Wed. Sep 28th, 2022

The Justice Department charged 47 defendants Tuesday for allegedly defrauding a federal program that provided food for needy children during the pandemic, describing the scheme — totaling nearly $250 million — as the largest uncovered to date targeting trillions in government aid.

Federal prosecutors said the defendants — a network of individuals and organizations tied to Feeding Our Future, a nonprofit operating in Minnesota — in some cases obtained federal pandemic funds in the names of children who did not exist and then spent that money on luxury cars, houses and other personal purchases.

To bilk the government, the Justice Department said, the defendants relied on a complex web of shell companies and bribes. One participant allegedly created a list of fake children to whom it had supposedly served meals, populated with names generated from the website “listofrandomnames.com.” Others fabricated spreadsheets with invented ages or faked their invoices, all in pursuit of federal cash, the government charged.

Once they had that money in hand, some of the defendants bought “houses in Minnesota, resort property and real estate in Kenya and Turkey, luxury cars, commercial property, jewelry, and much more,” according to Andrew M. Luger, the U.S. attorney for the district of Minnesota, who briefed reporters on the case Tuesday.

The extent of the scheme, which siphoned away money meant for hungry children, led the Justice Department repeatedly to describe the theft as “brazen.” The acknowledgment underscored the immense challenge that federal prosecutors face to keep watch over the spending approved since the start of the pandemic — all while pursuing criminals who have treated the aid as a potential windfall.

“These indictments, alleging the largest pandemic relief fraud scheme charged to date, underscore the Department of Justice’s sustained commitment to combating pandemic fraud and holding accountable those who perpetrate it,” Attorney General Merrick Garland said in a statement.

Feeding Our Future could not be reached for comment. A call to a phone number listed on its website could not be completed, and a lawyer representing the organization in related litigation did not immediately respond to a request for comment. Aimee Bock, the nonprofit’s founder and executive director, previously has denied wrongdoing.

The federal food aid is a critical part of the roughly $5 trillion in emergency spending that Congress has adopted since 2020. The money helped rescue the economy from the worst crisis since the Great Depression, putting shots in millions of Americans’ arms while helping workers find jobs and businesses stay afloat. But the money also opened the door to billions of dollars in waste, fraud and abuse, the extent of which is only beginning to come to light. The Washington Post is exploring the problem in a year-long investigation called The Covid Money Trail.

Targeting unemployment insurance, sophisticated criminals repeatedly stole the identities of innocent Americans, potentially draining much-needed jobless aid by more than $160 billion. Similar schemes targeted roughly $1 trillion in aid administered by the Small Business Administration, which provided loans and grants to businesses that did not exist, should not have qualified for help or appeared to operate abroad.

In other cases, inadequate federal oversight and lax program rules led to trouble. Many Republican-led states, for example, have tried to put their allotments under a $350 billion aid program toward political pet projects, such as tax cuts and immigration crackdowns. Still another federal initiative to retrain veterans saw only 397 find new jobs, a far cry from what lawmakers hoped.


The Covid Money Trail


It was the largest burst of emergency spending in U.S. history: Two years, six laws and more than $5 trillion intended to break the deadly grip of the coronavirus pandemic. The money spared the U.S. economy from ruin and put vaccines into millions of arms, but it also invited unprecedented levels of fraud, abuse and opportunism.

In a yearlong investigation, The Washington Post is following the covid money trail to figure out what happened to all that cash.

Read more

The scheme alleged by the Justice Department on Tuesday centered on the Federal Child Nutrition Program, administered by the Agriculture Department to provide free meals to children in lower-income families. The program essentially operates as a vast ring of networks: Nonprofits and other organizations provide meals or contract with vendors to do so, and they are reimbursed by states, using money from the federal government.

In response to the pandemic, the U.S. government made it easier for a larger set of providers to participate in the child nutrition program — and for those entities to supply meals at a wider array of locations. The tweaks aimed to help more families access food, particularly when schools had shuttered and couldn’t provide free or reduced-price breakfast and lunch as usual.

But the changes to federal law also may have paved the way for rampant abuse. With Feeding Our Future, prosecutors said, the organization served as a middleman. As a “sponsor,” it submitted applications for new meal delivery sites to the state of Minnesota for participation in the federal program. It then oversaw meal distribution, sent the state claims for reimbursement and remitted the federal funds back to its partners, according to the Justice Department. The nonprofit also collected administrative fees from the payments.

Prosecutors allege that from that powerful perch, the nonprofit’s leader, Bock, ultimately “oversaw a massive scheme to defraud carried out by sites under its sponsorship” — one allegedly spanning dozens of individuals, some in her employ, and shell companies operating throughout the state. In total, Feeding Our Future opened more than 250 sites in Minnesota, according to the government.

One of the entities her organization sponsored, known as ASA Limited, repeatedly submitted falsified records about the number of children it provided with free meals, according to the government. In September 2021, for example, one of the defendants tied to the firm allegedly populated a spreadsheet with a formula that generated a random number between 7 and 17 in the age column for thousands of children.

“Bock and Feeding Our Future knew [the state’s] concerns were valid, and that little of the Federal Child Nutrition Program funds disbursed by Feeding Our Future were used to feed children,” the Justice Department alleged.

In these and dozens of other instances, federal prosecutors said, Bock failed to conduct proper oversight or lied about it — and then sought to deflect government regulators who tried to keep close watch over her.

Minnesota state officials began investigating Feeding Our Future in 2020, after officials began to register concerns with the large number of meals that its sponsored sites had claimed to deliver. But an earlier attempt to deny payments to the organization ultimately failed, allowing its network to continue receiving federal aid.

Facing new scrutiny, Bock at one point filed a lawsuit against the Minnesota Department of Education, which oversees the state’s implementation of the meal program, accusing it of “racial animus.” The FBI, for its part, conducted several raids in January.

On Tuesday, federal law enforcement officials stressed that they are continuing to probe the alleged fraud in Minnesota and other attempts to bilk money from a program meant to help hungry children.

“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,” FBI Director Christopher A. Wray said in a statement.



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