MINNEAPOLIS (AP) — A Minnesota state agency’s inadequate oversight of a federal child food program and failure to respond to warning signs created the opportunity that led to the theft of $250 million in one of the largest pandemic aid fraud cases in the nation, the state’s financial regulator said Thursday in a scathing report.
The Minnesota Department of Education “failed to respond to warning signs that were known to the department before the onset of the COVID-19 pandemic and before the alleged fraud began, did not effectively exercise its authority to hold Feeding Our Future accountable for compliance with program requirements, and was ill-prepared to respond to the problems it encountered at Feeding Our Future,” according to the nonpartisan Office of the Legislative Auditor.
Seventy people have been charged in federal court for allegedly taking part in a plot that prosecutors say targeted a nonprofit called Feeding Our Future. Five of the first seven defendants were convicted Friday. The trial drew widespread attention after someone tried to bribe a juror with a bag full of $120,000 in cash the night before the case was due to be heard. Authorities are still trying to determine the source of that money.
18 other defendants have already pleaded guilty. Trials against the others are still pending.
Education Commissioner Willie L. Jett II disputed the auditor’s characterization of his agency’s oversight as inadequate. In a written response in the 120-page report, he said oversight “conformed to applicable standards” and that agency officials “made effective referrals to law enforcement.” He said agency staff first discovered the problems in the summer of 2020 and reported their concerns to federal authorities.
“What happened to Feeding Our Future was a farce – a coordinated, brazen abuse of nutrition programs that exist to provide access to healthy meals for children from poor families,” the commissioner wrote. “The responsibility for this blatant fraud rests with the accused and convicted fraudsters.”
But top Republicans in the legislature said the report showed the failure to stop the fraud was the fault of Democratic Gov. Tim Walz’s administration, which said the state was bound by a 2021 court order to resume payments despite its concerns and that the FBI had asked the state to continue making payments while the investigation continued.
“This was something they should have noticed. They had the authority to do it, but they didn’t. It’s astounding,” said Senate Republican Minority Leader Mark Johnson of East Grand Forks at a news conference. “The Department of Education and Governor Walz have repeatedly tried to tell the public that they did everything they could … but this report clearly shows that was a misrepresentation.”
Jett, who was appointed commissioner in January 2023 amid the impact of the crisis, said his agency has implemented changes to strengthen its oversight capacity, including establishing an inspector general’s office in 2023, adding a general counsel’s office in 2022, training all employees on updated fraud reporting guidelines and hiring a firm to conduct financial audits of certain partners.
According to federal prosecutors, the conspiracy took advantage of rules that were kept lax to keep the economy from collapsing during the pandemic. The FBI began looking into it in spring 2021. The defendants allegedly issued invoices for meals that were never served, operated shell companies, laundered money, engaged in passport fraud and accepted bribes. In total, more than $250 million in federal funds were stolen as part of the Minnesota plot, and only about $50 million of that has been recovered, according to authorities.
The food aid came from the U.S. Department of Agriculture and was administered by the state agency, which channeled the food money through partners like Feeding Our Future. Among the defendants awaiting trial is Aimee Bock, the founder of Feeding our Future. She maintains her innocence, saying she never stole and saw no evidence of fraud by her subcontractors.
An Associated Press analysis published last June documented how thieves across the country looted billions in federal funds from COVID-19 relief. Fraudsters may have stolen more than $280 billion, while another $123 billion was wasted or misspent. In total, the loss represented 10% of the $4.3 trillion the government had paid out through last fall. Nearly 3,200 people have been charged and about $1.4 billion in stolen pandemic aid has been seized, according to the Justice Department.
