MINNEAPOLIS — Last year, with the federal government making available huge new sums of money for programs to feed needy children during the pandemic, a nonprofit organization called Advance Youth Athletic Development set up what it described as an enormous child care operation in northeast Minneapolis that could prepare 5,000 dinners each weeknight.Based on the group’s claims, the State of Minnesota channeled $3.2 million of the federal food aid to the program.But on a subzero morning in January, the F.B.I. carried out a series of predawn raids around the region. It revealed a sprawling investigation into Advance Youth Athletic Development and other groups like it — and the much larger nonprofit organization, Feeding Our Future, that was responsible for ensuring that the money provided to the smaller groups was spent properly.In court filings, the F.B.I. said it had discovered a “massive fraud scheme” among groups that Feeding Our Future was supposed to oversee, saying they siphoned off tens of millions of dollars by charging taxpayers for nonexistent meals.In affidavits filed in federal court, the Justice Department said it was investigating at least 15 different feeding operations. Together, the F.B.I. said, these groups — all of which were supposed to be overseen by Feeding Our Future — had received more than $65 million from federal food programs during the coronavirus pandemic.“Almost none of this money was used to feed children,” the government wrote in one filing. “Instead, conspirators misappropriated the money and used it to purchase real estate, cars and other items.”When a reporter recently visited the address listed for Advance Youth Athletic Development, there was no sign of a kitchen or a large child care facility. It was a second-story apartment.“No. No. No,” said Lul Mohamoud, a neighbor in the apartment across the hall, when asked if she had ever seen 5,000 children there. “I have never seen any kids going in there.”No one has yet been charged in the case, and the leaders of Feeding Our Future, Advance Youth Athletic Development and other nonprofit groups have denied wrongdoing.But the case has highlighted how the government’s reliance on nonprofits to help carry out an array of programs can increase vulnerability to fraud — a problem that only increased over the past several years, as Washington pumped trillions of dollars into pandemic aid packages.That aid has focused new attention on the role of nonprofits in particular in acting as conduits and overseers of federal money that flows through them via the states and then to smaller organizations that carry out programs. States and the federal government count on groups like Feeding Our Future to guard against corruption — even as the system incentivizes the organizations to push more money out the door by giving them a cut of it.In his State of the Union address last week, President Biden said that “billions” in pandemic aid had been stolen, and that he would soon name a chief prosecutor for pandemic fraud.In Minnesota, state regulators said that even after they grew suspicious of Feeding Our Future, they had been constrained by the courts from stopping the organization. In fact, the state paid the group more than $197 million after the first suspicions were raised.ImageOne of the groups overseen by Feeding Our Future listed a second-floor apartment in this building in Minneapolis as the site of a day care center from which it could prepare 5,000 meals per weeknight for needy children.Credit...Jenn Ackerman for The New York Times“The scale of this, and the rapidity of it, is astonishing,” said State Senator Roger C. Chamberlain, a Minnesota Republican whose committee oversees the food programs. He said his goal was to understand “why this system failed and collapsed completely. Because it certainly did.”In all, more than 200 investigators from the F.B.I. and other agencies raided 15 homes and offices around the Twin Cities.The Minnesota case involves two multibillion-dollar federal food-aid programs, both funded by the Agriculture Department but administered by states. One pays for meals at preschools, emergency shelters and aftercare centers. The other pays for meals at summer activities.In the 1970s, Congress created a role in both programs for nonprofits called sponsors, so that giant state bureaucracies and tiny day care centers did not have to talk to one another directly.In theory, the nonprofit groups that fill the sponsor role make sure that feeding sites follow the rules, then hand out federal money to those that do.The watchdogs can keep as an “administrative fee” up to 15 percent of the funds they pass along. Critics say that creates a perverse incentive: a reason for the watchdog not to bark. The structure, theyBy: David A. Fahrenthold
Title: Fraud Investigation in Food Aid Puts Focus on Role of Nonprofits
Sourced From: www.nytimes.com/2022/03/08/us/politics/food-aid-nonprofits-fraud-investigation.html
Published Date: Tue, 08 Mar 2022 16:30:12 +0000
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