Categories: Politics

Food box contractor sent itself $3 million worth of milk intended for Covid relief, House Democrat alleges

In addition, contractor Yegg, Inc. charged USDA $5 per gallon for milk, and sent $1 million worth of dairy boxes to a nonprofit focused on “educational and cultural travel.”

Earlier this year, when the United States Department of Agriculture (USDA) announced the contractors it had selected for the Farmers to Families Food Box Program—an unprecedented food-aid initiative that paid distributors to pre-pack boxes of produce, meat, and dairy and deliver them to food banks—a few of the awardees raised eyebrows

There was the caterer who won a contract worth well over $40 million but appeared to have no experience in distribution. There was the company that operated airport kiosks. And then there was the mail-order avocado service, which didn’t even make it to day one of the program’s rollout before the agency revoked its contract. 

This summer, the House Select Subcommittee on the Coronavirus Crisis began investigating Farmers to Families amid concerns about USDA’s implementation of the program. 

“The Helping Feet website bears no evidence of active charitable activities and makes no reference to food distribution.”

Among the early contractors was Yegg, Inc., a California company that advertised itself as a financial services provider. It was awarded a $16.59 million contract to distribute boxes of milk and dairy on the West Coast, and invoiced the government the full amount of the contract, indicating it had successfully completed its deliveries.

Now, as first reported in The Washington Post, the Subcommittee Chairman James Clyburn has written a letter to George Egbuonu, president of Yegg, asking him to cooperate with an ongoing investigation based on findings that Yegg may have misrepresented its connections with food banks in its application paperwork. 

Clyburn, a Democratic rep from South Carolina, wrote that the committee had first requested documents from Egbuonu on August 24, but the company has withheld some of them. 

Citing reporting from The Counter, Clyburn wrote that Yegg may have driven up the cost of the food boxes by subcontracting with another food distributor to complete the obligations of its $16.59 million contract. As we previously reported, Yegg had partnered with Alta Dena, an arm of the now-bankrupt dairy processor Dean Foods, to deliver milk and dairy products to food banks and nonprofits.

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Even more damning, the subcommittee investigation found that Yegg invoiced the government for almost $3 million worth of boxes delivered to an organization called Helping Feet, a nonprofit also owned by Egbuonu and operating out of the same business address in Manhattan Beach, California. In the letter, Clyburn wrote that Helping Feet lists in its articles of incorporation protecting endangered species, wastewater management, and acquiring vacant land among its primary functions, but does not mention providing food to people in need. 

The subcommittee investigation found that Yegg invoiced the government for almost $3 million worth of boxes.

“The Helping Feet website bears no evidence of active charitable activities and makes no reference to food distribution,” Clyburn wrote to Egbuonu. “Instead, the website appears designed to promote a book you wrote, entitled ‘How to Get a Job in 30 Days or less.’”

Clyburn also challenged Egbuonu for refusing to produce records “showing the prices you charged USDA.” Previously unreported invoice details obtained by The Counter—combined with interviews with a food bank that partnered with Yegg—suggest that the company charged the government $5 per gallon of fluid milk, nearly double average retail prices. 

As Clyburn noted, $2.85 million worth of boxes went to Helping Feet. Another $1.3 million in boxes were listed as having been delivered to the Brockman Institute, a Huntington Beach-based organization that appears to focus on global cultural and educational experiences. The Counter has reached out to the Brockman Institute and Yegg’s other top recipients for further detail and will update this story if we get a response. 

“Yegg, Inc. is a minority-owned small business that stepped up in the earliest days of the Covid crisis to help get essential food staples, like milk, to thousands of needy families. The USDA has subsequently certified that Yegg successfully performed its responsibilities in connection with the Farmers to Families program,” wrote Stuart Nash, lawyer for the company, in response to a request for comment. “Yegg looks forward to continuing to fully cooperate with the Subcommittee’s inquiry, subject to Yegg’s legitimate right to protect its proprietary business information from disclosure to its competitors.” The company’s contract ended in late June and was not renewed

The Farmers to Families Food Box program has been rife with problems from the outset. Many of the boxes were wildly overpriced. Some parts of the United States received no food at all. Inexperienced contractors have delivered rotting food in falling-apart boxes. Food banks incurred tens of thousands of dollars in last-mile delivery expenses after contractors refused to follow through on the “truck to trunk” delivery that USDA promised. And churches have promoted their services at distribution sites and slapped their logos onto the boxes, a big no-no for government aid. 

The multibillion-dollar program is scheduled to run through the end of December. 

UPDATE 4:00 PM 11/25/2020: This story was updated shortly after publication to include a comment from Yegg, Inc.

H. Claire Brown and Jessica Fu
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H. Claire Brown and Jessica Fu

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