MN Department of Education "created opportunities" for Feeding Our Future fraud, per audit

"Inadequate" oversight of Feeding Our Future and a lack of action by the Minnesota Department of Education "created opportunities for fraud," a legislative audit released Thursday concludes.

Why it matters: The report details the Walz administration's failure to stop what federal prosecutors have called the biggest pandemic fraud case in the nation.

• They also come days after another Office of the Legislative Auditor (OLA) report dinged two other agencies for mismanagement of another pandemic-era aid program.

Catch up fast: The U.S. Attorney's Office in Minneapolis has charged 70 people affiliated with the St. Anthony-based nonprofit in what they've called a "brazen" scheme to steal $250 million during the pandemic from government programs to feed hungry kids.

• Eighteen people have pleaded guilty.
• In the first trial, a jury found five of seven defendants guilty.
• Feeding Our Future founder Aimee Bock, who has not yet stood trial, has denied wrongdoing and pleaded not guilty.

Between the lines: The Minnesota Department of Education and Gov. Tim Walz have repeatedly pushed back on criticism that the state failed to stop the fraud, arguing that state officials were the ones who tipped off federal agencies and law enforcement to the nonprofit's suspected problems.

• They've said a lack of statutory authority and legal fights with the nonprofit prevented the agency from successfully stopping the flow of funds.

Yes, but: Thursday's report details a series of failures by what it described as a department "ill-prepared" to address the issue. The audit found MDE:

1. "Failed to act on warning signs" related to Feeding Our Future's size and staffing prior to the pandemic.
2. Did not fully or properly investigate complaints about the nonprofit or its sites.
3. "Repeatedly approved" the nonprofit's applications to participate in the federal nutrition program, "despite identifying serious concerns" about its ability to administer the funds.

What they're saying: "MDE had the authority — and the obligation — to take each of these steps, regardless of any lack of detail in law or [federal] guidance, and regardless of a threat of litigation or negative press," the audit found.

The other side: MDE commissioner Willie Jett disputed the characterizations in a letter to the OLA, saying his agency met oversight standards and made "effective referrals to law enforcement."

• "The responsibility for this flagrant fraud lies with the indicted and convicted fraudsters," wrote Jett, who was appointed after the scandal broke.
• A spokesperson for Gov. Walz said the state has already made many of the corrective actions suggested by the OLA and taken other "strong steps to find and eliminate any remaining vulnerabilities in government programs."

What we're watching: MDE has made a number of changes meant to detect and deter more fraud in the wake of the scandal, such as a new inspector general .

• Legislative auditor Judy Randall told lawmakers she hopes the office will help the agency implement the OLA's recommendations for preventing future fraud.