Updated: 4:45 p.m.
Three of the 49 people charged in an alleged quarter-billion-dollar scheme to defraud government meal programs pleaded guilty Thursday.
Bekam Addissu Merdassa, 40; Hanna Marekegn, 40; and Hadith Yusuf Ahmed, 33, entered pleas at the federal courthouse in Minneapolis, in the case linked to the nonprofit Feeding Our Future. The three were charged with wire fraud.
Prosecutors charged them by criminal information, rather than through a grand jury indictment, so the guilty pleas were expected.
Most of the other defendants charged in the Feeding Our Future case, including founder Aimee Bock, have pleaded not guilty.
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Authorities say the Twin Cities-based nonprofit stood at the center of a network of shell companies controlled by people who used federal child nutrition money to buy cars, luxury goods, jewelry and property in the United States, Kenya and Turkey.
Ahmed, of Eden Prairie, admitted that as an employee of Feeding Our Future he took more than $1 million in bribes and kickbacks from operators of purported meal sites in what the government calls a pay to play scheme. To do this, he set up a shell company and disguised the payments as consulting fees.
Ahmed also admitted that he set up a nonprofit of his own called Southwest Metro Youth and took another $1.1 million dollars in federal meal funds by submitting fake reimbursements for serving 2,000 meals per day to children. Ahmed said that he served “nowhere close to 2,000” meals.
At the hearing, assistant U.S. Attorney Joe Thompson said the amounts listed in the plea agreement did not represent everything that Ahmed stole, just a “brief summary;” Ahmed confirmed this.
According to Thursday's plea agreements and other court documents, Merdassa and two co-conspirators used a shell company, Youth Inventors Lab, and S&S Catering to steal $3 million. They fraudulently claimed to have served 1.3 million meals, but never received or served any. The co-conspirators Abdul Abubakar Ali of St. Paul and Yusuf Bashir Ali of Vadnais Heights pleaded not guilty to wire fraud and money laundering.
Merdassa, of Inver Grove Heights, admitted taking 10 percent of the stolen money for himself and will be required to pay $343,086 as part of his plea agreement.
The government did not make a sentencing recommendation, but prosecutors and Merdassa’s attorney agreed that federal guidelines call for 2 to 2 1/2 years in prison along with $10,000 to $95,000 in fines.
According to court documents, Marekegn must repay $5.2 million she stole through her Brava Cafe business. Sentencing guidelines call for 3 to 4 years in prison.
In court, Marekegn, of Medina, admitted paying more than $150,000 in kickbacks to a Feeding Our Future employee in exchange for the group’s sponsorship of the cafe. When she refused to pay more, Marekegn said Feeding Our Future refused to submit additional fake reimbursement claims and cut her off.
Marekegn said she and her company took $7.1 million altogether in federal child nutrition program funds and claimed to have served 2 million meals to kids between September 2020 and last fall. In court on Thursday she said she served some meals, but was unsure of how many.
Andrew Luger, the U.S. attorney for Minnesota, has described the overall fraud case as a “brazen scheme of staggering proportions” that faked some 125 million meals at sites across Minnesota.