Nearly two dozen Minnesota nonprofits and their leaders have been accused of defrauding a federal child nutrition program of millions of dollars in a sweeping enforcement action by the Minnesota Attorney General’s Office.
The 23 charities, all of which were created or revived at the start of the pandemic, were allegedly shell organizations to capitalize on funds appropriated to the Federal Child Nutrition Program under the CARES Act three years ago. Those involved in the scheme allegedly did so by registering their organizations as phony conduits for the distribution of meals to children in need but failed to fulfill their obligations under the program, according to legal documents filed last week by Minnesota Attorney General Keith Ellison.
The state Charities Division, a subagency of the Minnesota Attorney General’s Office, has primary jurisdiction over the state’s charities and nonprofits. The division is vested with civil enforcement authority over them but can refer evidence for further investigation resulting in civil or criminal prosecution. Authorities with the Charities Division filed these civil complaints against the 23 charities with state courts in five counties but will seek to have them consolidated and heard in Hennepin County Court in Minneapolis, where 16 of the 23 defendant
nonprofits are based.
A majority of the accused “were previously indicted under federal criminal laws for their roles in perpetrating fraud,” according to the announcement by Ellison. The state enforcement action seeks restitution and the permanent closure of their organizations. The civil action could be followed by criminal charges.
“Nonprofits are supposed to benefit the public, not defraud it,” Ellison said via a statement. “Most nonprofits work hard and do good work to help the people of Minnesota, but not these sham organizations. I am seeking to permanently shut down these sham nonprofits so they can’t be revived to defraud the public again.”
The state enforcement action follows the unveiling of federal indictments last month against Aimee Bock, founder and CEO of the Minnesota nonprofit Feeding Our Future, and approximately 50 other Minnesotans in what the federal Department of Justice has called the largest case of pandemic fraud to date in the United States. At least three people have since pleaded guilty for their role in that scheme, which federal prosecutors say resulted in the defrauding of more than $250 million from federal child nutrition programs.
Authorities have not said if the state and federal enforcement actions are related. However, state investigators with the Office of the Minnesota Attorney General’s Charities Division allegedly determined that the nonprofits accused in the state action and their leaders “did not appear to have legitimate nonprofit activities on site, showed evidence of misuse of bank records, gave abandoned or false addresses, failed to comply with state and federal reporting requirements that would have allowed regulators to detect the fraud, and failed to comply with the
Attorney General’s investigation — all providing grounds to shut the organizations down under Minnesota’s civil nonprofit corporation laws,” according to Ellison.
The defendant organizations involved are:
- Academy for Youth Excellence
- Advanced Youth Athletic Development
- African Chamber of Commerce Education
- Bet On Better Future
- Community Enhancement Services Inc.
- Gedo Community Services
- Hobyo Health Care Foundation
- Hope Academy for Youth & Women Empowerment
- Minnesota African Chamber of Commerce
- Minnesota’s Somali Community
- Multiple Community Services, MCS
- Optimum Community Services
- Serving Younger Generation
- Somali American Faribault Education
- South West Metro Youth
- Stigma-Free International
- The Free Minded Institute
- United Enrichment with Heart
- Unity Social Service
- Urban Advantage Services
- Xogmaal Media Group and Xogmaal Services
- Youth Higher Educational Achievement
- Youth Inventor’s Lab
