Legislators call for audit of Minnesota Department of Education over alleged nonprofit fraud

Four Minnesota Republican senators are demanding an audit of the state agency that distributed federal funding to a St. Anthony nonprofit now under investigation for fraud.

More than 200 law enforcement officers raided Feeding Our Future and numerous other sites last month after FBI investigators accused them in unsealed search warrants of a multimillion-dollar scheme to defraud the government. FBI investigators allege about two dozen people misused at least $48 million in federal nutrition aid distributed by the Minnesota Department of Education (MDE), spending the money on lavish trips, real estate, cars, jewelry and other personal expenses instead of providing meals to impoverished kids.

The leader of the nonprofit, Aimee Bock, denies any fraud took place. No one named in FBI search warrants has been criminally charged, and no arrests have been made.

Sens. Roger Chamberlain, Mark Koran, Mary Kiffmeyer and Michelle Benson sent a letter last week to the Office of the Legislative Auditor requesting an audit of MDE and its oversight of Feeding Our Future. The senators also want an estimate on the cost of a complete audit of all federal COVID-19 funds distributed by the Education Department, saying that more than $2.8 billion in aid was passed on to schools and other organizations since the start of the pandemic.

Legislative Auditor Judy Randall said in a letter to the senators that she shares their concerns about the allegations and her office is coordinating with federal and state investigators so it doesn't interfere with the federal investigation. She said that her office is already conducting an audit of state and federal COVID-19 aid received by state agencies from March 2020 to April 2021.

Chamberlain, Koran, Kiffmeyer and Benson also sent a letter to the Minnesota Management and Budget office to ask for an accounting of money provided by the federal government to audit COVID-19 expenses — much of which is doled out to nonprofits for programs to help Minnesotans in need.

"Sadly, this instance of fraudulent grant use is unlikely to be the last case we uncover as we look back at the billions of dollars the state distributed for COVID relief," Kiffmeyer said in a statement. "We need a full accounting of all dollars."

MDE deferred comment to the Management and Budget office, adding that, under federal law, the Education Department is subject to regular, ongoing audits of U.S. Department of Agriculture (USDA) program funds.

According to the FBI court documents, MDE became suspicious about the large amount of money going to Feeding Our Future and its sites in 2020 and terminated one of those sites, prompting Feeding Our Future to sue MDE.

In January 2021, MDE declared Feeding Our Future "seriously deficient" due to incomplete financial audits. Three months later, a judge told MDE it didn't have the authority to stop payment to Feeding Our Future. That month, MDE provided information to the FBI, which launched an investigation soon after.

In 2021, Feeding Our Future received $197 million in federal nutrition program reimbursements — up from $307,000 in 2018 — though the FBI hasn't alleged that all of its funds were misappropriated.

The USDA funds child nutrition programs, reimbursing schools, child-care centers, after-school programs and nonprofits for meals and snacks for low-income children and adults. "Sponsors," such as school districts, nonprofits and some for-profit businesses may manage multiple sites where food is distributed such as community centers.

Feeding Our Future was a sponsor of about 140 sites providing 100,000 meals a day to children across Minnesota, Bock said.

Because of the COVID-19 pandemic, the USDA loosened guidelines on the types of organizations allowed to participate in the programs, opening them up to for-profit restaurants and allowing meals to be bundled in multiday packs and consumed off-site. MDE officials told FBI investigators that the loosened guidelines made the programs more vulnerable to abuse, records show.

In warrants made public last month, the FBI said it visited some of the sites in Feeding Our Future's network and found no evidence of food being distributed.

Bock, executive director of the nonprofit, told the Star Tribune she never misused federal money and she said she has no evidence of fraud among her subcontractors. She has accused MDE of supplying the FBI with a bogus criminal case to derail a civil case she filed against MDE, which was scheduled to go to trial in April. Bock said she thinks Feeding Our Future is being targeted because it worked with mostly minority-owned businesses.

Returning campaign donations

When MDE denied Feeding Our Future's applications last year, Bock and organizations she worked with took their case to political leaders from City Hall to the State Capitol.

"Political leaders have been watching this and they have been watching the way MDE is treating Feeding Our Future and, more importantly, the communities we serve," Bock told the Star Tribune last week.

Bock said at least two state lawmakers reached out to MDE to find out why the department was taking so long to act on the group's efforts to expand its network of meal providers. One of those lawmakers was Sen. Sandy Pappas, DFL-St. Paul, who wrote to MDE regarding one of Feeding Our Future's pending site applications, according to an affidavit Education Commissioner Heather Mueller filed last year in Feeding Our Future's civil suit against MDE.

Pappas said Tuesday that she was just trying to request a site ID for a St. Paul nonprofit, not vouching for Feeding Our Future. She shared her colleagues' concerns about the "outrageous" allegations and supports a review of the case.

"It hurts the people who are actually delivering the services," she said of other nonprofits.

Bock said Sen. Omar Fateh, DFL-Minneapolis, also intervened on behalf of Feeding Our Future. On Tuesday, Fateh said in a statement that he supported the USDA programs but condemned the businesses that allegedly stole from the program. He said he received nine campaign contributions from people named in the investigation and returned the contributions this week.

Bock said Attorney General Keith Ellison also met with several sites Feeding Our Future funded. A spokesperson in Ellison's office said Tuesday that he and his staff met with community members about USDA programs, including some of the food sites, but Ellison told them his role is to defend MDE in litigation.

Minneapolis Mayor Jacob Frey and Council Member Jamal Osman also met with the state education commissioner last spring, but both said recently the meeting was about federal nutrition programs generally, not Feeding Our Future.

Bock said meetings with local politicians didn't help lift MDE's stop-pay; instead, it was the judge who determined MDE didn't have the authority to stop payments.