Feds Charge 47 People In $250 Million Scheme That Defrauded Pandemic Food Aid Program

Deena Winter, Minnesota Reformer

Federal criminal charges were filed Tuesday against 47 people who allegedly participated in a $250 million scheme to exploit a federal child nutrition program during the pandemic.

Over the course of about 20 months, the defendants falsely claimed to serve more than 125 million meals, with some claiming they served up to 6,000 meals to needy children per day.

U.S. Attorney Andrew Luger called it “a brazen scheme of staggering proportions” and the largest U.S. pandemic relief fraud uncovered to date.

“These defendants exploited a program designed to provide nutritious food to needy children during the COVID-19 pandemic,” he said. “Instead, they prioritized their own greed, stealing more than a quarter of a billion dollars in federal funds to purchase luxury cars, houses, jewelry, and coastal resort property abroad.”

The federal investigation first came to light when the FBI seized property in January in an effort to stop the hemorrhaging.

Attorney General Merrick Garland released a statement saying the Justice Department will continue to bring justice to people who exploited the pandemic for personal gain and stole from taxpayers.

In six separate indictments, 47 people were charged with conspiracy, wire fraud, money laundering and bribery. Prosecutors allege they misused and laundered millions of dollars in federal funds meant to feed hungry children, exploiting changes made during the pandemic, such as allowing off-site food distribution and allowing for-profit restaurants to participate in the Federal Child Nutrition Program.

Luger said the defendants used the money to buy luxury vehicles, residential and commercial real estate in Minnesota, Ohio and Kentucky, real estate in Kenya and Turkey, and to fund international travel. The feds have seized 60 bank accounts, 45 pieces of property and 14 vehicles in an investigation that is still ongoing, he said.

Luger said the defendants quickly set up the scheme in April 2020, “stealing money at breakneck speed.” They would set up sites and begin claiming they were serving thousands of meals, seven days a week, within days to weeks of launching.

He said you can’t make much money if you work on the program “legitimately,” and the defendants primarily kept the money for themselves, spending little on food and logistics.

“They were running a scheme, not a child nutrition program,” he said.

Among them: Safari Restaurant, which enrolled in the program under Feeding Our Future and opened additional sites statewide and dozens of shell companies and then claimed to have served millions of meals, for which they received over $32 million, prosecutors say, which was used to buy vehicles, real estate and travel.

The indictment alleges Empire Cuisine and Market LLC claimed to have served millions of meals, and got over $40 million they used for vehicles, travel, real estate, and property in Kenya.

Administered by the U.S. Department of Agriculture, the program provided free meals to needy children by distributing federal money to state governments. In Minnesota, the federal funds were administered and overseen by the Minnesota Department of Education.

MDE provided funds to sponsoring agencies like the nonprofit Feeding Our Future, which in turn distributed the funds to various meal distributors around the state. Feeding Our Future was supposed to monitor that the funds were used appropriately, but instead helped dozens of people defraud the program, according to prosecutors.

Luger said the defendants quickly set up the scheme in April 2020, “stealing money at breakneck speed.” They would set up sites and begin claiming they were serving thousands of meals, seven days a week, within days to weeks of launching.

He said you can’t make much money if you work on the program “legitimately,” and the defendants primarily kept the money for themselves, spending little on food and logistics.

“They were running a scheme, not a child nutrition program,” he said.

MDE officials questioned the legitimacy of the large payments in 2020 and halted funding to Feeding Our Future, but a judge ordered the agency to resume payments after Feeding Our Future filed a lawsuit alleging racial discrimination against the mostly East African clientele. MDE called it a “sham lawsuit.”

Luger said the lawsuit was filed to “keep the money flowing.”

“It was all a lie,” he said.

Asked whether MDE deserves any blame for the huge fraud, Luger said everyone points fingers in a large-scale fraud case, but he blames the defendants who perpetrated and covered up the scheme.

Prosecutors allege Feeding Our Future opened more than 250 sites throughout the state and fraudulently disbursed more than $240 million in Federal Child Nutrition Program funds. Feeding Our Future went from disbursing about $3.4 million in federal funds in 2019 to nearly $200 million in 2021.

Sponsoring agencies retained 10% to 15% of the reimbursement for meals, and prosecutors charged Aimee Bock, founder and executive director of Feeding Our Future, with overseeing the massive scheme carried out by sites under their sponsorship.

Prosecutors say Feeding our Future employees recruited people to open sites statewide that, within days to weeks of setup, falsely claimed to serve meals to thousands of children per day.

Feeding our Future pocketed more than $18 million in fees and got bribes and kickbacks — disguised as consulting fees paid to shell companies — from people they sponsored, prosecutors say.

Prosecutors say dozens of shell companies enrolled in the program to enroll in the program and receive and launder their proceeds. Fake names of children were concocted, some by using a website called www.listofrandomnames.com, Luger said.

Other companies in the indictment include:

S & S Catering Inc., which received over $18 million, spending some of it on vehicles and real estate. Haji’s Kitchen LLC got more than $25 million and used some for vehicles, real estate, and travel. The owner of Community Enhancement Services Inc. and other co-conspirators opened multiple sites and shell companies in the JigJiga Business Center in Minneapolis and received more than $1.6 million, some of which was spent on vehicles, real estate, and beach property in Kenya. Brava Restaurant & Café LLC in Rochester claimed to serve millions of meals and falsely claimed to have a contract with Rochester Public Schools, receiving about $4.3 million, some of which went to vehicles, real estate, and property on the Mediterranean coast of Turkey.

Luger said three of the 47 defendants agreed to waive their right to appear before the grand jury and admit their roles in the scheme.

MDE released a statement Tuesday saying it reported Feeding Our Future’s “unexplained growth” to the U.S. Department of Agriculture, USDA’s Office of Inspector General and the FBI until it was able to find “someone who would take the troubling spending as seriously as we were.”

Minnesota Reformer is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Minnesota Reformer maintains editorial independence. Contact Editor Patrick Coolican for questions: info@minnesotareformer.com. Follow Minnesota Reformer on Facebook and Twitter.

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