Seventy-nine indictments. Fifty-six guilty pleas. Seven convictions at trial, including the organization's founder and CEO. Approximately $250 million in federal child nutrition funds diverted, with only a fraction recovered to date.
Organizations that serve as pass-through entities assume a distinct set of fiduciary and regulatory obligations. The Feeding Our Future case illustrates the financial, reputational, and legal exposure that can result when those obligations are not met.
If you manage federal grants, or oversee the people who do, this case warrants your full attention.
Case Background
Feeding Our Future operated as a sponsor under two USDA-administered child nutrition programs: the Summer Food Service Program and the Child and Adult Care Food Program. The organization functioned as a pass-through entity, responsible for distributing program funds to individual meal sites, submitting reimbursement claims, and monitoring sites for compliance and eligibility.
As noted above, to date, the case has resulted in 79 indictments, 56 guilty pleas, and 7 convictions at trial, including the organization's founder and CEO. Prosecutors allege that the organization and its co-conspirators fabricated meal counts, established shell companies, and directed federal funds to individuals.
The Regulatory Obligations At Issue
Federal regulation imposes specific monitoring obligations on pass-through entities. These include:
- Conducting a risk assessment of each subrecipient prior to award, accounting for prior federal award experience, financial stability, and audit history.
- Ensuring the subawards are compliantly structured as outlined in the Simplifying Subawards blog we published February 11, 2023. NOTE: Per the proposed 2 CFR 200 changes published on May 29, 2026, fixed amount subawards will no longer be allowed for most grantees. If this modification is included the final rule, the regulatory requirement will become effective October 1, 2026.
- Monitoring subrecipient activity to confirm that funds are used for authorized purposes and in compliance with applicable statutes, regulations, and award terms
- Verifying through SAM.gov that subrecipients are not suspended, debarred, or otherwise excluded from federal funding
- Confirming subrecipient compliance with Single Audit Act requirements where applicable
- Implementing corrective action when monitoring identifies noncompliance
For organizations operating in USDA's child nutrition programs specifically, sponsors are further required to conduct a minimum of three site reviews annually and to maintain documentation confirming that services were actually delivered.
Episode 15: Federal Grants Explained Podcast
Implications for Organizations Managing Subaward Relationships
This case underscores three considerations relevant to any organization that distributes federal funds to subrecipients:
Monitoring is a control function, not an administrative formality. The federal government relies on pass-through entities to provide oversight it cannot exercise directly at the subrecipient level. When that function is inadequately resourced or inconsistently executed, the organization bears both the compliance exposure and the reputational consequence — regardless of where in the chain the misconduct originated.
Programmatic flexibility does not reduce fiduciary obligation. Regulatory waivers or relaxed program requirements, such as those issued during the COVID-19 public health emergency, do not relieve a pass-through entity of its underlying obligation to monitor for compliance. Organizations should reassess internal controls whenever the regulatory environment shifts, rather than treating eligibility flexibility as a reduction in oversight responsibility.
Subrecipient risk is organizational risk. Federal funds are awarded for defined purposes, to defined populations, under defined conditions. A pass-through entity's exposure — financial, legal, and reputational — is directly tied to the adequacy of the monitoring framework it has in place before, during, and after disbursements. In this case, compliance gaps that included a waiver of onsite monitoring during the COVID-19 pandemic were exploited.
To learn more about pass-through entity requirements, read Your Role As a Pass-through Entity of Federal Grants.
GrantWin Consulting is a federal grant consulting and training firm based in Atlanta, GA, supporting organizations across the full grant lifecycle — from identifying and securing funding to managing and maintaining compliance with federal, state, and private funding requirements. Our services include compliance gap assessments, financial management systems design, development of required written policies and procedures, and audit readiness support. Learn more about our training programs, including the Federal GrantIQ Training Series and the GrantWin Grant Collective, below. Our training is accredited for continuing education credit through NASBA, CFRE, and GPCI.
