3rd person pleads guilty in Feeding Our Future fraud scheme

The first three guilty pleas in connection to the massive Feeding Our Future fraud scheme have been entered.

Thursday morning, 40-year-old Bekam Addissu Merdassa, from Inver Grove Heights, entered a guilty plea as part of a plea deal.

According to federal prosecutors, Merdassa claimed to run a federal food program site under Feeding Our Future’s sponsorship through his St. Paul-based nonprofit, Youth Inventor Lab. Over a seven-month period, the site claimed to feed thousands of meals to children seven days a week, reaching a total of more than 1.3 million meals throughout that time. However, investigators found that “only a fraction” of those meals were actually served.

Prosecutors say Youth Inventor Lab was founded in March 2017 but had “essentially no business activity” until Merdassa conspired with Abdul and Yusuf Ali — who have also been indicted — to receive more than $3 million in meal program funds.

Of those funds they received, Merdassa admitted they kept 10% and transferred the rest of the money to other people.

As part of the plea deal, Merdassa would be sentenced to between 24 and 30 months in prison, have to pay more than $343,000 in restitution and testify against others charged in the scheme.

When leaving federal court Thursday morning, Merdassa’s lawyer said he had no comment.

Read KSTP’s full Feeding Our Future coverage

After Merdassa’s court appearance, 40-year-old Hanna Marekegn, of Medina, appeared in court and also pleaded guilty in connection to the scheme.

Marekegn, according to prosecutors, claimed to operate a Federal Child Nutrition Program that served breakfast and lunch to 4,000 kids a day out of her restaurant, Brava Café, which is situated inside an office building in the Mid-City Industrial area of Minneapolis.

Prosecutors claim Marekegn “substantially and fraudulently inflated the number of meals served at the Brava Café site” and received more than $5 million in reimbursements from Feeding Our Future while paying more than $150,000 in kickbacks to a Feeding Our Future employee.

“I made a mistake,” Marekegn told the judge Thursday.

She added that when she stopped providing kickbacks, Feeding Our Future stopped processing her claims.

One other person charged in connection to the Feeding Our Future fraud scheme — 34-year-old Hadith Yusuf Ahmed, from Eden Prairie — appeared in federal court for a change of plea hearing Thursday and pleaded guilty. He, like Merdassa and Marekegn, is charged with conspiracy to commit wire fraud.

Ahmed, a Feeding Our Future employee, admitted to accepting “bribes and kickbacks” from people and businesses to stay in the program. In total, he told a judge he received more than $1 million in kickbacks, which he handled through a shell consulting firm.

Additionally, he also admitted to setting up an Eden Prairie location that claimed to be serving 2,000 meals per day but actually served “nowhere close to 2,000,” he told the judge.

As part of the plea deal, Ahmed will have to pay back more than $1.1 million.

“Given such a large number of defendants, you’re going to have people that are very differently situated who want things to go fast for one reason or another,” said Mark Osler, a former federal prosecutor and the Robert and Marion Short Distinguished Chair in Law at the University of St. Thomas.

He explained the charge they each pleaded guilty to, conspiracy to commit wire fraud, carries a lower sentence.

“There’s a statutory maximum of five years so they know that they’re not looking at more than five years,” said Osler. “Under the sentencing guidelines you get a significant break on your sentence for pleading guilty so that was at least part of the impetus for these people coming forward.”

“One thing that I think we can anticipate is there’s going to be cases that are added as we go along,” said Osler. “There may also be cases that are dismissed as more information comes forward — it’s a dynamic situation and it’s one that’s going to play out over months or even years.”

“Restitution is going to be tied to the amount of actual loss and here that’s going to be complicated by the fact that some of the funds have already been recovered,” said Osler. “Some may prove to be unrecoverable but they’re going to make their best efforts to get this money back for these important programs.”

The sentencing hearings for all three will be set at a later date.

The investigation into Minnesota-based nonprofit Feeding Our Future’s role in defrauding $250 million in Federal Child Nutrition Program funds during the pandemic has resulted in charges for at least 49 people, including the organization’s president and CEO, Aimee Bock. Federal officials say more charges are expected in the future.

It’s been called the largest pandemic-related fraud scheme in the country.