Select Subcommittee Releases Staff Report Showing Trump Administration Wasted Taxpayer Dollars and Failed America’s Families in Pandemic Food Box Program

Oct 13, 2021
Press Release
Chair Clyburn Calls on the USDA Inspector General to Scrutinize Wasted Funds After Year-Long Investigation Uncovers New Evidence of Waste and Abuse in $6 Billion Pandemic Food Program

Washington, D.C. (October 13, 2021) — Today, the Select Subcommittee on the Coronavirus Crisis, chaired by Rep. James E. Clyburn, released a staff report with new findings from a Select Subcommittee investigation into how the Trump Administration mismanaged the United States Department of Agriculture’s (USDA) $6 billion Farmers to Families Food Box Program, which was intended to address agricultural surpluses and food shortages during the coronavirus pandemic.  Chairman Clyburn also wrote to USDA Inspector General Phyllis K. Fong requesting that her office conduct a review of the Program to identify possible fraud and reclaim wasted taxpayer funds.

The Select Subcommittee investigation included case studies of three distributors awarded first-round contracts collectively worth $95.7 million that had been the subject of multiple press reports questioning their qualifications to participate in the Program.  Although one of these three contracts was ultimately canceled before any money was distributed, the Select Subcommittee’s investigation uncovered troubling information about how two contractors—which were ultimately paid a total of $48 million in taxpayer dollars—fulfilled their obligations in the Program, illuminating deep flaws in the Trump Administration’s management of the initiative. 

Chairman Clyburn released the following statement about the report:

“The significant mismanagement of the Food Box Program illuminated by this report is yet another example of the previous Administration’s failure to meet the needs of the American people as the coronavirus spread across the country.  The Program was marred by a structure that prioritized industry over families, by contracting practices that prioritized cutting corners over competence, and by decisions that prioritized politics over the public good.  As we work to emerge from the coronavirus pandemic and prepare for future emergencies, we must heed this report’s lessons to prevent more instances of fraud and abuse and ensure that future relief efforts are more effective, efficient, and equitable.”

The Select Subcommittee launched the investigation on August 24, 2020 in response to troubling reports about the Program.  Today’s staff report reveals the following key findings:

  • The Trump Administration Granted Multimillion-Dollar Contracts to Unqualified Recipients with Serious Red Flags.
    • USDA awarded contracts worth:
      • $16.5 million to Yegg, Inc., a self-described "Export Management, Trading and Trade Finance company" that had listed its most recent annual sales as $250,000 and had only ten full- and part-time employees;
      • $39.1 million to CRE8AD8, a company which describes itself solely as an “EVENT MARKETING AGENCY, specializing in meetings, incentives and corporate events” with little to no food distribution experience; and
      • $40 million—the sixth largest contract at the time—to Ben Holtz Consulting, a small company that submitted a handwritten proposal and stated in the mandatory “past performance reference[s]” section of its application: “I don’t have any.”

 

  • The Trump Administration Failed to Monitor Contract Performance to Detect Possible Fraud or Abuse. 
    • Yegg was ultimately paid the full $16.5 billion value of its contracts.  Of this amount, the Trump Administration sanctioned $7.95 million in payments for deliveries that took place outside of the contract period, in violation of contract terms.  At the time USDA made at least $3.8 million of these payments, USDA was aware that some of the invoiced food had not yet left the producers, reached the site of eligible nonprofit organizations, or been distributed to needy Americans.
    • The Trump Administration reimbursed Yegg for more than $2.85 million worth of milk and dairy boxes purportedly delivered to “Helping Feet,” a nonprofit operated by the wife of the Yegg’s CEO, who was also the company’s majority shareholder, and operated out of its office space.
    • At least $1.3 million of Yegg’s deliveries were supported by inaccurate documentation, but were nevertheless reimbursed by the Trump Administration.
    • On multiple occasions with respect to both Yegg and CRE8AD8, the Trump Administration approved invoices for deliveries for which one person signed on behalf of numerous recipient organizations, despite not being present for the purported deliveries. 

 

  • The Trump Administration Permitted Contractors to Profit Steeply from the Taxpayer-Funded Food Box Program. 
    • By failing to either require contractors to submit documentation showing the prices that contractors paid for food or place restrictions on the profits that contractors could make from the emergency program, the Trump Administration failed to safeguard taxpayers from price gouging.
    • CRE8AD8, which was ultimately paid $31.5 million in taxpayer funds, acknowledged to the Select Subcommittee that it collected profits of between 10 and 25 percent—a total of anywhere from $3.1 million to $7.75 million for one month’s worth of deliveries.
    • Yegg repeatedly charged taxpayers 50 percent markups on the amount that it paid for food box contents. 

 

  • The Trump Administration Failed to Structure or Administer the Program to Meet its Stated Goals of Feeding Hungry Americans and Eliminating Food Waste.   
    • The Trump Administration did not have a process in place to evaluate whether nonprofit organizations that received the food boxes had the necessary operational and financial capacity to store and distribute them.
    • The Trump Administration failed to meaningfully screen first-round contractors for their ability to safely and competently deliver food in the amounts awarded.  One recipient nonprofit said of CRE8AD8:  “They were very sketchy.  They didn’t seem to understand how food banks work.  They didn’t understand that you couldn’t send us bad food and expect us to take it.”  Another described Yegg’s performance as “a horrible job,” and labeled the Program “a disaster.” 
    • Recipient nonprofits told the Select Subcommittee that some contractors delivered “rotten food and wet or collapsing boxes,” provided large amounts of commercially packaged meat inappropriate for family consumption, or delivered produce at temperatures that the nonprofits identified as presenting a “food safety issue.”  

 

  • The Trump Administration Abused the Program for Political Gain by Making Program Announcements Primarily to Score Political Points and Requiring Food Boxes to Include a Letter Signed by President Trump Taking Credit for the Program.

Though the Biden Administration ended the Program on May 31, 2021, the Select Subcommittee concluded its report with recommendations aimed at eliminating waste, fraud, and abuse in future emergency responses and improving the design and implementation of future food distribution programs.

Click here to read today’s report.

Click here to read Chairman Clyburn’s letter to USDA Inspector General Phyllis K. Fong.

 

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117th Congress