The Justice Department announced charges Tuesday against 47 people accused of stealing $250 million from a federal program designed to provide meals to needy children during the pandemic.
According to the department, the scheme is the largest Covid-19-related fraud discovered by researchers to date. The defendants face a range of charges, including conspiracy, wire transfer fraud, money laundering and paying and receiving illegal bribes.
The defendants, prosecutors said, have set up a network of shell companies affiliated with the Minnesota-based nonprofit Feeding our Future to operate the federal infant nutrition program, which is designed to provide meals to children from families with low incomes. The program was expanded by Congress at the start of the pandemic to allow more organizations to participate.
“Feeding Our Future employees recruited individuals and entities to open Federal Child Nutrition Program sites in the state of Minnesota,” the Department of Justice said in a press release. “These sites, created and operated by the defendants and others, fraudulently claimed that they were serving meals to thousands of children a day within just days or weeks of being established.”
The Justice Department alleges that despite Feeding Our Future’s knowledge of their own fraudulent claims, they nevertheless filed them with the Minnesota Department of Education, which administered and oversaw the federal program for the state.
“This was a brutal plan of staggering proportions,” said United States Attorney Andrew M. Luger for the District of Minnesota. “These defendants took advantage of a program designed to provide nutritious children with nutritious food during the COVID-19 pandemic. Instead, they prioritized their own greed and stole more than a quarter of a billion dollars in federal funds to buy luxury cars, homes, jewelry and seaside resorts abroad.”
“The company went from receiving and disbursing approximately $3.4 million in federal funds to sites under its sponsorship in 2019 to nearly $200 million in 2021,” part of the indictment reads. “In total, Feeding Our Future has fraudulently obtained and disbursed more than $240 million in funds from the Federal Child Nutrition Program during the Covid-19 pandemic,” it continued.
The defendants claimed to feed thousands of children a day, prosecutors said. To perpetuate the ruse, the defendants allegedly submitted false bills for food served to the children and lists of false names to show who was being fed.
In addition, the Minnesota Department of Education was given “false assurances” that Feeding Our Future was serving the meals, as it alleged after the department “tried to exercise appropriate oversight regarding the number of sites and the number of claims made,” according to the DOJ.
According to prosecutors, the defendants used the proceeds of the settlement to buy real estate in Minnesota, Kenya and Turkey, luxury cars, jewelry, finance international travel and more.
At a news conference Tuesday, Luger said an unspecified number of people had been arrested in the morning, but some suspects are not currently in the US.
This story has been updated with additional details.