The exterior of St. Paul-based Partners in Quality Care in March, 2022. Credit: Ben Hovland | Sahan Journal

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A nonprofit linked to a federal fraud investigation dropped its lawsuit against the state this week for cutting off its federal funding. 

The legal team for St. Paul-based Partners in Quality Care filed a notice of voluntary dismissal Wednesday in its lawsuit against the Minnesota Department of Education. The organization’s executive director, Kara Lomen, also apparently stopped working for the nonprofit this month. An automated reply from Lomen’s work email address states “effective 11/1/2022, I no longer work at Partners in Quality Care.”A Partners in Quality Care employee declined to comment on the matter when reached by phone Thursday. A spokesperson for the education department also declined to comment.

Prosecutors have not charged any Partners in Quality Care employees or former employees in the federal case. The Minnesota U.S. Attorney’s Office has charged 50 suspects for allegedly fraudulently taking $250 million from the federal government that was designated to feed underprivileged children.

Partners In Quality Care distributed hundreds of millions of federal dollars to several nonprofit food sites during the first two years of the COVID-19 pandemic. The nonprofit sued the state Department of Education in September for allegedly violating its Constitutional right to due process. 

The education department acts as a go-between for nonprofit sponsor organizations like Partners in Quality Care and the federal government. The department distributes federal food-aid money to sponsor organizations, which then disseminate it further to smaller organizations that are supposed to supply food to needy children.

In January, the education department cut off Partners in Quality Care’s funding after FBI search warrant affidavits alleged that suspects used Partners in Quality Care to fraudulently obtain food-aid money. A federal complaint filed in May subsequently alleged that a former employee and board member of Partners in Quality Care received illegal kickbacks for enrolling fraudulent food sites into federal food-aid programs. 

The food-aid investigation has centered around another sponsor organization—Feeding Our Future, whose former executive director is indicted in the case. But Partners in Quality care has been directly and indirectly named in related court documents that include a lawsuit, search warrant affidavits, and a federal complaint filed in May.

Prosecutors say more than $57 million of the estimated $250 million fraud went to food sites that used Partners in Quality Care as a sponsor. 

One of the five defendants in the food-aid fraud investigation who’s pleaded guilty received government money fraudulently through Partners in Quality Care, which federal prosecutors identified in indictments as “Sponsor A.” 

In Partners in Quality Care’s now-defunct lawsuit, the nonprofit accused the education department of using the organization as a scapegoat. The lawsuit said the education department showed favoritism for another sponsor organization and alleged that its actions cutting off funding from Partners in Quality Care were an attempt to cover up for its own “maladministration” of federal food-aid money. 

Last month, a judge denied Partners in Quality Care’s request for a restraining order to prevent the education department from terminating Partners in Quality Care’s participation in the food-aid programs. 

“If Partners is indeed connected to the fraud, as the unsealed affidavits allege, MDE [Minnesota Department of Education] continuing to funnel money to an entity that knowingly or blindly served as a pass-through for the fraud is not in the public interest,” U.S. District Judge John Tunheim wrote in that ruling.

Joey Peters is a reporter for Sahan Journal. He has been a journalist for 15 years. Before joining Sahan Journal, he worked for close to a decade in New Mexico, where his reporting prompted the resignation...