MINNEAPOLIS (AP) — Federal authorities in Minnesota charged 48 people with conspiracy and other counts Tuesday in what was the largest fraud scheme linked to the pandemic to steal $250 million from a federal program that provides meals to low-income children.
Prosecutors say the defendants set up businesses that claim to provide meals to tens of thousands of children across Minnesota. then demanded compensation for these meals through USDA food nutrition programs. Prosecutors say the dinners were actually few and far between, and the defendants used the money to buy luxury cars, property and jewelry.
“That $250 million is the limit,” Andy Luger, the U.S. attorney for Minnesota, told a news conference. “Our investigation is ongoing.”
Many of the companies that claimed to be serving the food were sponsors of the nonprofit organization under the name Feeding our future, which filed the companies’ claims for compensation. Feeding Our Future founder and executive director Aimee Bock was among those charged, and authorities say she and other members of her organization submitted false reimbursement claims and received kickbacks.
Bock’s lawyer, Kenneth Udoibock, said the indictment “does not indicate guilt or innocence.” He said he would not comment further until he had reviewed the indictment.
In an interview after law enforcement raided multiple sites in January, including Bock’s home and offices, Bok denied stealing the money and said she never saw evidence of fraud.
Earlier this year, the US Department of Justice made prosecuting fraud related to the pandemic a priority. The department has already taken enforcement action against more than $8 billion suspected pandemic fraudincluding indicting more than 1,000 criminal cases with damages exceeding $1.1 billion.
Federal officials have repeatedly described the alleged fraud as “brazen” and denounced it as involving a program designed to feed children in need during the pandemic. Michael Paul, special agent in charge of the FBI’s Minneapolis office, called it “an amazing display of deception.”
Luger said the government has been billed for more than 125 million fake meals, with some accused making up names for children using an online random name generator. He showed one reimbursement form that claimed the site provided exactly 2,500 meals each day, Monday through Friday — with no children sick or otherwise missing from the program.
“These kids are just made up,” Luger said.
He said the government has so far returned $50 million in money and property and expects to return more.
The Minnesota defendants face multiple counts of conspiracy, wire fraud, money laundering and bribery. Luger said some of them were arrested Tuesday morning. At the press conference, the authorities announced 47 indictments; The Star Tribune and The New York Times reported the allegations against the 48th on Tuesday evening. A spokesman for the U.S. attorney’s office did not immediately return a message.
According to court documents, the alleged scheme targeted the USDA’s federal child nutrition programs, which provide food to low-income children and adults. In Minnesota, the funds are administered by the state Department of Education, and the meals have historically been provided to children through educational programs such as schools or child care centers.
Sites that serve food are sponsored by community or non-profit groups such as Feeding Our Future. The sponsoring agency retains 10% to 15% of reimbursed funds as an administrative fee in exchange for filing claims, sponsoring sites, and disbursing funds.
But during the pandemic, some of the standard requirements for sites to participate in federal nutrition programs have been waived. The USDA allowed commercial restaurants to participate and allowed food distribution outside of educational programs. The charging documents say the defendants used such changes “for enrichment.”
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 across the state, knowing the sites intended to submit false claims.
“The sites fraudulently claimed to be serving meals to thousands of children a day within days or weeks of being set up, and despite having few, if any, staff and little experience serving that much food,” — the indictment says.
One example describes a small storefront restaurant in Willmar, west central Minnesota, that typically serves only a few dozen people a day. The two defendants offered the owner $40,000 a month to use his restaurant and then billed the government for about 1.6 million meals over 11 months in 2021, according to one indictment. They listed the names of about 2,000 children — nearly half of the local school’s total enrollment — and only 33 names matched actual students, the indictment said.
Feeding Our Future received nearly $18 million in federal Child Nutrition Program administrative fees in 2021 alone, and Bock and other employees received additional kickbacks, often disguised as “consulting fees” paid to shell companies, according to charging documents .
According to an FBI affidavit released earlier this year, 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 compensation amount jumps to $197.9 million in 2021.
Court documents say the Minnesota Department of Education is growing concerned about the rapid increase in the number of Feeding Our Future-sponsored sites, as well as the increase in reimbursements.
The department began scrutinizing applications for the Feeding Our Future site more closely and rejected dozens of them. In response, Bock sued the department in November 2020, alleging discrimination, saying most of its sites were based in immigrant communities. That case has since been dropped.