Posts Tagged ‘Minnesota’

Cavalier Greed And Cruelty In Minnesota

Wednesday, September 21st, 2022

Yesterday, Federal authorities charged 47 people in Minnesota with conspiracy and other counts in what prosecutors said is, to date, the largest fraud scheme of the COVID-19 pandemic, a scheme that stole at least $250 million from a federal program that provides meals to low-income children.

According to the Justice Department, “The 47 defendants are charged across six separate indictments and three criminal informations with charges of conspiracy, wire fraud, money laundering, and bribery.”

Government prosecutors allege the defendants created companies that claimed to be offering food to tens of thousands of children across Minnesota — nearly all of whom did not exist, — then sought reimbursement for those meals through the U.S. Department of Agriculture’s food nutrition programs. Because the need was so great, some standards were waived and oversight was often minimal. The USDA allowed for-profit restaurants to participate, and allowed food to be distributed outside educational programs. The charging documents say the defendants exploited such changes “to enrich themselves.”

A non-profit called Feeding Our Future was central to the scheme.

The Federal Child Nutrition Program is used to feed low income children in daycare and afterschool organizations. It spends $4 billion a year to feed needy children across the country. Feeding Our Future received hundreds of millions of dollars from the program from 2019 through 2021.

Here’s how it worked.

The government alleges Feeding Our Future, a sponsor in the Federal Child Nutrition Program, established sponsorship contracts with nearly 200 federal child nutrition program sites throughout the state, knowing that the sites intended to submit fraudulent claims. The sites would submit the claims to Feeding Our Future, which would then submit them to the Minnesota Department of Education, which has historically administered the programs, primarily through school programs. With schools closed for the pandemic the rules of the nutrition programs were changed to allow for all of the new entrant providers and the relaxed rules.

Feeding Our Future became a sort of Third Party Administrator for the sham sites and collected 15% of the charges as its fee. It went from receiving and disbursing approximately $3.4 million in federal funds in 2019 to nearly $200 million in 2021.

According to the indictments, “The sites fraudulently claimed to be serving meals to thousands of children a day within just days or weeks of being formed and despite having few, if any, staff and little to no experience serving this volume of meals.”

The massive fraud was allegedly headed up by Aimee Bock, Feeding Our Future’s founder and executive director. The indictments also allege she and some of her employees received additional kickbacks, which were often disguised as “consulting fees” paid to shell companies Bock created.

Andy Luger, the U.S. Attorney for Minnesota, said the fraudsters billed the government for more than 125 million fake meals. He displayed one Form For Reimbursement that claimed a site served exactly 2,500 meals each day Monday through Friday — with no children ever getting sick or otherwise missing a meal.

Luger said, “These children were simply invented.”

Earlier this year, the U.S. Department of Justice made prosecuting pandemic-related fraud a priority. The department has already taken enforcement actions related to more than $8 billion in suspected pandemic fraud, including bringing charges in more than 1,000 criminal cases involving losses in excess of $1.1 billion.

In this case, one of the indictments offered a beyond-brazen example of the fraud. It described a small storefront restaurant in Willmar, in west-central Minnesota, that typically served only a few dozen people a day. Two defendants offered the owner $40,000 a month to use his restaurant, then billed the government for some 1.6 million meals through 11 months of 2021. They listed the names of around 2,000 children — nearly half of the local school district’s total enrollment — and only 33 names matched actual students. And where did the defendants get the names of the children they said the program fed? From a website that randomly provides the names of mythical children. That’s where.

As usual in these kinds of fraud schemes the defendants used the stolen money to buy homes, exotic cars, vacation junkets and expensive clothes and jewelry.

And what did Minnesota’s low income children get? They got hunger.

 

 

 

News roundup: Cavalcade, immigrants, TRIA, NIOSH and more …

Tuesday, July 24th, 2007

Cavalcade – Catching up with news after being on vacation for a week, I find a good place to start is with last week’s Cavalcade of Risk, ably hosted by Richard Eskow of The Sentinel Effect.
Illegal immigrants and WC – Peter Rousmaniere of Working Immigrants posts about a review of workers compensation coverage of illegal workers that was compiled by the International Association of Industrial Accident Boards and Commissions (IAIABC). He notes that, “… 6 states have statutes that expressly authorize coverage for these workers – CA, FL, NV. NY,TX and UT, while two states’ laws expressly do not – ID and WY. Twelve states have had court decisions in favor of coverage – IL, MI, MN, ND, OH, AL, AZ, CO, MT, NC, SC and VA. Two of these states – MI and VA – also have court decisions going the other way. Two other states have had court decisions which go against coverage — KS and PA.”
NIOSH research programs saved – David Michaels of The Pump Handle reports that with the defeat of The Barton Amendment, National Institute for Occupational Safety and Health programs have been saved. The bill would have cut more than 20% of the NIOSH budget and would have effectively eliminated the National Occupational Research Agenda.
TRIA – Mark Hofmann of Business Insurance reports that the markup of the TRIA extension bill is expected this week. TRIA – a federal terrorism backstop due to expire Dec 31 – would extend for 10 years.
MN groups sue AIG – Roberto Ceniceros of Business Insurance reports that Minnesota workers comp groups are suing AIG seeking $100 million in damages. The Minnesota Workers’ Compensation Reinsurance Assn. and the Minnesota Workers’ Compensation Insurers Assn. state that the $1.2 million that was earmarked for Minnesota in the settlement AIG reached with Eliot Spitzer for AIG’s alleged underreporting of premiums over 22 years is insufficient. Ceniceros notes that they are not they only entity filing suit – the National Workers Compensation Reinsurance Pool, representing about 600 insurers, also filed suit in May.
Kudos – congratulations to Michael W. Fox of Jottings By An Employer’s Lawyer for his 5-year blogiversary – that’s a lot of blogging. Michael’s blog has long been one of our favorites – drop on by and see why.
Gasoline safety – over the summer there is an increased risk of gasoline-related injuries for workers because gas-powered equipment is prevalent in outdoor work sites. OSHA offers the following safety tips:

  • Wash any skin or clothing that comes in contact with gasoline thoroughly with soap.
  • Avoid inhaling gasoline fumes by keeping all gas in approved sealable safety containers.
  • Know initial symptoms of carbon monoxide poisoning, such as headache, fatigue, dizziness, drowsiness, nausea, and tightness across the chest.
  • Do not use gasoline for any purpose other than fueling a motor.

OSHA’s Gasoline Safety and Health Topics outlines standards for working safely with gasoline, including healthful exposure limits for employees. Also, to prevent carbon monoxide poisoning, see OSHA’s Carbon Monoxide Fact Sheet (PDF).

Minnesota Issues Workers Compensation System Report

Tuesday, August 10th, 2004

Minnesota’s Department of Labor and Industry just issued a Workers’ Compensation System Report that covers data and trends in the state’s system from 2000 through 2002. The good news? Claims fell by more than 15% during that time. The bad news?
” … cost per $100 of payroll rose 18 percent during the same two-year period. The report estimates the cost rose to $1.58 per $100 of payroll in 2002 from $1.34 in 2000.
This echoes a national trend of a decrease in frequency and an increase in severity. Also, for the first time in the state, the medical portion of the claim eclipsed the indemnity portion in terms of overall costs. The full report can be accessed online through the link provided above.

Fraud or lack of worksite controls?

Monday, October 6th, 2003

Minnesota is getting tough on fraud. They estimate that about 10% of all claims are fraudulent. If fraud is that high in the state, it’s a clear sign that employers aren’t making the most of basic worksite controls – communicating and establishing expectations with employees, managing injuries immediately, bringing employees back on RTW. Generally, in our experience, when fraud is high, employer controls are being underutilized.