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UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Criminal No. 22-124(2) (NEB/DTS)
UNITED STATES OF AMERICA, )
)
Plaintiff, )
) GOVERNMENT’S RESPONSE TO
v. ) DEFENDANT’S POSITION
) REGARDING SENTENCING
MOHAMED JAMA ISMAIL, )
)
Defendant. )
The United States of America, by and through its attorneys, Andrew M. Luger,
United States Attorney for the District of Minnesota, and Joseph H. Thompson, Harry
M. Jacobs, Matthew S. Ebert, and Daniel W. Bobier, Assistant United States
Attorneys, submits the following response to defendant Mohamed Ismail’s sentencing
memorandum.
I. BACKGROUND
During the Covid-19 pandemic, while most Americans were coming together to
ensure the health and safety of their communities, defendant Mohamed Ismail and
his co-conspirators enriched themselves by carrying out a fraudulent scheme to
obtain nearly $50 million in federal child nutrition program funds. To this day, Ismail
has not expressed any remorse for his crime. Indeed, in his sentencing memo, he
downplays the significance of his crime and attempts to portray himself as an
immigrant entrepreneur who overcame adversity to achieve success in the United
States and as someone who has had a positive impact on his community. In reality,
Ismail has done untold damage to the state of Minnesota. His actions have called into
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question the ability of the state to continue its tradition of providing a generous social
safety net to those in need. Through his scheme, Ismail enriched himself and his co-
conspirators. He stole money from taxpayers—money intended to feed children. He
sent hundreds of dollars of fraud proceeds abroad, beyond the reach of American law
enforcement. That money still awaits him upon his release. In short, this is an
outrageous crime deserving of a significant sentence.
II. THE PSR CORRECTLY FOUND THAT THE LOSS WAS MORE THAN $25 MILLION
Guidelines section 2B1.1 provides that the loss amount is “the greater of the
actual loss or intended loss.” Guidelines § 2B1.1(b)(1), app. Note. 3. The government
must prove the intended loss by a preponderance of the evidence. United States v.
Holthaus, 486 F.3d 451, 454 (8th Cir. 2007). “The district court’s method for
calculating the amount of loss must be reasonable, but the loss need not be
determined with precision.” United States v. Hodge, 588 F.3d 970, 973 (8th Cir. 2009)
(quoting United States v. McIntosh, 492 F.3d 956, 960–61 (8th Cir.2007)). “Because
the damage wrought by fraud is sometimes difficult to calculate, a district court is
charged only with reasonably estimating the loss using a preponderance of evidence
standard.” United States v. Alexander, 679 F.3d 721, 731 (8th Cir. 2012) (quoting
United States v. McKanry, 628 F.3d 1010, 1019 (8th Cir. 2010)). Appellate courts
“accord particular deference to the loss determination because of the district court's
unique ability to assess the evidence and estimate the loss.” United States v. Scott,
448 F.3d 1040, 1044 (8th Cir. 2006) (internal citations omitted).
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A. The defendants obtained more than $40 million in federal child
nutrition program funds
The PSR correctly found that the base offense level is increased 22 levels
pursuant to Guidelines § 2B1.1(1)(L) because the loss was more than $25 million but
less than $65 million. PSR ¶103. This loss figure is based on the evidence introduced
at trial showing that Ismail and his co-defendants fraudulently obtained more than
$40 million in federal child nutrition program funds. See, e.g., Gov’t Ex. M-1, N-3.
As shown and presented at trial in Government Exhibits N-3 and N-5, the
defendants submitted to MDE reimbursement claims for more than $49 million in
federal child nutrition program funds. Of this, MDE paid out approximately
$47,920,514 to the entities that sponsored the defendants’ participation in the
program, Partners in Nutrition and Feeding Our Future.1 Those sponsors, in turn,
retained approximately $5.6 million in adminstrative fees. The sponsors then paid
over approximately $42,407,515 to Empire Cuisine & Market, ThinkTechAct, and
other entities owned or controlled by the defendants, including more than $21 million
to ThinkTechAct and more than $12 million to Empire Cuisine & Market.
1 Pursuant to Guidelines § 5E1.1, Ismail and his co-defendants owe restitution for the
full amount of the victim’s loss. Accordingly, the Court should order Ismail to pay $47,920,514
in restitution.
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As depicted in Government Exhibit N-3, in addition to the more than $36
million received by the entities owned by the defendants themselves, more than $6
million in federal child nutrition program funds were sent by Partners in Nutrition
and Feeding Our Future to other non-profit entities used as part of the scheme,
including Somali Community Resettlement Services, The Free Minded Institute, and
St. Cloud Somali Athletic Club. The government introduced bank records and
summary charts showing the flow of funds into and out of these entities at trial.2
2 See, e.g., Gov’t Ex. M-28, O-144, and O-145 (Somali Community Resettlement
Services); M-29 and O-141 (The Free Minded Institute); M-27 and O-152 (St. Cloud Somali
Athletic Club); M-14 (Madina Grocery Inc.); and M-24, O-136, and O-137 (New Prospect
Learning Inc.).
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As shown at trial, after receiving the federal child nutrition program funds,
the defendants transferred the funds to and through a variety of entities to launder
the funds. For example, ThinkTechAct—the non-profit company under which most of
the sites were opened—received more than $21 million in federal child nutrition
program funds in 2021.3 Gov’t Ex. M-30. More than $12 million of these funds were
sent from ThinkTechAct to Ismail and Abdiaziz Farah’s company, Empire Cuisine &
Market, and another $3 million were sent to a related entity created by Abdiaziz
Farah, Empire Enterprises.4 This was in addition to the more than $12 million in
federal child nutrition program funds that Empire Cuisine & Market received directly
from Partners in Nurition and Feeding Our Future. M-13a.
3 In addition to the summary chart, the government introduced at trial records of
ThinkTechAct Foundation’s bank account. Gov’t Ex. O-17.
4 At trial, the government introduced records of the various bank accounts opened in
the name of Empire Cuisine & Market (Gov’t Ex. O-7, O-8, O-9) as well as a chart
summarizing all the funds that flowed into, and out of, the account. Gov’t Ex. M-13a.
Financial records related to Empire Enterprise’s bank accounts were introduced at trial as
Government Exhibits M-13z, O-11 and O-12.
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Almost all of the federal child nutrition program funds were transferred into
four companies set up and used by the conspirators as part of the scheme, including
ThinkTechAct Foundation (Mahad Ibrahim and Abdiaziz Farah), Empire Cuisine &
Market (Abdiaziz Farah and Mohamed Ismail), Empire Enterprises (Abdiaziz Farah
and Abdimajid Nur), Afrique Hospitality Group (Mukhtar Shariff and Mahad
Ibrahim), and Bushra Wholesalers (Said Farah and Abdiwahab Aftin).5 For example,
more than $25 million in federal child nutrition program funds were sent to Ismail’s
company, Empire Cuisine & Market. Gov’t Ex. M-13a.
At trial, the government introduced a chart summarizing all funds that flowed
into, and out of, the various bank accounts opened in the name of these entities. Gov’t
Ex. M-1. This chart showed not only the more than $42 million in federal child
5 At trial, the government introduced records of the bank accounts opened on behalf of
Afrique Hospitality Group and Bushra Wholesalers along with charts summarizing all funds
flowing into and out of those accounts. See Gov’t Ex. M-6, M-6b, O-20, O-21, and O-22 (Afrique
Hospitality Group) and Gov’t Ex. M-10, M-10d, O-24, O-25, and O-26 (Bushra Wholesalers).
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nutrition program funds deposited into the accounts (outlined in blue), but also
accounted for all food purchases by the defendants and their entities (outlined in red).
These food purchases—which totalled approximately $5,106,102—included all
food purchases by the entities, including a significant amount of money spent on
“food” that had nothing to do with the federal child nutrition program. For example,
Empire Cuisine & Market operated a small halal deli and market located in a strip
mall in Shakopee, Minnesota. As depicted in Government Exhibit M-1, the market
had more than $1 million in credit card receipts during the time of the fraud scheme.
In other words, regular customers spent more than $1 million buying food at Empire
Cuisine & Market. As FBI Forensic Accountant Pauline Roase testified at trial, the
funds credited to “food” on Government Exhibit M-1 and other summary charts
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introduced at trial included money spent to puchase food and other items (such as
halal meat and baby formula) for sale at the market. And as the Court saw, many of
the defendants’ food invoices were for the purchase of these types of items unrelated
to the food program. See, e.g., Gov’t Ex. D-72 at 62-63, 82 (Lincoln Trading
International invoices for the purchase of goat meat, lamb kidney, and other halal
meats to sell at Empire Cuisine & Market), D-73 (Gold Star Distribution invoices for
the purchase of non-food items to be sold at Empire Cuisine & Market), and Q-46
(Capital Imports invoices showing purchase of food unrelated to the federal child
nutrition program). Nevertheless, FBI Forensic Accountant Pauline Roase testified
that she credited money paid to these companies as food expense even though much
of the money was spent on items unrelated to the food program in order to be
conservative in her calculations.
B. The loss amount far exceeded $25 million even if the Court
credits all money spent on food, even the money spent on food
unrelated to the federal child nutrition program
Ismail makes two arguments with respect to the loss amount. First, he argues
that the loss amount is overstated and should be reduced based on the food
purchased, and meals provided, by the defendants. Second, he argues that he should
only be responsible for the money he personally pocketed from the scheme, and not
the total amount of loss he and his co-conspirators caused. Both arguments fail.
The Sentencing Guidelines allow for credits against loss in certain situations.
The Guidelines provide that the loss shall be reduced by the “fair market value . . . of
services rendered by the defendant or other persons acting jointly with the defendant,
to the victim before the offense was detected.” Guidelines § 2B1.1, app. Note 3(E)(i).
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The advisory notes further provide that in cases involving government benefits, such
as grants, loans, or entitlement program payments, the loss “shall be considered to
be not less than the value of the benefit . . . diverted to uninteded uses.” Guidelines
§ 2B1.1, app. note 3(F)(ii).
Here, the government disagrees that the loss figure should be reduced based
on the value of the food actually provided by the defendants. As the Court heard at
trial, the defendants served some food, but mainly as window dressing for their fraud
scheme. And when they did so, they did not do so in a manner consistent with the
rules of the federal child nutrition program. Even with the Covid waivers, the federal
child nutrition program had rules about what qualified as a reimbursable meal. As
MDE employee Emily Honer testified, even with the waivers, the program generally
did not allow for the service of bulk groceries, such as onions, potatoes, and uncooked
rice. In those circumstances where it did, the program required the food to be served
or delivered with instructions and appropriate measurements so that a child could
prepare a meal from the food provided. That did not happen here. Instead, much of
the food was simply bulk groceries, such as onions, potatoes, and rice—not meals
suitable and intended for children. As Emily Honer testified, MDE would not have
approved defendants’ claims and paid out federal child nutrition program
reimbursement funds had they been aware of how defendants were operating. In
other words, while the defendants may have served some food, they did not do so in
a manner that benefited MDE or the federal child nutrition program. Accordingly,
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the government does not believe they should receive credit for the food they
purchased or distributed, in essence, to make it look good.
In deciding whether a defendant receives credit against loss, courts look to a
defendant’s subjective intent. That is, courts look to whether the items provided were
provided in good faith, rather than to further the fraud scheme by, for example,
lulling a victim into a false sense of complacency. See, e.g., United States v. Hartstein,
500 F.3d 790, 797-98 (8th Cir. 2007); United States v. Hatchett, 622 F.3d 984, 987-88
(8th Cir. 2010) (same). Here, as the Court heard at trial, the defendants did not enroll
in the federal child nutrition program to feed children. They did so to get rich. Indeed,
the Court saw how members of the conspiracy describe the food program as a “golden
ticket.” Gov’t Ex. H-54a at 4.
The Court also saw conspirators talking about using federal child nutrition program
funds to build a for-profit community center and co-working space (Gov’t Ex. 110 at
9) and purchase real estate and construct condo buildings in Kenya. There was little
or no discussion of children.
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Because the food defendants served was little more than window dressing, the
Court should not credit defedants for any food they provided.
That being said, even if the Court credits defendants for all money spent on
food, the loss amount far surpasses the $25 million benchmark that triggers the 22-
level enhancement under Guidelines § 2B1.1(b)(1)(L). This is true even if the Court
credits funds used to purchase food to sell at their halal market and deli, which had
nothing to do with the federal child nutrition program.
C. The Court should not adopt a lesser loss figure based on Ismail’s
personal gain
Despite the fact that he and his co-conspirators obtained well more than $40
million in federal child nutrition program funds, Ismail argues that his loss figure
under the Guidelines should be limited to the $2 million in fraud proceeds he
deposited into his own personal bank account. In effect, he is asking the Court to
ignore the fact that he participated in a massive conspiracy and fraudulent scheme
through which he has his co-conspirators took home more than $40 million in fraud
proceeds. This the Court should not do. It is black letter law that defendants are
responsible for the reasonably foreseeable actions of their co-conspirators. Here,
Ismail joined and participated in a massive fraud scheme through which he and his
co-conspirators made tens of millions of dollars over a brief 18-month period. The idea
that he should not be responsible for the full scope of that fraud scheme is absurd.
Finally, Ismail argues that the Sentencing Guidelines put too much emphasis
on the amount of the loss caused by the fraud scheme. The government disagrees.
Setting aside his general criticism of the Sentencing Guidelines, this case is hardly
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one where the loss amount overstates the severity of the crime. Ismail participated
in one of the most despicable and notorious fraud schemes in recent memory. He and
his co-conspirators took advantage of a once-in-a-century global pandemic to steal
money intended to be used to feed disadvantaged children. That Ismail does not
recognize the immorality of his crime is reason enough to impose a significant
sentence.
III. THE PSR CORRECTLY FOUND THAT ISMAIL WAS AN AVERAGE PARTICIPANT
IN THE SCHEME AND IS NOT ENTITLED TO A ROLE REDUCTION
The PSR correctly found that Ismail was an average participant in the fraud
scheme and that he was not entitled to a role reduction under Guidelines § 3B1.2.
Guidelines section 3B1.2 provides that defendants who played a minor or
mininal role in the offense may receive an offense level reduction. The application
notes explain that the reduction is for “a defendant who plays a part in committing
the offense that makes him substantially less culpable than the average pareticipant
in the criminal activity.” Guidelines § 3B1.2, application note 3. In the fraud context,
the application notes provide an example of “a defendant in a health care fraud
scheme, whose participation in the scheme was limited to serving as a nominee owner
and who received little personal gain relative to the amount.” Id.
That is a far cry from the facts of this case. Ismail co-owned the main entity
involved in carrying out this massive fraud scheme and personally received more than
$2 million in fraud proceeds deposited into his personal bank account, much of which
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he sent abroad.6 Ismail was involved in the scheme at the beginning. He signed and
submitted fraudulent meal counts. And he received and laundered fraud proceeds.
Therefore, he is not entitled to a minor role reduction even if he was less involved in
the fraud than some of his co-defendants. United States v. Ponce, 311 F.3d 911, 913
(8th Cir. 2002) (“The mere fact that a defendant is less culpable than his co-
defendants does not entitle defendant to ‘minor participant’ status.”).
IV. THE PSR CORRECTLY APPLIED AN OBSTRUCTION-OF-JUSTICE
ENHANCEMENT
Ismail objects to the PSR’s assessment of a 2-level enhancement for obstruction
of justice based on his passport fraud and attempted flight from the United States.
He argues that “there is simply no evidence that [he] was trying to flee the country
to obstruct the investigation.” Dkt. #672 at 5.
The government disagrees. As explained in its sentencing memorandum, the
FBI seized passports belonging to both Ismail and his co-defendant and partner
Abdiaziz Farah on January 20, 2022. Two months later, Ismail and Farah both
submitted fraudulent passport applications on the same day, March 22, 2022, at the
same place (the Minneapolis Passport Office). They both lied on their passport
applications in the same way, each claiming he had “lost” his passport, despite
knowing it had been seized by FBI agents.
6 Ismail notes that he was not a signatory on the Empire Cuisine & Market bank
accounts. While this is true, that was because his bank accounts were being garnished due
to an outstanding tax issue. Despite this tax issue, Ismail remained a full partner with
Abdiaziz Farah and continued to own 50 percent of the company. Gov’t Ex. O-71 at 19
($1,699.10 garnished from Ismail’s personal checking account on June 4, 2020); O-73 at 18
($7,523.47 garnished from Ismail’s personal checking account on June 4, 2020); O-15 at 164
($2,173.74 garnished from Empire Gas & Grocery LLC account on June 4, 2020).
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Both Ismail and Farah then booked flights out of the country. Ismail booked a
flight to Nairobi, Kenya, where his wife and children lived and where he owned
hundreds of thousands of dollars in real estate.
In the face of this evidence, Ismail’s claim that his passport fraud and resulting
flight from prosecution had nothing to do with his knowledge of his status as a target
of an FBI investigation into a massive fraud scheme falls flat. So, too, does his claim
that such behavior does not constitute obstruction of justice. While the application
notes to Guidelines § 3C1.1 state that “avoiding or fleeing from arrest” ordinarily does
not trigger an obstruction enhancement, courts have recognized that flight, coupled
with other obstructive conduct, may justify the § 3C1.1 enhancement. The Eighth
Circuit has held that the obstruction enhancement may apply where a defendant flees
not in an “instinctive flight” to evade arrest, but to as part of a premidatated plan to
obstruct an investigation of which the defendant is aware. See, e.g., United States v.
Billingsley, 160 F.3d 502, 507 (8th Cir. 1998); United States v. Hare, 49 F.3d 447, 453
(8th Cir. 1995) (upholding application of obstruction enhancement to defendant who
agreed to cooperate in an investigation and then fled to Canada).
Here, Ismail’s conduct went far beyond running from the police when they
attempted to arrest him. He and Farah hatched and carried out a plan to obtain new
U.S. passports by submitting fraudulent passport applications in which they lied and
claimed their passports had been lost, when in reality they had been seized as part of
a fraud investigation of which both Ismail and Farah knew they were targets. Ismail
then attempted to use his fraudulently obtained passport to leave the country in
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which he was being investigated and flee to the country in which he and his co-
conspirators stashed much of their fraud proceeds. It is an understatement to say
that had he successfully fled the country it would have obstructed his prosecution.
Indeed, it likely would have prevented it altogether.
In any event, as the PSR pointed out, Ismail’s sentencing guidelines actually
increase without the obstruction enhancement. If, as Ismail suggests, his passport
fraud was unrelated to his fraud conviction, then he receives 2 criminal history points
for his passport fraud conviction (for which he was sentenced to 7 months in prison).
PSR at ¶122, A.4. This would put him in criminal history category II. PSR at A.4.
In addition, with the addition of those criminal history points, Ismail would no
longer qualifies for a 2-level reduction for having zero criminal history points under
Guidelines § 4C1.1. PSR at A.4.
Accordingly, if Ismail does not receive an obstruction enhancement for the
passport fraud conviction, his offense level remains 32 and he will fall into criminal
history category II. This increases his Guidelines range from 121 to 151 months in
prison to 135 to 168 months in prison due to the higher criminal history category.
PSR at A.4. If Ismail persists in his objection, the government is fine proceeding in
this manner.
V. ISMAIL IS FULLY DESERVING OF A SIGNIFICANT SENTENCE
Ismail’s argument that he should receive a sentence far below the advisory
Guidelines range simply fails. He was involved in one of the most notorious fraud
schemes in Minnesota history. He and his co-conspirators took advantage of a once-
in-a-century global pandemic to enrich themselves by stealing nearly $50 million
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intended to be used to feed disadvantaged children. His crime has called into question
the way government operates in the state of Minnesota, and the sustainability of the
state’s generous social safety net.
That Ismail came to the United States as a refugee is a significant aggravating
factor here. Rather than be grateful for the country that welcomed him when his own
country did not, Ismail chose to steal from it. For Ismail, the American dream wasn’t
enough. He wanted to get rich quick, and he was willing to lie, cheat, and steal to
accomplish his goal.
Sadly, Ismail sent much of his ill-gotten gains abroad to Kenya, where his
family resided, and where they are beyond the reach of American law enforcement.
Unlike many defendants who pled guilty, accepted responsibility for their crimes, and
agreed to forfeit and turn over assets located abroad, Ismail has done no such thing.
He has never expressed any responsibility or expressed any remorse for his actions.
When he learned of the investigation, he committed passport fraud and attempted to
flee the country. He continues to complain about not being able to travel to Kenya
after he was arrested and charged with passport fraud. Dkt. #672 at 18. And he has
never agreed to return the federal child nutrition program funds he sent abroad back
to the United States. Because of his crime, he will leave prison a wealthy man—a fact
that the court must consider in imposing a sentence. The Court must send the
message that to both defendant Ismail and others that it is not worth it.
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VI. CONCLUSION
For the reasons stated above, the government respectfully requests that the
Court impose a sentence of 151 months in prison.
Respectfully Submitted,
Dated: October 13, 2024 ANDREW M. LUGER
United States Attorney
/s/ Joseph H. Thompson
BY: JOSEPH H. THOMPSON
HARRY M. JACOBS
MATTHEW S. EBERT
DANIEL W. BOBIER
Assistant U.S. Attorneys
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