Minnesota Dept. of Education’s Flawed Oversight of Nonprofit Created Fraud Opportunities: Audit

‘There’s no excuse for this except for incompetence or purposely turning a blind eye,’ Rep. Patti Anderson said.

Despite Feeding Our Future (FOF) failing to present an acceptable plan for serving hungry children, the Minnesota Department of Education (MDE) approved the nonprofit’s annual applications and budget amendments amounting to hundreds of millions of dollars. A June 13 report from the Minnesota Office of the Legislative Auditor (OLA) also found that MDE’s “actions and inactions” created “opportunities for fraud.” 

The U.S. Department of Justice charged a total of 70 people between September 2022 and February 2024 over FOF’s alleged scheme, which prosecutors say cost taxpayers $250 million. Federal officials say they have recovered about $50 million.

When the nearly four-year relationship was finally terminated in 2022, FOF employees are alleged to have already spent much of the stolen funds that were supposed to cover meals and snacks for low-income students, according to the report.

“Frankly, we think its inadequate oversight created opportunities for fraud,” Katherine Tyson, OLA’s director of special reviews, said during a presentation of the report to state legislators on Thursday.

Between the initial application review in 2018 and the FBI’s raid of FOF offices and sites in early 2022, the MDE failed to adequately monitor FOF’s activities, visit its 194 service sites to verify that food was being served, scrutinize vouchers and other documents, and adequately respond to complaints about questionable conducts and fraudulent activity, according to the report.

When the COVID-19 pandemic began and schools were closed, two federally funded programs that serve primarily school-aged children provided additional money from the U.S. Department of Agriculture to provide meals that would otherwise be served in schools. More program sites were required to feed low-income children, especially in low-income urban neighborhoods.

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Vouchers for 2,000 meals were approved one day even though attendance records indicated only 1,000 children were present for the service. In April 2021 alone, FOF was reimbursed for 11.8 million meals, an increase of 7,104 percent from April 2020, according to the report.

Even though the program is federally funded, state education departments are responsible for selecting “sponsors,” which can either be schools and daycare centers or nonprofits such as FOF, and approving the site locations where meals are served. States are also responsible for all oversight tasks and have the authority to sanction sponsors that don’t comply with regulations.

According to the report, FOF allegedly hired vendors to help in this scheme, receiving bribes and kickbacks in the process.

The report said FOF employees, associates, or “volunteers” allegedly submitted reimbursement vouchers for meals that were never served, falsified attendance records, and submitted fake invoices for food purchases.

FOF also continued to identify itself as a nonprofit after the Internal Revenue Service revoked that status due to financial reporting failures.

FOF employees allegedly created shell companies used to buy trips, real estate, luxury vehicles, jewelry, and electronics, or to pay off debts, according to the report.

OLA representatives told state legislators that they learned of the suspected fraud from a January 2022 newspaper article, though they were later informed that the MDE had contacted the FBI before that. 

Even though the MDE’s oversight was inadequate, the state agency identified some deficiencies in FOF applications but usually approved them without requiring revisions. 

In 2021, the MDE decided against approving additional food service sites and did not reimburse some vouchers, prompting FOF to file a lawsuit in Ramsey County Court. A judge remarked that the MDE’s actions “were a real problem” but did not issue a ruling, according to the report, prompting the state agency to resume paying FOF.

‘Just Awful’

The report also said the MDE ignored or failed to adequately respond to most of the 30 complaints about FOF, filed between June 2018 and December 2021. Some of these complaints came from site owners or vendors who observed food safety or dietary regulation violations, or who lost their contracts with FOF for refusing to provide kickbacks.

“The complaints included allegations that Feeding Our Future used unethical or inappropriate methods to recruit sites; operated sites at locations without the property owners’ permission, and at those locations, ran a messy and haphazard food distribution process; and demanded kickback payments from vendors to serve food at its sites,” according to the report.

One of the first complaints came from a FOF employee who alleged its executive director took control of the agency through a pattern of forgery and theft. The MDE informed that person that they would only investigate actions involving a “conviction for any business-related offenses, or if the organization is no longer in good standing with the IRS,” the report states.

State legislators remarked that the department’s lack of action was “shocking.”

“Clearly they (Department of Education) knew about this for years, and did virtually nothing about it,” said Rep. Patti Anderson (R-Dellwood), who previously served as a state auditor. “This could have all been avoided. There’s no excuse for this except for incompetence or purposely turning a blind eye. This is just awful.”

Minnesota Legislative Auditor Judy Randall said there is no evidence of purposeful intent by the MDE. “What we did see was that they were ill-prepared to handle this situation,” she said.

The OLA report does not call for sanctions against the MDE or any of its employees, but it does outline detailed guidance for better oversight practices.

In a June 7 response to the OLA, the MDE’s commissioner, Willie L. Jett II, said he would work to improve his agency’s oversight practices but he did not take responsibility for its shortfalls in this case.

“What happened with Feeding Our Future was a travesty – a coordinated, brazen abuse of nutrition programs that exist to ensure access to healthy meals for low-income children,” Mr. Jett wrote. “The responsibility for this flagrant fraud lies with the indicted and convicted fraudsters.”

In an email response to The Epoch Times, the MDE said it does not have further comment beyond Mr. Jett’s letter to the OLA.


The report was released just days after five of seven former FOF employees or associates, all of them Minnesota residents, were convicted by a jury of conspiracy to defraud, money laundering, or wire fraud-related charges for their role in the scheme.

During those court proceedings, someone reportedly attempted to bribe a juror with $120,000 in cash. The FBI is still investigating that complaint and has yet to announce an arrest.

Before the recent verdicts of the seven defendants, 18 people had pleaded guilty to charges related to money laundering, bribery, wire fraud, or conspiracy.

Abdiaziz Farah was identified as one of the key players in the scheme. He was convicted on 23 of the 24 counts against him. The other four defendants convicted by a jury were identified as Mohamed Jama Ismail, Abdimajid Mohamed Nur, Mukhtar Mohamed Shariff, and Hayat Mohamed Nur on a variety of charges, including conspiracy, wire fraud, federal programs bribery, money laundering, and making false statements.

The Associated Press contributed to this report.

Original News Source Link – Epoch Times

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