Department officials defend their oversight
Last Thursday, Minnesota’s Office of the Legislative Auditor (OLA) released its special report on the Minnesota Department of Education’s (MDE) oversight of the nonprofit Feeding Our Future (FOF) following a major investigation and trial that found individuals linked to the Saint Anthony-based organization guilty of crimes including bribery, wire fraud, and money laundering.
The U.S. Department of Justice indicted 70 individuals in relation to the nonprofit’s food distribution program. The program was intended to feed underserved children but defrauded government resources of roughly $250 million, becoming the biggest pandemic fraud case in the nation.
The defendants in the financial fraud case have allegedly used the money to purchase vehicles, homes, a beach resort, and more. On June 7, a jury voted to convict five defendants in the first trial of the FOF fraud case. Two others were acquitted. Eighteen others have already pleaded guilty to the charges brought against them.
To conduct the review, the OLA examined documents related to MDE’s oversight of the nonprofit, which spanned application records, meal claims, and monitoring activities. MDE and Feeding Our Future’s executive director, Aimee Bock, provided the OLA with documents that contributed to the audit. Bock has pleaded not guilty to the charges brought against her relating to the fraud.
In the report, OLA evaluated MDE’s responses to past complaints it received about FOF and its sites. They reviewed the agency’s past communications with the U.S. Department of Agriculture and law enforcement agencies and gathered information through interviews with MDE staff.
OLA stated that MDE failed to follow up on several complaints against the nonprofit and allowed FOF to investigate itself on at least one occasion. The report identified multiple missed opportunities for the agency to deny applications for government funds to continue operating.
In the past, MDE has received praise from federal prosecutors for drawing their attention to concerns with FOF’s handling of funds. The agency reported these suspicions to the U.S. Department of Agriculture in 2020 and the Federal Bureau of Investigation the next year.
During a contentious hearing on the audit report, MDE Commissioner Willie L. Jett II fielded questions from lawmakers on both sides of the aisle. Joined by the agency’s general counsel, MDE argued that they had denied past FOF and other organizations that applied to become partner food distributors, but those denials had been overturned.
“The situation with Feeding Our Future was a travesty, a coordinated brazen abuse of a nutrition program meant to ensure access to healthy meals for low-income children,” Commissioner Jett said. “MDE just didn’t allow fraud to happen. We noticed issues early on and took action.
“The MDE team used the regulatory tools available to respond. The Department of Education contacted our federal partners promptly and cooperated with their direction to not impede their investigation,” said Jett
The commissioner contended that the agency had much to learn from this experience and laid out some of its short-term and long-term goals to mend the issues that allowed the fraud to occur under them.
MDE stated that several issues occurred during the pandemic, which prevented them from curtailing the fraud as it was occurring. One issue they faced was operational challenges caused by COVID-19 pandemic-related waivers issued by the USDA.
This made it “difficult” for the agency to observe meal distribution service. They also mentioned a lack of clear and written guidance from the USDA on how to interpret certain federal regulations and how they could implement pandemic-era waivers.
FOF also sued MDE in November 2020, and with this litigation, the agency felt that it had to be clear and intentional about its oversight of the nonprofit. In its lawsuit, FOF accused MDE of discrimination, which posed a serious risk to the agency’s public image. MDE also contended that they didn’t have the investigative authority to address the fraud when it occurred.
The report did respond to some of these points. “This was a limited review, and we did not examine some topics that may interest legislators and the public. For example, we did not evaluate the legal merits of Feeding Our Future’s lawsuits against MDE or MDE’s legal strategy in that litigation,” the report stated.
“Because the fraud scheme allegedly began around the start of the Covid-19 pandemic, we assessed the impact of MDE’s implementation of federal pandemic-era waivers on its oversight practices. However, we did not evaluate whether these waivers were justified.”
The report included Commissioner Jett’s letter stating, “MDE disputes the OLA’s characterization regarding the adequacy of MDE’s oversight. MDE’s oversight of these programs met applicable standards, and MDE made effective referrals to law enforcement,” he said.
He continued that “MDE is committed to program integrity and strong fiscal oversight of [its] programs and the important work [MDE does] on behalf of children and adults across the state.”
Jett further noted in his statement that the agency would independently implement changes to strengthen its oversight of other programs by establishing an Office of Inspector General, adding a General Counsel’s Office, providing staff training on the agency’s current fraud-reporting policy, and contracting with a firm to conduct financial reviews of certain entities.