Political feuding intensifies over food-fraud case

Two men behind a podium with Jensen Birk posters on it
Republican candidates Scott Jensen and Matt Birk called for an investigation into how the Walz administration's reacted to alleged fraud in a federal nutrition program that has resulted in dozens of federal indictments.
Brian Bakst | MPR News

Minnesota Republicans coordinated their focus Monday on a major case of alleged fraud tied to COVID-19 relief money, with statewide candidates criticizing Democratic incumbents for failing to contain it sooner as the GOP pushed for additional scrutiny of actions that were taken. 

The DFL officials most engaged in the case continued to insist they were asked to tread carefully by federal investigators to avoid alerting targets.

The alleged $250 million scheme to defraud a youth meals program has resulted in dozens of arrests, charges and financial recovery efforts. It all stems from aid payments routed through a group known as Feeding Our Future, which authorities say didn’t deliver the nutrition assistance it promised and instead put money into luxury cars, property and other purchases.

Scott Jensen, the Republican nominee for governor, pressed for an independent investigation into DFL Gov. Tim Walz and his Department of Education, a probe he suggested should be completed and released ahead of this November’s election.

“What did Governor Walz know, when did he know it, when did he decide to use a district court judge as a scapegoat for his administration and who is Governor Walz trying to protect?” Jensen asked at a Capitol news conference. “I’d think that would be a starting point.”

Jensen repeated his call for the resignation or firing of Education Commissioner Heather Mueller. Republican Senate Majority Leader Jeremy Miller added his voice to that on Monday, which is significant because the Senate is currently led by Republicans who could remove her from office once the Legislature is back in session.

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Walz has not called for Mueller to leave. Press Secretary Claire Lancaster said the education department “blew the whistle on this fraud scheme. They detected it early and worked diligently to stop it.”

Republican attorney general candidate Jim Schultz said the public deserves answers on why payments kept flowing despite regulators raising red flags. Schultz said DFL Attorney General Keith Ellison should have taken more steps given the charity oversight role of his office.

“It doesn't take Sherlock Holmes to deal with this fraud,” Schultz said. “They simply could have requested bank records showing extraordinary payments to individuals associated with Feeding Our Future, payments going to title companies to buy houses, payments going to car dealerships and so forth.”

Schultz said if he is elected he will seek to triple the size of the attorney general’s office charities division to investigate and prosecute nonprofit fraud cases.

Ellison’s office had attorneys working to stop federal aid from going to the Minneapolis-based nonprofit, according to records. But the state had to contend with a lawsuit from the nonprofit and ultimately released more payments. Some money went out after a judge found the state in contempt for not processing the group’s applications quickly enough.

In a written statement, Ellison’s spokesperson John Stiles said education department officials contacted the FBI about their fraud suspicions in spring of 2021 and that attorneys from Ellison’s office met regularly with the FBI to coordinate efforts.

Professionals stand behind a podium
FBI Special Agent Michael Paul describes the Feeding Our Future fraud scheme as the largest federal fraud case in US history during a press conference on Tuesday.
Ben Hovland | MPR News

“The FBI repeatedly made it clear to the Attorney General’s Office and MDE that it should not disclose the existence of the investigation in Feeding Our Future’s state court lawsuit so that it could proceed without tipping off Feeding Our Future and the target of the investigation,” Stiles said.  

Stiles said several suspects were apprehended trying to leave the country, including one arrested at an airport in Chicago on Monday. He said that was “yet more evidence that tipping off off Feeding Our Future to the investigation before the government was ready to lay charges would have severely compromised the government's ability to hold the perpetrators accountable."

Jensen, a doctor and former state senator, said he had a hard time believing the FBI would let more money go to a potentially criminal scheme.

“I think it's highly unusual for the FBI to come into the state of Minnesota, do an investigation and instruct the governor of Minnesota to continue to make fraudulent payments in the millions and millions of dollars so that they can continue their investigation unimpeded,” Jensen said. “If that indeed happened, I think we need to have that paperwork from the FBI.”

MPR News asked the FBI to respond to Ellison’s statement. In an email, Minneapolis Field Office spokesperson Cyndi Barrington said the FBI does not comment on ongoing investigations per U.S. Justice Department policy. Neither Walz nor Ellison’s office has issued documentation of the request by the FBI for discretion both have said was made.

Republican State Auditor candidate Ryan Wilson also put the case front and center on Monday. Appearing alongside Schultz, Wilson said he’d ask the Legislature to add staff to the auditor’s special investigation division and advocate for a multi-agency task force to combat fraud in the nonprofit sector.

“I'm tired of people, elected officials, saying ‘This isn't my job, that it's someone else's problem,’” Wilson said. “We all have to be in this together to stop this because $250 million is too much to ignore.”

Wilson is running against first-term DFL Auditor Julie Blaha. In a statement last week, Blaha said reviews of the meals program would fall under the jurisdiction of the Legislative Auditor. That entity is already in the midst of a program examination after being asked to do so by the Legislature and is on course to release its results early next year.

“To duplicate their work would be a waste of taxpayer dollars and outside of the limits set on the office by the people of Minnesota,” Blaha said.

MPR News reporter Matt Sepic contributed to this report.