Legal expert weighs in on MN fraud scheme

Published: Sep. 20, 2022 at 10:39 PM CDT
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MOORHEAD, Minn. (Valley News Live) - 47 defendants have now been charged for scheming tens of millions of dollars worth of COVID-19 funding.

“The scheme that began with a simple idea in March of 2020 grew to become the largest pandemic fraud in the United States,” said U.S. Attorney Andrew Luger. “The defendants obtained over $250 million from the Feeding the Child Nutrition Program through Feeding Our Future.”

Federal prosecutors allege the defendants set up separate companies through the non-profit “Feeding our Future” to defraud the federal program.

“The government probably needed to be a little bit more careful and kind of vet out who they are giving money to,” said Joe Irby, a Moorhead-based attorney.

The defendants are also accused of then using the money to buy things like luxury cars and property.

US attorneys say they’ve so far managed to recover about $ 50 million, but Irby says it could be hard to get it all back.

“What would end up happening is a lot of those assets will get frozen. The government will get those back to sell them and recoup as much as they could,” he said. ” It’s kind of a long process to do that.”

Why was it so easy for these individuals to even get the scheme started?

“Anybody can set up a non-profit. You can do that in a matter of minutes,” Irby said.

He believes the government’s lack of oversight may be to blame.

“You’re seeing stories where they are just having to give away whatever money they have left and have to figure out where to spend it,” Irby said. “There was just no oversight as far as who they were giving money out to.”

Irby says going forward the government’s vetting process may be more demanding.

“They may ask a few more questions. They may want to verify that 501(c)(3) status before giving money out,” he said. ”One bad apple can ruin the whole bunch. It’s tough to see that their job might become more difficult or it might take longer to help somebody because there may be some extra steps involved.”

More arrests may be coming.

Luger says this investigation may be just the tip of the iceberg.