Interesting federal probes HERE and around the country

There’s a pretty big FBI probe that got started last year in Minnesota.  Apparently, it involved a non-profit with the mission of feeding underprivileged kids:

[…] A Star Tribune reporter and photographer stood outside the nonprofit offices of Feeding Our Future on Jan. 20 as FBI officers raided the building to confiscate and cart away files.

FBI investigators allege that Feeding Our Future played a central role in a “large-scale scheme” to defraud the government, using tens of millions of dollars meant to reimburse community groups, vendors and nonprofits for providing meals to children. Investigators allege that almost none of the money went to feed kids in need and instead funded personal costs — from luxury cars and lavish trips to lakefront homes.

Since that day, a team of Star Tribune reporters have been following the investigation and covering related developments in the case, publishing nearly a dozen articles so far.

What fraud is alleged?

On Jan. 20, more than 200 law enforcement officers raided more than a dozen sites in Minnesota including the St. Anthony offices of Feeding Our Future and executive director Aimee Bock’s Rosemount home.

In more than 200 pages of U.S. District Court search warrants that were unsealed later that day, an FBI special agent detailed an elaborate scheme to defraud the USDA of millions of dollars by taking money meant to feed children in need. Investigators allege that the money was instead funneled to an array of entities to be laundered and used to buy jewelry, a Porsche, lakefront homes in Prior Lake, a $1 million Plymouth home, a $500,000 apartment in Kenya and other personal property, trips and items.

In a court order filed Jan. 21, prosecutors moved to seize 14 properties owned by people accused in the scheme

How much money do investigators say was stolen?

Feeding Our Future received $244 million in federal funds through the federal nutrition programs from 2018 to 2021, according to the FBI, which has not alleged that all of those funds were misappropriated. According to FBI search warrants unsealed so far, investigators allege at least $48 million in federal nutrition aid was spent on lavish trips, luxury homes and other personal expenses.

Why is the Minnesota Department of Education involved?

In Minnesota, federal funds for food go to two agencies — the Department of Human Services (DHS) and the Minnesota Department of Education (MDE). DHS oversees programs such as food stamps or grants to food shelves. MDE distributes funding to reimburse schools and after-school programs for providing snacks and meals to children and adults in need. That includes two key USDA programs — the Child and Adult Care Food Program (CACFP) and Summer Food Service Program (SFSP).

“Sponsors,” such as school districts and nonprofits, apply to MDE to be a sponsor and then may manage multiple sites where food is distributed such as community centers or affordable housing complexes. It’s up to sponsors to oversee the paperwork and reimbursement claims for its sites.

The meals children receive during the school day, such as free or reduced-price lunch, aren’t part of these specific programs or affected by the investigation.

How did the investigation begin?

The education department noticed rapid growth in the number of community sites sponsored by Feeding Our Future in 2020. The department said it didn’t receive sufficient information to explain the sudden increase and reported irregularities to the USDA in 2020. The education department also denied dozens of site applications starting in December 2020. By early 2021, the department had declared Feeding Our Future “seriously deficient” over incomplete financial audits and a lapsed nonprofit status with the IRS and issued a “stop pay” order halting payments to Feeding Our Future.

Feeding Our Future sued the state and claimed the education department was discriminating against a nonprofit that worked with racial minorities. In April 2021, Ramsey County District Judge John Guthmann told the department it didn’t have the authority to stop payments and ordered the department to resume payments. That same month, the education department provided information to the FBI, which began investigating in May.

What is Feeding Our Future?

Aimee Bock started the nonprofit in 2016 “to increase healthy food access for youth and senior[s],” she wrote in tax forms. The organization’s primary funding is from federal USDA nutrition programs.

In her first media interview after the FBI raid, Bock told the Star Tribune she employed 65 staff members who spoke a total of 17 languages. Feeding Our Future quickly became the largest independent sponsor of federal food programs in the state, Bock said. Feeding Our Future received $197 million in federal nutrition program reimbursements last year — up from $307,000 in 2018, according to FBI documents. Bock said in an interview that she was working with 140 subcontractors to distribute 100,000 meals a day to kids across Minnesota — from Willmar to Burnsville.

On Feb. 25, the nonprofit’s three board members announced they had voted unanimously to dissolve the organization in part because the FBI had frozen its bank accounts.

Who leads Feeding Our Future?

Bock is the executive director and founder. Feeding Our Future also has three board members, who have oversight of the nonprofit. As of January, the three board members were Ali Egal, Jamie Phelps and John Senkler, according to forms filed with the Minnesota Attorney General’s Office. Egal, Phelps and Senkler couldn’t be reached for comment. Messages left with former president Benjamin Stayberg weren’t returned. As of February, the three board members are Egal, Henry Komolo and Amal Sala.

Bock incorporated Feeding Our Future with the state in 2016 and initially listed board members Christine Twait and Kara Lomen as incorporators. Bock worked at the time with Twait and Lomen at Partners in Nutrition, also known as Partners in Quality Care, a St. Paul-based nonprofit that also sponsors federal nutrition programs. Lomen and Twait said in a statement that they had no role in Feeding Our Future “as a functioning agency,” adding that since Bock ran the organization as an active sponsor in 2018, they weren’t involved.[….]

Interesting stuff.  NOW, here’s some news from the great state of Ohio:

Seven people who were under FBI investigation in Greater Cincinnati had their Paycheck Protection loans forgiven by the U.S. Small Business Administration, the WCPO 9 I-Team has discovered.

The I-Team found the anomaly by comparing SBA forgiveness data to criminal complaints in 22 local pandemic fraud cases. One complaint, which outlines loan-fraud allegations against six defendants, said the FBI opened its investigation in March 2021 “based on a review of transactional data showing that deposits stemming from SBA programs … had been used for purchases and expenses seemingly unrelated to job retention and other permissible business expenses.”

The investigation led to the September 2021 arrest of Joseph Lentine, a Sedamsville property manager who was accused of filing false statements to obtain pandemic relief loans and collecting fees for helping five others do the same.

By the time Lentine was arrested, the SBA had approved Paycheck Protection and Economic Injury Disaster Loan payments to the six defendants totaling $1.3 million. In addition, the SBA forgave PPP loans totaling $572,745 for five of the six defendants between April and August of 2021. In other words, the loans were forgiven after the FBI probe began but before the criminal complaint against Lentine was unsealed in U.S. District Court.

Four of the six defendants have reached plea agreements that call for restitution to the SBA totaling $392,908. No trial date has been set for Lentine, who could not be reached through his attorney.

The I-Team also contacted the SBA, FBI and U.S. Attorney’s office to ask whether SBA was aware of the criminal probe before loan forgiveness was granted. The FBI and U.S. Attorney’s office declined to comment. SBA provided a statement:

“While the U.S. Small Business Administration (SBA) cannot comment on on-going investigations or specific cases, the SBA actively works with its Office of Inspector General to identify cases of suspected fraud and supports OIG, DOJ, FBI, USSS and other federal and state law enforcement agencies to prosecute fraudsters and seize unlawfully obtained funds.”[….]

And last, but not least, here’s a little news from The US Attorney for the Eastern District of North Carolina:

Shakeerah Kaneisha Yvette Vinson, 32, pleaded guilty today to conspiracy to commit wire fraud for fraudulently obtaining a Paycheck Protection Act (“PPP”) COVID-19 loan for her real estate broker business.  She faces up to 20 years in prison.

“This defendant, along with her network of co-conspirators, took taxpayer money meant to help struggling small businesses during a global pandemic,” said U.S. Attorney Michael Easley.  “We are investigating and prosecuting those who steal from public programs intended to keep legitimate businesses afloat.”

According to the charged criminal information, the defendant conspired with Edward Whitaker, Schunda Coleman, and others to obtain a fraudulent PPP loan on behalf of Vinson’s business.  Whitaker and Coleman pled guilty on January 19, 2023 for their role in operating a nation-wide scheme to help people across the country commit millions of dollars of PPP fraud.

According to charging documents and information summarized in court, Whitaker and Coleman created fraudulent supporting documents and applications for the PPP loan which they provided to Vinson in exchange for 25% of the total loan proceeds.  The fraudulent application falsified the number of employees and gross wages being paid prior to the COVID pandemic, in order to help qualify for the PPP loan.  Following the disbursement of the PPP loans, Whitaker instructed Vinson as to how to make it appear that the PPP loans were being paid out to employees, when in reality the money was transferred back to Vinson.  The fraudulent payroll records were then submitted to the Small Business Administration (SBA) to obtain 100% loan forgiveness.

Late last year, Quentin Jackson pled guilty in the same conspiracy which included the recruitment of numerous individuals in the Eastern District of North Carolina to use Whitaker and Coleman to obtain fraudulent PPP funds.

“The Paycheck Protection Program was designed to help small businesses facing financial difficulties during the COVID-19 pandemic,” said Donald “Trey” Eakins, Internal Revenue Service (IRS) Criminal Investigation Special Agent in Charge in the Charlotte Field Office. “Through our partnership with the U.S. Attorney’s Office and our federal law enforcement partners, IRS Criminal Investigation Special Agents will continue to aggressively pursue individuals who try to exploit federal relief programs for their personal gain.”[…]