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Five Defendants Found Guilty for Their Roles in $250 Million Fraud Scheme

MINNEAPOLIS – Five individuals have been convicted by a federal jury for their roles in a $250 million fraud scheme that exploited a federally-funded child nutrition program, announced U.S. Attorney Andrew M. Luger.

“I am extraordinarily proud of the prosecution team and our law enforcement partners who have spent years investigating this highly complex and widespread fraud scheme,” said U.S. Attorney Andrew Luger. “With today’s convictions, a total of 23 individuals have been held accountable for their roles in this egregious conspiracy to steal millions of taxpayer dollars.”

“Exploiting a program designed to feed underserved children during the COVID pandemic is reprehensible,” said Special Agent in Charge Alvin M. Winston of FBI Minneapolis. “Today's verdict is a clear warning to those who exploit the most vulnerable for personal gain. Justice will be swift and severe. The FBI, alongside our law enforcement partners and the U.S. Attorney's Office, stand united in condemning such acts and ensuring that those who prey on others face the consequences they deserve.”

“This verdict highlights the meticulous work of IRS Criminal Investigation special agents and their fellow law enforcement partners who brought to justice individuals who took advantage of food programs when children and families needed them the most,” said Jason Bushey, Acting Special Agent in Charge, IRS Criminal Investigation, Chicago Field Office. “This investigation is not over, and today’s verdict highlights the fact that a large-scale fraud of this scope and nature will not be ignored, and those who engage in fraud schemes like this will not evade justice.”

Inspector in Charge Bryan Musgrove of the Denver Division stated, “Today’s verdict reaffirms how critical a role the U.S. Postal Inspection Service plays in protecting the American consumer from these types of fraudulent schemes and in ensuring that the nation’s U.S. mail stream is not used by criminals to prey upon our citizens and government financial aid programs. The bold egregious nature in which these fraudsters abused government financial assistance programs designed to feed low-income children during the Covid pandemic illustrates their callous disregard for human decency and overall greed. This investigation is a tremendous example of how the U.S. Postal Inspection Service and our federal law enforcement partners can work side by side in an effort to bring these fraudsters to justice.”

Following a six-week trial in U.S. District Court before Judge Nancy E. Brasel, a federal jury convicted Abdiaziz Shafii Farah, 35, Mohamed Jama Ismail, 51, Abdimajid Mohamed Nur, 23, Mukhtar Mohamed Shariff, 33, and Hayat Mohamed Nur, 27, for their roles in the $250 million Feeding Our Future Fraud scheme. Sentencing hearings will be scheduled at a later date.

As proven at trial, the convicted defendants devised and carried out a $40 million fraud scheme to defraud the Federal Child Nutrition Program. The convicted defendants obtained, misappropriated, and laundered millions of dollars in program funds that were intended as reimbursements for the cost of serving meals to children. The convicted defendants exploited changes in the program intended to ensure underserved children received adequate nutrition during the COVID-19 pandemic. The convicted defendants also created and submitted false documentation. They submitted fraudulent meal count sheets purporting to document the number of children and meals served at each site and false invoices purporting to document the purchase of food to be served to children at the sites. The convicted defendants also submitted fake attendance rosters purporting to list the names and ages of the children receiving meals at the sites each day. These rosters were fabricated and created using fake names.

The Federal Child Nutrition Program, administered by the U.S. Department of Agriculture (USDA), is a federally-funded program designed to provide free meals to children in need. The USDA’s Food and Nutrition Service administers the program throughout the nation by distributing federal funds to state governments. In Minnesota, the Minnesota Department of Education (MDE) administers and oversees the Federal Child Nutrition Program. Meals funded by the Federal Child Nutrition Program are served by “sites.” Each site participating in the program must be sponsored by an authorized sponsoring organization. Sponsors must submit an application to MDE for each site. Sponsors are also responsible for monitoring each of their sites and preparing reimbursement claims for their sites. The USDA then provides MDE federal reimbursement funds on a per-meal basis. MDE provides those funds to the sponsoring agency who, in turn, pays the reimbursements to the sites under its sponsorship. The sponsoring agency retains 10 to 15 percent of the funds as an administrative fee.

During the COVID-19 pandemic, the USDA waived some of the standard requirements for participation in the Federal Child Nutrition Program. Among other things, the USDA allowed for-profit restaurants to participate in the program, as well as allowed for off-site food distribution to children outside of educational programs.

In total, seventy defendants have been charged across 14 indictments and six criminal informations. To date, eighteen defendants have entered guilty pleas. The following five defendants, named in the United States v. Abdiaziz Shafii Farah, et al., 22-CR-124 (NEB/TNL) indictment, were found guilty by a federal jury:

• Abdiaziz Shafii Farah, of Savage, Minnesota, was convicted of one count of conspiracy to commit wire fraud, six counts of wire fraud, one count of conspiracy to commit federal programs bribery, two counts of federal programs bribery, one count of conspiracy to commit money laundering, 11 counts of money laundering, and one count of false statements in a passport application. Abdiaziz Farah was an owner and operator of Empire Cuisine and Market LLC, a for-profit restaurant that participated in the scheme as a site, as a vendor for other sites, and as an entity to launder fraudulent proceeds. Empire Cuisine and Market and other affiliated sites received more than $28 million in fraudulent Federal Child Nutrition Program funds.

• Mohamed Jama Ismail, of Savage, Minnesota, was convicted of one count of conspiracy to commit wire fraud, one count of conspiracy to commit money laundering, and one count of money laundering. Ismail was an owner and operator of Empire Cuisine and Market LLC, a for-profit restaurant that participated in the scheme as a site, as a vendor for other sites, and as an entity to launder fraudulent proceeds. Empire Cuisine and Market and other affiliated sites received more than $28 million in fraudulent Federal Child Nutrition Program funds.

• Abdimajid Mohamed Nur, of Shakopee, Minnesota, was convicted of one count of conspiracy to commit wire fraud, four counts of wire fraud, one count of conspiracy to commit money laundering, and four counts of money laundering. Abdimajid Nur created Nur Consulting LLC to receive and launder Federal Child Nutrition Program funds from Empire Cuisine and Market, ThinkTechAct, and other entities involved in the scheme.

• Mukhtar Mohamed Shariff, of Bloomington, Minnesota, was convicted of one count of conspiracy to commit wire fraud, one count of wire fraud, one count of conspiracy to commit money laundering, and one count of money laundering. Shariff was the chief executive officer of Afrique Hospitality Group, a company used to fraudulent obtain and launder Federal Child Nutrition Program funds.

• Hayat Mohamed Nur, of Eden Prairie, Minnesota, was convicted of one count of conspiracy to commit wire fraud and two counts of wire fraud. Hayat Nur, the sister of Abdimajid Nur, participated in the scheme by creating and submitting fraudulent meal count sheets, attendance rosters, and invoices.

United States Attorney Andrew M. Luger thanks the FBI, IRS – Criminal Investigations, and the U.S. Postal Inspection Service for their collaboration and skilled investigative work on this case.

Assistant U.S. Attorneys for the District of Minnesota Joseph H. Thompson, Harry M. Jacobs, Matthew S. Ebert, Chelsea A. Walcker, and Daniel W. Bobier tried the case. Assistant U.S. Attorney Craig Baune is handling the seizure and forfeiture of assets.

 

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