In a rare action, the Minnesota Attorney General's Office is requesting a judge supervise the dissolution of Twin Cities nonprofit Feeding Our Future to ensure there isn't any fraud involving its remaining assets as the operation winds down.
Minnesota Attorney General's Office seeks court supervision of Feeding Our Future closure
The nonprofit, which is being investigated by the FBI, announced last week it would dissolve. Now, the state agency wants court oversight of the process to prevent any fraud of its remaining assets.
March 3, 2022 at 11:07PM
The state agency filed the petition Thursday in Dakota County District Court. If approved, it could entail steps such as appointing a receiver and ordering regular check-ins with the Attorney General's Office.
The St. Anthony nonprofit, which is being investigated by the FBI for allegedly misusing millions of dollars, announced last week that it would voluntarily dissolve after the FBI froze its bank accounts, which had at least $3.5 million in them, according to the state.
"Court oversight of Feeding Our Future's dissolution will allow greater transparency into the organization's finances and prevent any future fraud or misuse of assets while the investigations continue," Attorney General Keith Ellison said in a statement.
Feeding Our Future is cooperating with both the FBI investigation and the state investigation, said Jennifer Urban, a St. Louis Park attorney hired by the nonprofit in January. She added that they expected the court filing after the Attorney General's Office notified the nonprofit of its investigation on Feb. 8.
"We both agree that the best step forward is one with transparency," Urban said. "All the things that they're asking the court to require were things we were planning on doing anyway. But now the whole public gets to see us do the things we promised we'd do."
FBI agents raided the nonprofit's offices and executive director Aimee Bock's Rosemount home on Jan. 20 and the agency is investigating a "large-scale scheme" to defraud the government, using tens of millions of dollars meant to reimburse community groups, vendors and nonprofits for providing meals and snacks to children. Investigators allege in search warrants that almost none of the money went to feed kids in need and instead funded personal costs — from luxury cars and lavish trips to lakefront homes.
Bock denies the organization or any of its partners engaged in fraud or submitted incorrect claims. More than 17 people are named in unsealed FBI search warrants.
While the FBI investigation is focusing on misuse of federal taxpayers dollars, the Minnesota Attorney General's Office is investigating whether the nonprofit violated state laws. So far, federal authorities haven't charged anyone with a crime and the Attorney General's Office hasn't made any formal determination of wrongdoing.
On Feb. 8, the state agency requested information from Feeding Our Future seeking a list of board members since the organization started in 2016 and board meeting minutes. Urban said they provided the information by Monday's deadline.
The agency said in the request for information that it had "reasonable grounds" to believe that Feeding Our Future violated state charitable laws and its leaders failed to properly administer charitable assets, breached fiduciary duties, made false or deceptive representations while seeking donations and solicited donations when the organization wasn't registered with the state.
The Attorney General's Office ensures nonprofits are following governance rules and properly overseeing charitable assets. The agency can take action against nonprofits that solicit donations in Minnesota, including filing court orders to get civil penalties or forcing a nonprofit to dissolve or ban it from operating in Minnesota. The office stipulated in court documents that, if board members' breach of fiduciary duty leads to losses, the agency can obtain restitution from board members.
The Attorney General's Office withdrew Feeding Our Future as a registered charity last year after requesting required tax forms and annual reports for more than two years and not receiving them. After a Star Tribune reporter asked Bock about it on Jan. 27, Feeding Our Future filed the proper paperwork and fees with the agency the next day, saying the failure to file the required forms was inadvertent because the notice was sent to a wrong address.
After the Attorney General's Office received the updated financial data, it said in the court filing that Feeding Our Future's required tax Form 990s didn't match the revenue described in FBI warrants. For instance, Feeding Our Future reports about $9 million in revenue in its 2020 tax form, and yet, in unsealed search warrants filed by the FBI, the Minnesota Department of Education records show more than $42 million in revenue.
An independent auditor hired to do the nonprofit's audits said in an interview that discrepancy could be in part because the nonprofit's fiscal year operated October 2020 to September 2021, not following the calendar year.
Urban — a former assistant attorney general in the charitable division of the Ohio Attorney General's Office — said Thursday the organization hired consultants to do its financial work who "weren't fluent in nonprofit accounting," and may have inputted incorrect information such as by only reporting net revenue, not gross revenue as needed. Feeding Our Future is now redoing all required audits and tax forms.
"The accounting was done incorrectly," she said. "I don't know if it's just gross incompetence of the people that they hired or what's going on."
Feeding Our Future hasn't been able to operate since the FBI raid on Jan. 20 and laid off its 65 employees, except for Bock. Besides the FBI freezing its bank accounts, the Minnesota Department of Education, which distributes the federal child nutrition program funds, stopped all payments on Jan. 20 to Feeding Our Future and its more than 100 sites.
Urban said the U.S. Department of Justice would need to unfreeze bank accounts so the nonprofit can pay outstanding bills and a new accounting firm. Feeding Our Future also held an online GoFundMe campaign that raised nearly $74,000 that they can't use because the money was raised for food programs no longer operating; the court would need to sign off on the nonprofit using that money for wind-down costs.
The governor said it may be 2027 or 2028 by the time the market catches up to demand.
