According to a state audit report released on Thursday, “inadequate oversight” by the Minnesota Department of Education opened the door to a massive fraud scheme that allegedly stole more than$ 250 million in federal funds for pandemic children’s meal programs.
The education department ignored the warning signs of fraud at the nonprofit Feeding Our Future , according to a report from the Office of the Legislative Auditor, and did n’t exercise its authority to hold the nonprofit accountable. The office claimed it had uncovered numerous instances where MDE had improper access to federal funds, “especially given information it neither had or should have gotten but did not.”
Congressional accountant Judy Randall and Special Reviews Director Katherine Theisen both wrote in a text that was included with the report,” MDE’s commitments under federal law ranged from providing guidance and training to Feeding Our Future team, to terminating the group’s participation in the courses if warranted.” We think MDE’s deeds gave rise to prospects for scams.
The Education Department’s monitoring of federal money was based on three major concerns, according to the OLA.
— Failing to follow the department’s recommendations for action prior to the COVID-19 crisis and the alleged fraud’s start.
— The department failed to properly rely on Feeding Our Future to adhere to program requirements.
— MDE was underprepared to deal with the issues it had with Feeding Our Coming.
Thus far, 70 people have been charged in connection with a third billion in federal misappropriation intended to provide food to needy Minnesota kids during the worst of the COVID- 19 crisis. Federal officials claim that Feeding Our Future, a nonprofit that received federal funding from the Minnesota Department of Education, was the source of a large portion of the scams.
Alleged fraudsters spent money on houses, trips, jewellery and luxury vehicles, according to prosecutors.
Pandemic resources
The funds were intended to cover costs for meals provided to organisations at sites like daycare centers, after-school programs, and summer camps. According to federal prosecutors, members of Feeding Our Coming and another volunteer, Partners in Nutrition, claimed to provide hundreds of meals at areas that later turned out to be deserted.
During the pandemic, there was a lot of fraud because the U.S. authorities provided trillions in aid to stop COVID-19 from causing financial disruptions. Federal regulators have cited Feeding Our Future’s situation as one of the most important examples.
Five of the seven plaintiffs on trial for fraud were found last week by judges. Authorities claim that the seven were to blame for a total of$ 40 million in fraud.
MDE admits some wrong
The Minnesota Department of Education disputed the findings of the Legislative Auditor review and claims it made recommendations to law enforcement that led to criminal prosecutions despite the audit’s results that it pointed out shortcomings in its method for disbursing federal funds.
Education Commissioner Willie Jett wrote in a email responding to the inspection that” What happened with Feeding Our Coming was a farce — a planned, blatant abuse of nutrition programs that exist to maintain access to healthier meals for low-income children.”
Before Jett became commissioner in January 2023, the Feeding Our Future fraud allegations had already become public. The fraud took place while former commissioners Heather Mueller and Mary Cathryn Ricker served in the years 2021 and 2023.
MDE attributes the lack of state law authority, which would give them more authority to reject partnerships, and pandemic-era waivers allowing for “offsite reviews and alternative forms of oversight,” to the lack of clear guidance from the U.S. Department of Agriculture.
The department notified the USDA of issues in November or December of that year and had been aware of complaints and suspicious activity at the organization since at least summer 2020. The pandemic had already started in 2019, and MDE had previously turned down Feeding Our Future’s application to become a partner when it requested money for meal preparations. In all, about 30 complaints came in by 2021.
It was challenging to verify information submitted by large nonprofits because the Education Department was n’t properly equipped to handle fraud investigations, according to MDE general counsel Maren Hulden, who testified before the Legislative Audit Commission on Thursday.
” We did n’t have investigatory tools. And so when our regulated entities provide us with documentation like that, with that level of detail, we do n’t have tools to dig underneath as to whether or not it’s been falsified, and that’s why we reached out to law enforcement”, she said.
Lawmakers press on commissioner
At a Thursday audit commission meeting, the legislative auditor’s office and state education leaders briefed lawmakers on the report.
Rep. Duane Quam, R- Byron, asked Jett if anyone responsible for disbursing money to Feeding Our Future had been disciplined for oversight failures.
Jett, who appeared at the commission together with the Hulden, did not directly address the issue of any of the 15 federal meal distribution employees and instead promised to keep an open mind when he said he would n’t point fingers at anyone in his organization.
” First and foremost that’s not who I am as a person, it’s not who I am as the Commissioner of Education”, Jett said,” There are some things and some findings in the OLA report that are fair, and we’re using this report as a tool to improve. To say that we must come here and blame someone or point out their errors is to say. That’s not right”.
Republicans were skeptical of Jett’s response.
Quam responded,” The job of running an organization is actually making sure that you have competent people doing it.” And one way to drive is to actually discipline people.
Sen. Ann Rest, DFL- New Hope, had similar concerns about responsibility getting passed along, and noted the previous commissioners had the ability to stop fraud.
” We do n’t hear about programs to feed students in other states where such fraud occurred,” she said. The buck is still running down the street, running down the street, and coming nowhere. And that is unacceptable”.
What’s changed? What’s next?
The state education department took a few new precautions after the alleged fraud was exposed in order to prevent future abuses. It established an inspector general’s office, added a general counsel’s office, began training staff members on a new fraud reporting policy, and contracted with a firm to conduct financial reviews of some partners.
The Legislative Auditor made a few suggestions for MDE changes on Thursday to stop further fraud cases.
— Revision of complaint investigation procedures, including an emphasis on independent fact- finding
— Information from nonprofits considered “high risk” should undergo more verification
— Follow-up reviews to ensure corrective action plans are implemented at nonprofit partners who have issues
— Expansion of MDE’s rulemaking powers
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