Feeding Our Future audit finds Minnesota Dept. of Education's oversight "created opportunities for fraud"
MINNEAPOLIS — A special review from the Office of the Legislative Auditor released Thursday determined that the Minnesota Department of Education's oversight of Feeding Our Future — the nonprofit accused of being at the center of a $250 million fraud scheme during the pandemic — was "inadequate" and "created opportunities for fraud."
The 120-page report details the ways in which the department failed to act on prior warning signs about the nonprofit and was ill-prepared to hold Feeding Our Future accountable, even when they were signs before the pandemic began.
Federal authorities have called this case "the largest pandemic fraud in the United States," as members of the nonprofit and its affiliated sponsor sites are accused of using the funds from two federal nutrition programs on luxury cars, jewelry, travel and property, while just a fraction went to feed low-income children. A few of those defendants were found guilty last week of multiple crimes.
The report from the legislative auditor found that the Minnesota Department of Education's last review of Feeding Our Future was in 2018, and while it found serious issues with the nonprofit's operations — including that it did not collect enrollment information from sites — it failed to follow up.
The nutrition programs are backed by the U.S. Department of Agriculture and the money is earmarked to provide meals and snacks served to eligible children and adults at locations called "sites," such as schools, child-care centers, and adult day care centers. The Minnesota Department of Education oversees the groups, or "sponsors" of these meal sites and submits claims to the federal government for reimbursement.
Over the course of several reviews, the department found that Feeding Our Future lacked financial resources and dedicated accounting staff, and noted that staff salaries were above average.
Still, the report said that by 2019, the nonprofit managed more than six times the number of sites than the average multi-site sponsor participating in the program. The department's payments to Feeding Our Future also increased by 2,800% between 2020 and 2021.
"Time and time again over the four years it participated in the federal nutrition programs, MDE missed opportunities to hold Feeding Our Future accountable," Legislative Auditor Judy Randall told the Legislative Audit Commission Thursday.
Between June 2018 and December 2021, the department received more than 30 complaints about the organization — ranging from unethical practices to demanding kickbacks from vendors — which must be investigated by law.
But the department's investigation procedures were "of limited usefulness" in the context of alleged fraud, the auditor found. At one point, the education department asked Feeding Our Future to investigate complaints about itself.
Some of the complaints weren't looked into at all, "despite their frequency and seriousness."
The Department of Education disputed the characterization of its oversight practices, saying pandemic complicated its oversight procedures and that it lacked guidance from federal authorities on how to implement pandemic-era processes.
Still, the auditor said the department failed to act on warning signs prior to the pandemic and "could have taken more decisive action sooner in its relationship with Feeding Our Future."
"The Minnesota Department of Education is committed to program integrity and strong fiscal oversight of our programs and the important work we do on behalf of children and adults across the state," wrote Willie Jett, commissioner of the Department of Education, in a letter included in the report. "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 responsibility for this flagrant fraud lies with the indicted and convicted fraudsters."
The auditor's office offered a host of recommendations, including that the department should take additional steps to verify information, conduct follow-up reviews and revise its complaint investigation procedures.
The legislature should also establish criteria, or give the department the ability to create criteria, that it must consider when determining eligible recipients for federal nutrition program funds, the report said.
Republicans in the legislature sharply criticized the department and said the auditor's finding "vindicates" them because it underscores their concerns about the agency's oversight procedure.
"If nothing changes, if nothing changes. Either Gov. Walz holds his appointed commissioners and other staff accountable and we stop the waste and fraud or this is going to continue," said Senate Minority Leader Mark Johnson during a news conference Thursday.
The special review comes days after five people were found guilty of stealing more than $40 million in connection to the scheme. They were the first to go on trial in the Feeding Our Future case. In total, 70 people face charges, though the founder Aimee Bock maintains her innocence.
One of the jurors was dismissed during deliberations after she reported that she'd received a $120,000 bribe with the promise of more if she voted to acquit those accused in the case.
On Wednesday, federal agents raided a string of Twin Cities homes in search of who tried to bribe her.