Fraud in child food programs blamed on ‘understaffed and disorganized’ DHS

At least four companies that opened Tennessee operations as nonprofit efforts to feed poor children are under investigation for fraud, reports The Tennessean. The state Department of Human Services’ recently-resigned director of food programs says the state’s lax enforcement of rules is encouraging such things.

Carmen Gentry, said the state has attracted unscrupulous actors because of its reputation for poor oversight.

“They know to come to Tennessee because we are so disorganized and understaffed,” said Gentry, who resigned in July after a Tennessean report on potentially millions of dollars paid to agencies that never provided food to children.

“What they can’t get away with in neighboring states or their own states they know we can get away with in Tennessee,” she said. “You can’t run an $80 million federal program with hundreds of sponsors and agencies that are participating with six to eight full-time staff members. Most states have at least 20 to 30 to 40 people working on these programs.”

DHS spokeswoman Stephanie Jarnagin disputed Gentry’s characterization, saying, “USDA FNS (the federal food program oversight agency) has not identified this for Tennessee, nor do we have any indication that this is the case. However we have increased oversight of the programs since 2011 as part of our ongoing efforts to improve program integrity.”

Jarnagin cited design flaws in the federal program. Among them, there is no “National Disqualified List” for the summer food program that would have enabled DHS in the case of Kingdom Ministries to learn Nealy’s background — or those of other agency operators who had been found to have committed fraud in other states.

Gentry and DHS also are at odds over how well staffed the federal food programs are. Gentry said there were no more than eight full-time staff members while she directed the program — with DHS employees working until late at night each workday to process applications. Jarnagin said there were “over 40 positions dedicated to working on the food programs in the department.” USDA officials said last week based on their visit to Nashville, there were fewer than 10 employees directly working in Tennessee’s food programs.

DHS officials point out that Kingdom Dominion Worldwide Ministries, Teen Angels and Community Hospitality Outreach Program have all been terminated from the program. The agency has since implemented improvements in oversight, including conducting criminal background checks and a scanning system to reduce paperwork.

But the examples of subcontractor misspending illustrate how easy it is for bad actors to game the system in Tennessee. Some Tennessee-based agencies establish themselves as nonprofits just weeks or months before applying to be a DHS subcontractor, only to disband and disappear soon after raking in tens of thousands of dollars from the food program.

Holy Ground Christian Ministries established itself as a Tennessee agency in June. DHS is now trying to recoup more than $79,000 from the agency. Sweet Serenity House established itself in 2013 before applying to be a food program operator. The state is trying to get it to repay more than $192,000.

Kingdom Dominion Worldwide Ministries