Food Scheme Stole $250 Million Meant For Low-Income Children In ‘The Largest Pandemic Fraud In The United States’ Feds Say

Federal authorities charged 47 people in Minnesota with conspiracy and other counts on Tuesday in what they said was a massive scheme that took advantage of the COVID-19 pandemic to steal $250 million from a federal program that provides meals to low-income children.

Tuesday, September 20th 2022, 2:14 pm

By: CBS News, Associated Press


Federal authorities charged 47 people in Minnesota with conspiracy and other counts on Tuesday in what they said was a massive scheme that took advantage of the COVID-19 pandemic to steal $250 million from a federal program that provides meals to low-income children.

U.S. Attorney Andrew Luger called it "the largest pandemic fraud in the United States," CBS Minnesota reports.

Luger said the defendants are charged with federal crimes including "conspiracy, wire fraud, money laundering and paying and receiving illegal kickbacks," the station reported.

Luger said the defendants took $250 million from a federal child nutrition program, which was to be used to "feed needy children." Instead, Luger alleges, the defendants "primarily pocketed the money for themselves."

Prosecutors say the defendants created companies that claimed to be offering food to tens of thousands of children across Minnesota, then sought reimbursement for those meals through the U.S. Department of Agriculture's food nutrition programs. Prosecutors say few meals were actually served, and the defendants used the money to buy luxury cars, property and jewelry.

Many of the companies that claimed to be serving food were sponsored by a nonprofit called Feeding Our Future, which submitted the companies' claims for reimbursement. Feeding Our Future's founder and executive director Aimee Bock was among those indicted, and authorities say she and others in her organization submitted the fraudulent claims for reimbursement and received kickbacks.

Bock's attorney, Kenneth Udoibok, said he wouldn't comment until he's had a chance to see the indictment, but that the indictment "doesn't indicate guilt or innocence."

In an interview earlier this year, Bock denied stealing money and said she never saw evidence of fraud.

The defendants face multiple counts, including conspiracy, wire fraud, money laundering and bribery.

Earlier this year, the U.S. Department of Justice made prosecuting pandemic-related fraud a priority. The department has already taken enforcement actions related to more than $8 billion in suspected pandemic fraud, including bringing charges in more than 1,000 criminal cases involving losses in excess of $1.1 billion.

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 meals have historically been provided to kids through educational programs, such as schools or day care centers.

The sites that serve the food are sponsored by public or nonprofit groups, such as Feeding Our Future. The sponsoring agency keeps 10% to 15% of the reimbursement funds as an administrative fee in exchange for submitting claims, sponsoring the sites and disbursing the funds.

But during the pandemic, some of the standard requirements for sites to participate in the federal food nutrition programs were waived. Among them, the USDA allowed for-profit restaurants to participate, and allowed food to be distributed outside educational programs. The charging documents say the defendants exploited changes in the program's requirements "to enrich themselves."

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 throughout the state, knowing that the sites intended to submit fraudulent claims. "The sites fraudulently claimed to be serving meals to thousands of children a day within just days or weeks of being formed and despite having few, if any staff and little to no experience serving this volume of meals," according to the indictments.

Feeding Our Future received nearly $18 million in federal child nutrition program funds as administrative fees in 2021 alone, and Bock and other employees received additional kickbacks, which were often disguised as "consulting fees" paid to shell companies, the charging documents said.

According to an FBI affidavit unsealed 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 amount of reimbursements jumped to $197.9 million in 2021.

Court documents say the Minnesota Department of Education was growing concerned about the rapid increase in the number of sites sponsored by Feeding Our Future, as well as the increase in reimbursements.

The department began scrutinizing Feeding Our Future's site applications more carefully, and denied dozens of them. In response, Bock sued the department in November 2020, alleging discrimination, saying the majority of her sites are based in immigrant communities. That case has since been dismissed.

First published on September 20, 2022 / 12:56 PM

© 2022 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.

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