MINNEAPOLIS — Three defendants in the nation's largest pandemic fraud case have pleaded guilty to their roles.
The Feeding Our Future fraud bilked $250 million from the federal meal program by claiming to serve underprivileged children during the pandemic, according to federal prosecutors.
When U.S. Attorney Andy Luger announced the charges last month, he added that Hadith Ahmed, Hanna Marekegn and Bekam Merdassa were expected to plead guilty and cooperate with authorities.
In U.S. District Court in Minneapolis on Thursday, those three followed through with those pleas, revealing new information about the fraud scheme.
Ahmed was employed by Feeding Our Future with the title of director of growth and development. He admitted that he solicited more than $1 million in bribes and kickbacks from people who wanted to run phony meal sites.
Ahmed agreed Feeding Our Future operated a "pay-to-play" scheme, and in return for the kickbacks, Feeding Our Future would sponsor the meal sites through the federal program, allowing them to be reimbursed for phony meals they served.
In addition to the kickbacks, Ahmed admitted to starting his phony meal site in Eden Prairie called Southwest Metro Youth and collected $1.1 million in federal money that way. He said they did serve some meals, but nowhere near the 2,000 per day, he claimed.
In order to launder the kickbacks, Ahmed created a fake consulting company called Mizal Consulting and labeled the payments "consulting fees."
Marekegn is the owner of an actual restaurant called Brava Cafe, and she applied to be a meal site through Feeding Our Future's sponsorship.
"I have served food, but I'm not sure how much," Marekegn said in response to a question from Judge Nancy Brasel about how many legitimate meals to children she served.
Marekegn lied about serving 4,000 breakfast and lunch meals seven days a week and collected a total of $7.1 million. Federal prosecutors say she personally stole $5,169,405, which she will have to pay back.
In addition, Marekegn bought a $1.26 million home in Medina with the fraud money. The house is now subject to forfeiture.
When asked by lead prosecutor Joseph Thompson why she's pleading guilty, Marekegn answered, "I made a mistake."
Bekam Merdassa and two co-defendants created a phony company called Youth Inventor's Lab and collected $3 million in federal money without ever serving or preparing an actual meal for children.
Merdassa said they laundered most of the money but he personally kept 10 percent of the funds they received. He now has to pay back the $300,000.
Youth Inventor's Lab claimed to be delivering meals to children's homes, which was allowed under a rule waiver during the pandemic and may have played a role in the fraud going on as long as it did, sources with knowledge of the investigation have told KARE 11 News.
Even if they are helping the authorities now, these three defendants still face potential prison time.
According to federal sentencing guidelines, Merdassa faces 24-30 months, Marekegn faces 37-46 months, and Ahmed faces 46-57 months.
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