Minnesota fraud report: Walz staffers say state voluntarily resumed Feeding our Future funding
Rep. Jordan grills Walz on Feeding Our Future fraud
Rep. Jim Jordan grilled Gov. Tim Walz on the Feeding Our Future fraud scandal during a Congressional hearing on fraud in Minnesota.
ST. PAUL, Minn. (FOX 9) - A report released during a politically charged and contentious Congressional hearing featuring testimony from Gov. Tim Walz and Attorney General Keith Ellison is shedding new light on why the state resumed funding to Feeding our Future despite fraud concerns in 2021.
Congressional fraud report
What we know:
The House Committee on Oversight released its report looking into fraud in Minnesota as Gov. Walz and Attorney General Ellison faced questioning on Wednesday.
The report includes multiple findings including new insight into claims the governor made after indictments came down in the Feeding our Future case.
The backstory:
In the report, Minnesota Department of Education (MDE) Assistant Commissioner Daron Korte says they first received complaints about Feeding our Future as early as 2018. However, those complaints came from another suspicious organization, Partners in Nutrition, that Feeding our Future ringleader Aimee Bock was once part of.
According to the report, MDE notified the governor's office by April 2020 about its concerns surrounding Feeding our Future. The state stopped processing applications from Feeding our Future by November 2020, which is when Feeding our Future filed a lawsuit against the state.
The state later stopped payments to Feeding our Future in March 2021 due to "serious deficiency." However, just a month later, the state resumed payments and continued until January 2022.
Gov. Walz initially blamed judge
The controversy:
After the indictments were issued in Sept. 2022, Gov. Walz blamed a court order and implied the judge involved should be investigated.
"I would hope there would be an investigation into that," Walz told reporters Thursday. "I was speechless, unbelievable that this ruling could come down. (I) did not really know what to say. Obviously, we had to honor it but at that point I said, we have got to continue to push the federal government and the FBI to do the investigation."
The Ramsey County judge involved in the case, Judge John Guthmann, later issued a public rebuke of Walz's statement, writing in part: "The Department of Education voluntarily resumed payments and informed the court that [Feeding Our Future] resolved the ‘serious deficiencies’ that prompted it to suspend payments temporarily. All of the Minnesota Department of Education food reimbursement payments to [Feeding Our Future] were made voluntarily, without any court order."
It's worth noting Judge Guthmann did issue an key order against MDE, requiring it to continue processing Feeding our Future's applications. State officials also pointed out to Congress that USDA regulations make it difficult to pull funding.
What state staffer said
Big picture view:
When asked about the resumed payments, here's what Department of Education officials said:
Director of Nutrition Emily Honer: "It's my understanding that the judge did not make a final ruling on the stop-pay."
Question: "And with the stop-pay, the court determined that that was actually outside the jurisdiction. Does that sound right to you?"
Honer: "That sounds correct."
What they're saying:
Gov. Walz was grilled on those statements during the Congressional hearing on Wednesday.
Rep. Jordan: "Why didn't you tell the truth about why you restarted the payments? The payments stopped because there were concerns, obviously, or you wouldn't stop the payments. Then they're restarted a month later. What was the reason for restarting the payments?"
Gov. Walz: "My understanding was the agency believed that the court had required them to make those payments."
Rep. Jim Jordan: "And that was false, wasn't it? You repeated that. You said that, didn't you? You said the reason you restarted was because the court ordered you to do so. Is that right?"
Gov. Walz: "I don't believe that is settled yet, to the best of my knowledge."
Minnesota failed by the USDA?
Dig deeper:
The report also shows that Minnesota leaders felt the federal government failed to support them when it came to Feeding our Future.
Department of Education officials told Congress when they sought support from the USDA, they didn't hear back.
The report states: "MDE contacted the USDA OIG in late 2020 with concerns about FOF, but the OIG did not respond to them. Honer blamed the USDA OIG’s lack of response and intervention for making FOF feel emboldened to commit fraud."
In the report, there seemed to be confusion among department officials about whether the state had the authority to pull Feeding our Future funding without help from the USDA. Assistant Commissioner Daron Korte told Congressional leaders the state probably could have, but it would likely be overturned in the courts.
Honer told Congressional leaders it was "incredibly difficult to stop payment. In fact, I will say I will say that it is easier for me to take back funds from a childcare provider who uses the wrong kind of rice, than it is to take back or stop payments from an organization I have concerns about."
By the numbers:
In total, prosecutors say Feeding our Future defendants pocketed more than $250 million in taxpayer dollars and dozens have been charged in the scheme.
The massive fraud case has also led to federal investigators uncovering fraud in several other state Medicaid programs.