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Detailed indictments in the federal food-aid fraud case will pose challenges for both prosecutors and defendants when the cases go to trial, according to local legal experts.
Charging documents allege a complex network of fraud beginning with the now-defunct nonprofit, Feeding Our Future, and involving 48 defendants across multiple smaller organizations. Mitchell Hamline School of Law professor emeritus Joseph Daly and University of St. Thomas School of Law professor Mark Osler said the case is rich with information but also touches on complicated topics that could confuse the general public. Daly and Osler are not involved in the case.
“The challenges will be to prove the case beyond a reasonable doubt,” Daly said. “The evidence is so vast that it’s going to be somewhat difficult to hold the attention of any jury, no matter how close they’re paying attention.”
Federal prosecutors announced the charges Tuesday, filing 10 charging documents alleging wire fraud, money laundering, and bribery. Investigators allege that operators of the scheme reported providing more than 125 million nonexistent meals to children over a 20-month period. In total, prosecutors say the defendants allegedly embezzled more than $250 million from a federal program intended to feed children from low-income families, making it the largest case of COVID pandemic fraud in the nation.
Indictments had been expected for months, but people didn’t know the full extent of the case, Osler said, “because there’s a lot of footwork in this investigation.”
‘Remarkable’ amount of information
The charging documents intricately detail how the fraud allegedly worked. The Minnesota Department of Education distributed federal food-aid funds to sponsor organizations like Feeding Our Future, which then funneled the money to smaller organizations that were supposed to provide or make ready-to-eat meals.
The organizations allegedly claimed they were serving meals to a certain number of children and provided attendance rosters of fake names so that they could be reimbursed with the federal dollars. Instead, the defendants allegedly pocketed those funds, spending it on homes, cars, and luxury goods, among other expenses.
“For the government to even have put together this indictment is quite remarkable,” Daly said. “It’s amazing how many facts they gathered, how much they seem to know about the machinations and the hidden things that these people were allegedly doing.”
Court documents charged players in several organizations that employed a complicated nest of shell companies. Additionally, Feeding Our Future employees received kickbacks to cover up the alleged fraud, according to the government.
The number of defendants charged shows that prosecutors think they have a comprehensive understanding of what happened, Osler said.
“They’re not charging people until they know pretty much everyone who they believe is culpable. That’s not always the case,” Osler said. “The other big advantage that the government has is the nature of the case. This is something that is not going to have a lot of sympathy for the defendants.”
Jurors are unlikely to be sympathetic towards people who allegedly took government funds meant for a public service, Daly added.
“In some ways, they’re already winning in the court of public opinion,” he said. “But of course, they have to win in court.”
Challenges in court
While the indictments are detailed, Daly said it will be difficult for the prosecution to prove every charge.
The prosecution will have to clearly show how allegedly stolen funds were used for personal gain, but that can get tricky when money changes hands and moves between different bank accounts multiple times, he said. For example, Daly said, a defendant deposits a $2 million check in a bank account then writes a $500,000 check to a co-conspirator. The $500,000 check goes into the co-conspirator’s bank account, and those funds are later used to purchase a $50,000 car.
“You can see the amount of attention it takes for a juror to pay attention to all this,” Daly said. “It’s not going to be tracing one payment–it’s going to be tracing a number of payments.”
Daly noted that prosecutors will have to provide excellent visual guides in court for jurors to follow each transaction.
Clearly understanding one defendant’s role in a greater organization also will be difficult, Osler said.
“Some of the defendants will say that they were operating only at the direction of others–they were lower down, or didn’t understand the full scope of what they’re doing,” Osler said. “It’s pretty likely that at least some of these defendants are going to say that.”
Daly agreed—up to a point. “A lot of fancy cars were seized, and a lot of fancy properties were seized, and a lot of large bank accounts were seized,” he said. “So it’s going to be a hard case to defend.”
One strategy defendants will likely use is to point the finger at other defendants, Daly said. For example, lower employees in the hierarchy of the alleged scheme may blame those higher up.
It will be interesting to see how the dynamics between defendants play out in court, Osler said, particularly because many defendants are related to each other or have other close ties.
“It’s a complex organization they’re talking about,” Osler said. “Beyond that, in between the defendants, you’re going to have family relationships and other forms of social relationships that complicate things, but also create opportunities for the defense to try to negate or mitigate the involvement of their client.”
But that may work to the prosecution’s advantage too, Osler said, because it could prompt some defendants to cooperate with the government in exchange for a lighter sentence.
It’s possible that some defendants may take plea bargains in exchange for complete information about the scheme and its operators, Osler said.
Many defendants turned themselves into the U.S. Marshal’s office Tuesday and made their first appearances in court that afternoon. Due to the large number of defendants, first appearances and detention hearings will be held over several days. Most defendants have been released on their own recognizance and are not in custody.
Three defendants from Minnesota left the country before charges were announced, and two were awaiting extradition in their home state of Ohio.
Osler said defense attorneys will receive more information from investigators about the cases against their clients during the discovery process, including information that’s not public. Some attorneys are likely to seek to exclude evidence, claiming it wasn’t seized properly. There will be a long process of in-court hearings, motions, lawyering, and evidence evaluation before a trial even starts, Daly said.
Daly and Osler predict that it will take at least a year before the cases reach resolutions.
“There are always surprises,” Osler said. “Even though the indictment may be read as being thorough, there will be twists and turns going forward that no one anticipates.”