The New American Development Center, a Twin Cities nonprofit that sponsored federal after-school and at-risk meal sites, is in a tug-of-war with state officials over roughly $7.8 million in billed meals and meal kits. Even as the Minnesota Department of Education moved to claw back more than $1 million and formally tagged the group with a “serious deficiency,” the Legislature still awarded the organization a separate $1 million direct grant last year.
According to KARE 11, state records show the nonprofit submitted roughly 2.9 million meal claims in 2021-22 and sought about $7.8 million in federal reimbursements. The Department of Education later flagged recordkeeping and operational problems and moved to recover about $1.1 million that it said had been improperly paid. Roughly $650,000 has been repaid so far, and the department declared a serious deficiency and referred parts of the case to federal law enforcement for investigation.
What the appeals court said
The dispute over denied reimbursement claims ended up at the Minnesota Court of Appeals, which weighed in on July 17, 2023. The court affirmed in part, reversed in part, and sent the matter back for additional fact-finding. In its opinion, available at Justia, the panel backed the agency’s view that some of the sponsor’s practices could be rejected under federal Child and Adult Care Food Program rules. That included treating grocery-box distributions as reimbursable “meals,” which the court said could justify disallowing certain payments.
How Minnesota defines a 'serious deficiency'
Under state rules, the Department of Education can declare a sponsor “seriously deficient” when it fails to meet program requirements. That status lets the agency recover payments, demand corrective actions and, if needed, suspend participation in the Child and Adult Care Food Program. The department’s CACFP oversight materials spell out its power to demand documentation, disallow claims and seek repayment when either the paperwork or the actual meal service does not meet federal standards. Minnesota Department of Education guidance on monitoring and serious-deficiency procedures explains those expectations and the records sponsors must keep.
Lawmakers still approved a $1M grant
Even with the disallowance and repayment effort underway, lawmakers in the 2024 session approved a one-time $1 million direct appropriation to the New American Development Center, earmarked for small-business and entrepreneurship work. The grant was written into the jobs and economic development article of the session laws and is part of legislation enacted in 2024. The award appears alongside other workforce and development grants in Minnesota Revisor of Statutes records of the 2024 session law.
Political fallout and a push to change how grants are made
The timing of the NADC appropriation dropped right into a heated Capitol debate over whether legislators should be naming specific nonprofits in state budget bills at all. Governor Tim Walz put forward a proposal this session that would bar lawmakers from steering named appropriations directly to nonprofit groups and would instead route those dollars through competitive grant programs run by state agencies. Some lawmakers have sharply resisted the idea, arguing that named grants let them respond quickly to community needs. Star Tribune reporting has detailed the governor’s proposal and its role in a broader anti-fraud package.
Who leads the nonprofit
The New American Development Center is led by Asad Khalif Aliweyd, who previously received a Bush Fellowship. The Bush Foundation lists him as a 2018 fellow and highlights his work focused on economic development in immigrant communities, including efforts to support small businesses and increase access to opportunity.
Repayments, federal referral and what comes next
State records and news reporting indicate the organization is on a repayment plan for roughly $1.1 million that the Department of Education identified as improperly paid, with about $650,000 returned to date and questions still lingering over other months of claims. KARE 11 reports that the department referred its findings to federal law enforcement, a step that can precede a broader criminal or civil investigation when officials suspect false or fraudulent claims.
Legal implications
The Court of Appeals decision largely upheld the department’s authority to disallow claims under the federal program but also sent some issues back for more fact-finding. That leaves the door open for additional administrative recovery efforts and any further legal action. For now, the department’s recovery push, the Legislature’s appropriation and the federal referral ensure that the case continues to move through administrative channels and potentially into criminal or civil court. Details of the appellate ruling are laid out in the opinion posted at Justia.
State officials and nonprofit leaders have declined, or have not yet provided, more detailed public updates beyond the records and notices already on file. Lawmakers and watchdogs say the mix of recovered funds, tighter monitoring and any new anti-fraud laws will serve as a key test of whether Minnesota can better protect federally reimbursed meal programs from future problems.
