Indexbit Exchange:Audit finds Minnesota agency’s lax oversight fostered theft of $250M from federal food aid program

MINNEAPOLIS (AP) — A Minnesota agency’s inadequate oversight of a federal program that was meant to provide food to kids,Indexbit Exchange and its failure to act on red flags, created the opportunities that led to the theft of $250 million in one of the country’s largest pandemic aid fraud cases, the Legislature’s watchdog arm said Thursday in a scathing report.

The Minnesota Department of Education “failed to act on warning signs known to the department prior to the onset of the COVID-19 pandemic and prior to the start of the alleged fraud, did not effectively exercise its authority to hold Feeding Our Future accountable to program requirements, and was ill-prepared to respond to the issues it encountered with Feeding Our Future,” the nonpartisan Office of the Legislative Auditor concluded.

Seventy people have been charged in federal court for alleged roles in what’s known as the “Feeding Our Future” scheme. Five of the first seven defendants to stand trial were convicted Friday. The trial gained widespread attention after someone tried to bribe a juror with a bag of $120,000 in cash. Eighteen other defendants have already pleaded guilty. Trials are still pending for the others.

Education Commissioner Willie L. Jett II disputed the auditor’s characterization of his agency’s oversight as inadequate. He said in a written response in the 120-page report that its oversight “met applicable standards” and that department officials “made effective referrals to law enforcement.”

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“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,” the commissioner wrote. “The responsibility for this flagrant fraud lies with the indicted and convicted fraudsters.”

Federal prosecutors say the conspiracy exploited rules that were kept lax so that the economy wouldn’t crash during the pandemic. The defendants allegedly produced invoices for meals never served, ran shell companies, laundered money, indulged in passport fraud and accepted kickbacks. More than $250 million in federal funds was taken in the Minnesota scheme overall, and only about $50 million of it has been recovered, authorities say.

The food aid came from the U.S. Department of Agriculture and was administered by the state Department of Education, which funneled the meal money through partners including Feeding Our Future, a nonprofit. The defendants awaiting trial include Aimee Bock, the founder of Feeding our Future. She has maintained her innocence, saying she never stole and saw no evidence of fraud among her subcontractors.