The state Department of Education wants more than $583,000 back for defending itself in what it is calling a "sham" lawsuit from Feeding Our Future.
The nonprofit, accused this week of running a massive scheme to defraud the government of more than $250 million, had sued the Education Department in 2020 after the state cut off its funding, citing concerns over astronomical growth in the number of poor children it claimed to be feeding during the pandemic.
The Education Department is claiming that Feeding Our Future's lawsuit was just a distraction to keep the state from uncovering the fraud and wants its legal fees and other related costs from Feeding Our Future's lawsuit repaid, according to documents filed Wednesday in Dakota County District Court.
The latest action comes just after federal prosecutors announced charges this week against 48 people, including Feeding Our Future leader Aimee Bock. Prosecutors allege the defendants fraudulently claimed to feed thousands of needy children during the pandemic, but instead spent most of the government reimbursement money on luxury cars, houses and other personal expenses.
Prosecutors say it's the largest pandemic-related fraud in the country and one of the largest federal fraud cases ever brought in Minnesota.
Jennifer Urban, a St. Louis Park attorney representing Feeding Our Future in a current civil case, said the organization doesn't have the more than $583,000 that the Education Department is seeking and the state agency didn't follow proper legal procedures in its request.
The Education Department "will have a very difficult time recovering any of that money," Urban said. "Each side bears their own attorney fees. ... This is an interesting tactic and it feels to me [it's] a political game, quite honestly."
Bock has accused the Education Department of racism and Republican lawmakers have accused the department of mismanaging the federal nutrition programs it's responsible for administering. A department spokesman said Tuesday that the federal indictments were a "direct result of the persistence and diligent oversight" of the department, and "will help protect the integrity of these important programs."
The department first raised alarms about Feeding Our Future in 2020 when the nonprofit reported a rapid increase in the number of meals that it and its more than 100 subcontractors were distributing. Feeding Our Future received $307,000 in federal funds in 2018, and by 2020 it was reimbursed $43 million, according to court documents. Bock previously said Feeding Our Future was the largest independent sponsor of federal food programs in the state.
The Education Department halted funding to Feeding Our Future and its subcontractors, and Feeding Our Future sued in November 2020. Education Commissioner Heather Mueller said in a statement Wednesday it was a "baseless sham lawsuit" intended to intimidate her department and distract from ongoing fraud.
In April 2021, Ramsey County District Judge John Guthmann told the Education Department that it didn't have the authority to stop payments without first trying to impose additional conditions.
Feeding Our Future and Bock have accused the department of discrimination, improperly holding up approvals and payments because the organization primarily contracted with immigrant-run businesses and nonprofits.
When the department didn't process applications quickly, Feeding Our Future filed a motion of contempt. The court sanctioned the state agency $35,750 in June 2021 and awarded $11,750 to Feeding Our Future.
Urban argued in a court filing Thursday that the Education Department can't use this week's indictments to now allege it is owed fees in a case it lost. The Education Department's claim for repaid legal fees was filed in a civil case led by Attorney General Keith Ellison's office, asking a judge to oversee the dissolution of Feeding Our Future to ensure there isn't any fraud involving its remaining assets. The nonprofit hasn't operated since the FBI raided its offices and froze its accounts in January.
The Education Department said this week that its concerns weren't taken seriously until the FBI became involved. The department, which doesn't have any investigative authority, reported Feeding Our Future in 2020 to the U.S. Department of Agriculture (USDA), which distributes money to states to reimburse schools and after-school programs for providing snacks and meals to children and adults in need. After repeatedly contacting the USDA, the Education Department in 2021 went to the FBI, which launched the investigation that spring.
According to the Education Department, eight days before the FBI made its investigation public in January, Feeding Our Future told the Education Department it would be seeking damages of $50 million to $60 million. Then on Jan. 20, the FBI raided Feeding Our Future's offices and Bock's Rosemount home, among other sites. The next week, Feeding Our Future dropped its case against the Education Department.
The Education Department said this week that, because it was assisting with the federal investigation, the agency couldn't "assert certain defenses" when Feeding Our Future sued because it didn't want to tip off the organization about the federal investigation.
On Thursday, Gov. Tim Walz commended the department for acting quickly and said he supported doing an after-action report to see what other steps can be done to ensure fraud in these programs doesn't happen again.
"The audacity, the brazenness and the absolute heartlessness of a criminal ring focusing on children's food is beyond the pale," Walz said.
The Office of the Legislative Auditor also announced Wednesday it's started a special review of the Education Department's oversight of Feeding Our Future. That is slated to wrap up by early next year.
Staff writer Briana Bierschbach contributed to this report.