Friday June 14, 2024
The Minnesota Department of Education, pictured at its previous headquarters in Roseville in April 2021. Credit: Jaida Grey Eagle | Sahan Journal
Minneapolis (HOL) — Inadequate oversight by the Minnesota Department of Education (MDE) enabled a massive fraud scheme involving Feeding Our Future, diverting over $250 million intended for pandemic children's meal programs, according to a state audit released Thursday. The scheme was described as one of the most significant cases involving pandemic funds and has led to the indictment of 70 individuals, with five recently found guilty.
Key Findings from the Audit
The Office of the Legislative Auditor's report highlighted MDE's failure to act on clear warning signs and its lack of accountability measures. The report identified three main issues:
- Ignoring Warning Signs: MDE failed to address known red flags before and during the COVID-19 pandemic.
- Lack of Accountability: The department did not effectively hold Feeding Our Future to program requirements.
- Unpreparedness: MDE was ill-equipped to handle the issues it encountered with Feeding Our Future.
Federal prosecutors revealed that the fraudsters spent the funds on luxury items instead of feeding needy Minnesota children. The scheme involved claiming reimbursements for meals at non-existent locations. Prosecutors have stated that this case is among the most significant involving pandemic funds. The founder of Feeding Our Future, Aimee Bock, has denied wrongdoing and pleaded not guilty.
Earlier this month, jurors found five of seven defendants guilty of fraud. Authorities allege these individuals were responsible for $40 million of the scam. The defendants' actions were part of a broader scheme that misappropriated funds meant for child nutrition during the pandemic. One of the defendants allegedly attempted to bribe a juror to obstruct the investigation, further highlighting the lengths the fraudsters went to avoid detection.
The Minnesota Department of Education acknowledged some shortcomings in its approach to disbursing federal funds but contested the audit's findings of inadequate oversight. Commissioner Willie Jett emphasized that MDE made referrals to law enforcement, leading to criminal prosecutions.
"What happened with Feeding Our Future was a travesty—a coordinated, brazen abuse of nutrition programs for low-income children," Jett said in a letter. "The responsibility for this flagrant fraud lies with the indicted and convicted fraudsters."
In response to the fraud, MDE has taken several steps to prevent future abuses, including establishing an inspector general's office, adding a general counsel's office, updating fraud reporting policies, and contracting financial reviews for certain partners. Legislative Auditor Judy Randall emphasized the need for more stringent complaint investigation procedures, verification of high-risk nonprofit information, and follow-up reviews to ensure compliance with corrective actions.
The audit's findings have sparked political controversy. Lawmakers pressed Commissioner Jett on accountability within MDE, with some criticizing the lack of disciplinary actions against employees responsible for disbursing the funds.
Rep. Duane Quam, R-Byron, emphasized the importance of holding people accountable within the organization. "The job of running an organization is ensuring you have competent people doing it," Quam said.
Sen. Ann Rest, DFL-New Hope, echoed concerns about the continuous passing of responsibility and the necessity for concrete actions to prevent future fraud.
Feeding Our Future was involved in a scheme where fraudulent claims were made for meal reimbursements. The funds, which were supposed to support child nutrition programs, were instead used for personal luxuries by the fraudsters.
The fraud transpired during the tenures of former commissioners Heather Mueller and Mary Cathryn Ricker. MDE pointed to unclear guidance from the U.S. Department of Agriculture and pandemic-era waivers that complicated oversight. The department also noted that it had reported suspicious activity to federal authorities as early as 2020.
In addition to the criminal proceedings, Minnesota Attorney General Keith Ellison recently dissolved 17 nonprofits involved in the fraud scheme. This action aimed to prevent further misuse of public funds and restore public trust in state-administered programs.
The FBI conducted multiple raids this week, including at the defendants' homes, to gather evidence related to the fraud.