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Minn. nonprofits angered by fraud allegations at St. Anthony organization

Minn. nonprofits angered by fraud allegations at St. Anthony organization

Minnesota nonprofits have desperately vied for funding during the COVID-19 pandemic to keep up with providing meals to the growing number of kids in need.

Now the leaders of many of those organizations say they are appalled by Thursday’s revelations that a St. Anthony organization called Feeding Our Future is accused of defrauding the federal government of tens of millions of dollars meant to pay for thousands of meals to kids across the Twin Cities and state.

Instead, investigators say most of the money was spent on the personal expenses of employees and associates of Feeding Our Future — from jewelry and a Porsche to lakefront homes in Prior Lake and a $1 million Plymouth home with an indoor basketball court. That’s according to more than 200 pages of U.S. District Court documents unsealed Thursday, in which investigators detail what they describe as an elaborate scheme that benefited at least two dozen people who transferred money among several companies to conceal its origins.

“It just makes me sick that that would happen — that they would be so bold to take money intended for children and spend on themselves,” said Colleen Moriarty, executive director of Hunger Solutions Minnesota, a statewide hunger relief nonprofit that never worked with Feeding Our Future. “It’s certainly not representative of the more than 320 food shelves or the after-school program providers … that are working hard every day. It’s shameful but it is not an indication of the entire community.”

She worries that the accusations will bolster distrust among policymakers and the public, making it more difficult for nonprofits to lobby the Legislature for aid.

Federal funds for meals and snacks at schools and after-school programs are sent to the Minnesota Department of Education (MDE) for distribution.

“For many children, the meals they receive while they are at school and in care programs are the only meals they receive during the day,” MDE said in a statement. “Ensuring that children are not going hungry has been of particular concern during the COVID-19 pandemic because many families have faced economic uncertainties.”

Because of the pandemic, the U.S. Department of Agriculture (USDA) waived some of the standard requirements for the federal child nutrition program, which allowed for-profit restaurants to participate and off-site food distribution outside educational programs. As a result, the program became more vulnerable to fraud and abuse, MDE officials told federal investigators.

MDE raised alarms about Feeding Our Future when it reported sharp increases in meal funds. Feeding Our Future received $307,000 in federal child nutrition program funds in 2018. By 2021, the organization was hauling in $197 million in federal funding that Feeding Our Future said would pay for meals for kids in Burnsville, Minneapolis, Owatonna, Willmar and other cities, according to court documents.

Last year, MDE announced it would scale back the number of nonprofits receiving funds, with Assistant Commissioner Daron Korte telling the Pioneer Press then that the intent was to “ensure the integrity of the program” due to nonprofits reporting large numbers of meals and MDE lacking “the ability as an organization to verify all of those meal claims.” After pushback from the nonprofit community, MDE reversed its decision.

The increased scrutiny may have hurt other nonprofits. Youthprise, a youth organization in Minneapolis, and Every Meal, a free meal program in Roseville, teamed up to try to open more meal sites and sought money from MDE, but never heard back.

“Whenever someone abuses that trust, it affects all of us,” said Rob Williams, executive director of Every Meal, formerly the Sheridan Story, which receives little government aid and relies almost entirely on donations. “You wonder how could that money have been put to good use. … We were all bending over backwards trying to squeeze every penny out of getting good food to kids.”

Youthprise is getting calls from day care centers and other sites that Feeding Our Future sponsored, now looking for a new partner, said Marcus Pope, president of Youthprise. It would be up to his nonprofit to vet the legitimacy of the sites and then up to MDE to approve funding.

Red flags emerge

MDE reported the “unexplained growth” to the USDA in 2020. MDE then denied dozens of Feeding Our Future site applications in December 2020, the department said in a statement. In January 2021, MDE declared Feeding Our Future “seriously deficient” due to incomplete financial audits and a lapsed nonprofit status with the IRS. In the spring of 2021, MDE issued a “stop pay” order to halt payments to the organization.

Mekfira Hussein is the founder of Shamsia Hopes, one of dozens of sites sponsored by Feeding Our Future. She provides about 800 meals a day at 10 locations in Minneapolis and north metro suburbs. When MDE paused funding to Feeding Our Future, Hussein had to close for a month last year because she didn’t have enough money.

On Friday, she couldn’t reach anyone from Feeding Our Future and learned of the federal investigation only through news reports. She said Feeding Our Future hasn’t reimbursed her yet for December meals and she will have to look for a new sponsor. She worries that legitimate meal sites will now be scrutinized, especially organizations led by people of color.

“For those of us actually doing the work, it’s sad,” she said. “It’s like you’re taking food off children’s plates and taking it for yourself. It’s hard to believe. If that’s true … it’s heartbreaking.”

In April 2021, Ramsey County District Judge John Guthmann told MDE that it didn’t have the authority to stop payment and would need to continue to pay Feeding Our Future. By May, the FBI had launched its investigation. The IRS, Minnesota Bureau of Criminal Apprehension, U.S. Postal Inspection Service and U.S. Marshals Service are assisting.

Meanwhile, the Minnesota Attorney General’s Office, which regulates the state’s charities, had been trying to get required tax forms and reports from Feeding Our Future since 2019. By October, the Attorney General’s Office withdrew Feeding Our Future as a registered charity in Minnesota.

No arrests or charges

According to the court documents, at least 20 people benefited from the scheme. No one has been arrested or charged yet.

Aimee Bock of Rosemount started Feeding Our Future in 2017. Bock formerly worked at Partners in Quality Care in St. Paul, according to her LinkedIn profile.

Bock didn’t respond to several messages seeking comment, and no one answered the door at her Rosemount home Friday. A Colorado-based attorney who represented Feeding Our Future in the MDE case, Rhyddid Watkins, didn’t return calls for comment. According to court documents, Bock got $310,000 in kickback funding and signed off on a check of $600,000 to her partner through a shell company — money that funded a luxury trip to Las Vegas.

Several people the FBI is investigating have ties to the Safari Restaurant and Event Center in Minneapolis and Empire Cuisine and Market in Shakopee. Safari Restaurant and its associates received more than $10 million in 2020 and 2021, almost none of it going to meals for kids, according to federal investigators. Messages left at Safari Restaurant weren’t returned Friday. One of the owners bought a new pickup truck and a five-bedroom Plymouth house with an indoor basketball court with $1 million in federal meal funds, according to court documents. At the Plymouth house on Friday, the blinds were drawn and no one answered the door.

One of the owners of Empire Cuisine and Market used the money to buy a a house in Savage, according to court documents. A number for Empire Cuisine no longer worked Friday.

Calls for new oversight

“This was an appalling abuse of federal funding and public trust,” said Gov. Tim Walz’s press secretary, Claire Lancaster, in response to the investigation. She praised education officials “for catching and stopping this fraud.”

U.S. Rep. Ilhan Omar, whose district includes Feeding Our Future’s headquarters, said the alleged wrongdoing, if true, is “reprehensible.”

“Anyone who participated in this scheme must be held accountable,” said Omar. “It’s shameful that children who struggle with food insecurity paid the price for this nonprofit’s alleged actions.”

Republican state legislators are calling for new legislation and auditing aimed at preventing widespread fraud schemes.

State Sen. Roger Chamberlain, a Lino Lakes Republican who chairs the Senate’s education committee, said he appreciated the Department of Education’s diligence in this case. Chamberlain raised concerns about whether other state agencies and departments had enough support for oversight and called for “an audit of all COVID-related funds and spending to hold accountable bad actors.”

House Minority Leader Kurt Daudt, R-Crown, called on Walz to “review every state and federal dollar being distributed by his agencies.”

Staff writer Alex Chhith contributed to this report.