Feeding Our Future fraud investigation puts nonprofits under Minnesota lawmakers' microscope

An attorney for the Minnesota Department of Education said Wednesday that a federal investigation is ongoing into what he called "one of the largest fraud occurrences in state history" at a meals program and hinted about grand jury involvement.

Eric Taubel, the education agency's lawyer, cited the active investigation to reveal little to the Minnesota Senate Education committee, which held a second day of hearings Wednesday about the fraud allegations against the nonprofit group Feeding Our Future. The state Department of Education had oversight on Feeding Our Future, which was tasked with providing meals to needy kids.

Feeding Our Future quickly scaled up during the COVID-19 pandemic, receiving $193 million in federal grants in 2021 after having gotten $307,000 three years before. The rapid rise came crashing down in January when dozens of federal agents raided locations owned by subcontractors who have been accused of stealing millions of dollars.

No one has been charged. The St. Anthony-based nonprofit disbanded in February.

During this week's legislative hearings, Minnesota education officials said they raised red flags about Feeding Our Future in summer 2020. When asked why nothing was done for more than a year, they pointed blame at the U.S. Department of Agriculture and a Ramsey County judge.

"What actually allowed the theft to continue was the number of barriers that we encountered every time we raised the question and the issue," Education Commissioner Heather Mueller told lawmakers.

Education officials and Feeding Our Future engaged in a 14-month legal battle after the state stopped processing applications for new meal sites and later stopped making payments to the nonprofit, court records indicate. 

Feeding Our Future sued, and Ramsey County Judge John Guthmann ruled that Minnesota education officials lacked the legal authority to stop payments. In June 2021, he held the Education Department in contempt of court for failing to process 143 applications from Feeding Our Future for new meal sites. Guthmann ordered the agency to pay Feeding Our Future more than $47,000 as both a fine and reimbursement for attorneys' fees.

"Only through a strong statement by the Court, accompanied by a meaningful financial consequence, can the Court ensure that the MDE will follow its orders," the judge said in his order.

Guthmann did not answer questions emailed to him through a court spokesman regarding why he made that ruling and whether he stands by it now. The next day, the spokesman, Kyle Christopherson, said Guthmann would not comment beyond what is in the court record.

Mueller said education officials contacted the FBI when they grew frustrated with the U.S. Department of Agriculture, which oversees the food assistance program. On Wednesday, the agency's lawyer declined to say when the FBI was brought in. The state Education Department itself is not under investigation, Mueller said.

At the Capitol, Republicans questioned whether a pandemic-era decision to do fewer on-site visits allowed fraud to happen. Not so, Mueller said, because Feeding Our Future's financial documents raised plenty of questions.

In the wake of this case, GOP lawmakers are looking to clamp down on all nonprofits that receive grants through the state.

Their catch-all state government bill bans groups from getting state money until their third year of operation. Even then, groups would need to show up-to-date nonprofit status, which Minnesota education officials say Feeding Our Future did not.

Nonprofits that get most of their funding through the state would have to show third-party audits to Minnesota regulators.

"This isn’t targeting Feeding Our Future," said state Sen. Michelle Benson, R-Ham Lake, who authored the provision and said it would have prevented the alleged fraud.

Gov. Tim Walz said he supports accountability but worries about painting all nonprofits in a bad light.

"These nonprofits did incredible work to keep people out of poverty, to keep them housed, to keep people fed," Walz told reporters last week. "We had bad actors in this. They should pay a price."