Abdikerm Abdelahi Eidleh, who is accused of receiving money back from people involved in the scheme. The other three defendants – including another employee of the nonprofit, Hadith Yusuf Ahmed – were charged through “criminal information” rather than a grand jury indictment.
The state blocked Feeding Our Future from receiving more aid after the FBI served a search warrant in this case in January. The nonprofit was seeking dissolution at the time, but Minnesota Attorney General Keith Ellison, a Democrat, blocked movement. Mr Ellison asked a judge to oversee the group while he investigates whether it violated state charity laws. That investigation appears to be underway.
As described by prosecutors, the participants targeted two federal food aid programs, administered through state governments. They plan to feed children in after-school programs and summer camps. But as the pandemic hit, Congress abandoned programs to reach the millions of children stuck at home, flocking to billions of dollars more and changed the rules to allow families to choose which meals to go.
However, as funding increases, oversight decreases: For example, state officials, No more directly checking feeding sites.
That leaves one last line of defense: so-called watchdog sponsors, like Feeding Our Future. Those nonprofit groups act as monetization conduits, from states to individual earning sites, and they must watch out for fraud.
But the system also gives those custodians a reason not to bark: They can keep 10 to 15 percent of the money flowing through them.
In this case, the indictment said, Ms. Bock’s team kept the cash flow to increase their own cuts.
“The defendants exploited the Covid-19 pandemic – and the resulting program of change – to enrich themselves,” the indictment reads.
Feeding Our Future started before the pandemic as a small donor overseeing $3.5 million in funding. It never had an accountant and sometimes struggled with basic administration, even letting its nonprofit status expire for a while.
But by 2021, Feeding Our Future has raked in $197 million in annual funding.
Under its umbrella, the indictments say, six different groups began committing similar frauds. Masterminds often register new companies or nonprofits, then quickly register them as feeding operations under the supervision of Feeding Our Future.
Then, the indictments said, the new groups would soon report that they were feeding thousands of children a day – numbers that put them among the largest feeding operations in the state – and begin collecting money. about thousands or millions of dollars in federal payments. In Minneapolis, for example, a man named Guhaad Hashi Said told the state he was serving 5,000 meals, twice a day, at a new facility called Advance Youth Athletic Development.
The place he listed was a place where children could not be fed by anyone. The address is a second floor apartment.
Mr. Said is one of those charged; The indictment says he was paid $2.9 million from federal funds to the state and Feeding Our Future. But the indictment says Mr Said provided only “a small portion” of the meals he claimed. In an interview This year, Mr. Said said he never claimed to serve 5,000 meals a day in the first place.
In 2020, Minnesota officials were concerned about the rate at which Feeding Our Future was creating new distribution locations and starting to monitor them more.
In November of that year, the nonprofit responded defiantly, filing a lawsuit alleging discrimination against public officials. The lawsuit says the state is harming children by delaying the start of new Feeding Our Future activities. “Every day that goes by, hundreds of the state’s most vulnerable children will not get the meals they need,” it said.
According to the indictment, several websites that the state sought to delay operations subsequently became fraud hubs.
In response to Feeding Our Future’s lawsuit, a state court judge ruled that Minnesota failed to take 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.
Kevin Burns, a spokesman for the Minnesota Department of Education, the food regulator, said: “The state “moved rapidly and consistently brought the matter to federal authorities until we could find anyone.” that will value the hassle spending like we do. – say money.
Republicans in the State Senate released a report This month, before the indictments were made public, accused the state Department of Education of “irresponsible” for not being able to stop Feeding Our Future sooner.