The Potluck

Schultz condemns AG in Feeding Our Future scandal, unveils plan to prevent fraud

By: - September 26, 2022 6:43 pm

Republican candidate for attorney general Jim Schultz says he would ask for more funding to prosecute nonprofit fraud. File photo by Baylor Spears/Minnesota Reformer.

Republican candidates for attorney general and state auditor held a news conference Monday, seizing on recent federal indictments of people charged with bilking millions from funds intended to go to hungry children.

GOP attorney general candidate Jim Schultz attacked Attorney General Keith Ellison for mishandling the investigation into Feeding Our Future and alleged accomplices, and unveiled a three-point plan to prevent future nonprofit fraud if elected in November.

“Either Ellison demonstrated unbelievable incompetence in failing to halt such fraud, or Keith Ellison simply looked the other way to secure campaign contributions for himself and fellow Democrats,” Schultz said.

“For two solid years, Attorney General Ellison’s office has been holding Feeding Our Future accountable,” Ellison’s spokesperson John Stiles said Monday. “The 48 indictments that the U.S. attorney announced last week are a direct result of the choice the attorney general’s office and the Minnesota Department of Education made to turn their concerns over to the federal government and to cooperate fully with them.”

Schultz said he would go to the Legislature for money to triple the size of the charities division in the Attorney General’s Office, a move he said would pay for itself by saving move state funds lost to fraud. Schultz  said he would also seek more power for the Attorney General’s Office through the Legislature to prosecute nonprofit fraud and increase penalties.

U.S. Attorney Andrew Luger announced charges last week against 48 people who allegedly participated in a $250 million scheme to exploit a child nutrition program. Two of the 48 charged were appointees of Minneapolis Mayor Jacob Frey. Another person was charged Monday, Sahan Journal reported.

Republicans have called out Gov. Tim Walz and his fellow Democrats for failing to stop the fraud sooner, turning the case into a campaign issue.

Officials with MDE, which administered the nutrition aid, questioned the rapid growth of Feeding Our Future. The nonprofit, in turn, sued the agency for failing to quickly process its new applications, alleging racial discrimination against its largely East African clientele and saying thousands of children would go hungry. MDE called it a “sham lawsuit.”

In 2021, MDE halted payments to the nonprofit, but a Ramsey County district judge told MDE its claims — which included mismanagement and inadequate record-keeping but not fraud — weren’t enough to halt payments without giving the nonprofit the chance to comply. The judge didn’t explicitly order the agency to resume payments, which was outside the scope of the lawsuit, but MDE did while it alerted federal investigators.

Walz blamed Judge John Guthmann, erroneously claiming the judge ordered MDE to resume payments. Guthmann released a statement Friday saying he never ordered such a thing.

Minnesota Senate Majority Leader Jeremy Miller, R-Winona, issued a statement Monday calling for MDE Commissioner Heather Mueller to resign.

“Based on Judge Guthmann’s statement, Gov. Walz and Commissioner Mueller have been dishonest with the public about the legal proceedings and failed to protect taxpayer dollars,” Miller said. “That’s not the kind of leadership the citizens of Minnesota expect of their government.”

Because the Senate hasn’t confirmed Mueller yet, Miller’s statement is a strong indication that she could be sacked in any special legislative session, or when the Legislature returns in January.

A spokesperson for Walz said in a statement to the Reformer: “MDE blew the whistle on this fraud scheme. They detected it early and worked diligently to stop it. MDE repeatedly urged the federal government to investigate and they partnered with the FBI to ensure accountability — even as they fought Feeding Our Future’s sham lawsuit in court. Now, because MDE brought this case to the FBI, (49) people have been charged.”

Schultz also said Monday that if elected he would form a partnership with the state auditor to create a “blue-ribbon” task force of federal and state law enforcement to restructure the state’s strategy against nonprofit fraud.

GOP candidate for auditor Ryan Wilson also attended the press conference. He’s taking on DFL State Auditor Julie Blaha.

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Maia Irvin
Maia Irvin

Maia is an intern at Minnesota Reformer. She is a fourth-year student at the University of Minnesota and the editor-in-chief of the Minnesota Daily. She is originally from Austin, Minn.