One of the largest awardees in a key Trump pandemic relief operation redirected $3 million to its own nonprofit organization despite its lack of track record or capacity in delivering food to people in need, House Democrats have alleged.
Yegg Inc., a California firm that offers business finance solutions, was awarded $16.6 million to supply milk and dairy boxes for the Farmers to Families Food Box program May 8.
In a letter Sunday, James E. Clyburn, chairman of the House’s select subcommittee on the coronavirus crisis, asked George Egbuonu, president of Yegg, to cooperate with the committee’s investigation into the food box program.
The letter alleged that rather than providing food boxes to major food banks across 10 counties in Southern California, as contracted, Yegg instead delivered almost $3 million in food boxes to an organization called Helping Feet, also owned by Egbuonu.
“Yegg reported that it delivered almost $3 million of food boxes, including and 38,956 dairy boxes and 171,000 fluid milk boxes to an organization named Helping Feet. This entity is not a Southern California food bank. Rather, it is an organization that you founded, with no public information indicating a mission, experience, or capacity to deliver food to people in need,” the letter said.
“Documents and information recently obtained by the Select Subcommittee raise additional concerns about whether Yegg was truthful in its proposal to USDA and whether millions of dollars of food paid for by taxpayers reached the intended recipients,” the letter said.
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Stuart Nash, a partner at Holland & Knight, which is representing Yegg, said the company had stepped up at the beginning of the pandemic to help get essential food to thousands of needy families.
“The USDA has subsequently certified that Yegg successfully performed its responsibilities in connection with the Farmers to Families program,” Nash said in an email. “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.”
When asked how Yegg fulfilled its food box contract, the USDA said in a statement: “The data you requested is not publicly available. Payments are only made upon the submission of an invoice documenting evidence of delivery and adherence to the contractual requirements.”
Food banks, community and faith-based organizations, and other nonprofits servicing those in need are eligible to receive food boxes through the program, according to the USDA.
“Coronavirus Food Assistance Program farmers box kits don’t have to go to a food bank but can also go to any charity,” said David May, director of marketing and communications for the Los Angeles Regional Food Bank. May says the food bank received 4,800 dairy boxes from Yegg in June.
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The $4.5 billion Farmers to Families Food Box program was launched in May to connect farmers and food distributors who were forced to dump products because of supply chain bottlenecks with food banks, which were struggling to feed many people made newly food insecure during the pandemic.
As of Nov. 23, the program has supplied 121.1 million food boxes in four rounds of contracts to food banks and other hunger charities, with a total federal government expenditure of $4.5 billion in fresh produce, dairy and meat products to feed food-insecure Americans, according to the USDA.
However, some anti-hunger advocates say the program has faced challenges from the outset with unseasoned vendors. In the initial round of $1.2 billion vendor contracts in May, contracts totaling more than $107 million went to a San Antonio event planner called CRE8AD8 (pronounced “create a date”); California Avocados Direct, an avocado mail-order company; Travel Well Holdings, a health-and-wellness airport kiosk company; and Yegg.
California Avocados Direct, which received $40 million to supply fresh fruit and vegetables across nine states, had its contract canceled with little explanation. CRE8AD8, which received a $39.1 million contract despite lacking a required government license to operate a produce company, did not have its contract renewed.
Yegg was given contracts for the first round of purchases, but they were not renewed in the second or third round. On Oct. 23, the USDA announced a fourth round of $500 million in contracts for food box deliveries from Nov. 1 to Dec. 31. The USDA has not yet contracted with Yegg, but the company remains an eligible vendor, according to the USDA.
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In 2019, Yegg’s website described the company as “an Export Management, Trading and Trade Finance company that specializes in the following areas: Capital equipment, export finance, and trade/export credit insurance.” Website changes in May 2020, documented by the Internet Archive Wayback Machine, amended that description to include “food and dairy products distributor,” but it had previously made no mention of food industry connections.
The Nov. 22 letter asserted that Yegg had not cooperated with an earlier request for documents that would help the subcommittee investigate whether the USDA had granted contracts to middlemen that lacked the ability to deliver food, companies that lacked a required food service industry license and companies that lacked industry networks needed to efficiently source and deliver food.
“With 50 million Americans going hungry this year due to the pandemic, the Select Subcommittee is seeking to ensure that every taxpayer dollar spent on the Food Box program helps hungry Americans, rather than being lost to waste, fraud, or abuse by private contractors,” said a select subcommittee staff member familiar with the investigation but not authorized to speak on the record in the ongoing investigation.
The House subcommittee alleges that Yegg refused to produce documents in September showing the prices it charged USDA, documents describing performance of its contractual obligations and communications between Yegg and USDA. On Oct. 21, Yegg’s lawyers asserted they would not produce such documents because of concerns that they would disclose pricing and volume information.
Egbuonu incorporated Helping Feet as a nonprofit in 2007 to focus on “acquisition of vacant land for construction of residential dwellings and subsequent sale or rent to low-income persons,” “protection of endangered animals and species” and “waste water management,” according to the letter. The nonprofit shares office space and staff with Yegg.
Egbuonu, who did not respond to requests for comment, is the author of two books: “How to Succeed as an Immigrant” in 2010 and “How to Get a Job in 30 Days or Less” in 2013. He is also listed as a movie producer and director for the documentary “The African Side” (2009) on IMDb.com and previously advertised his services on a number of websites as a virtual reality editor for virtual reality e-cards and templates.
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The USDA would not give a list of the food banks that Yegg had contracted to service. Beyond the 4,800 boxes received by the Los Angeles Regional Food Bank, the San Francisco-Marin Food Bank received some dairy boxes from Yegg but was unable to say precisely how many; Feeding America Riverside San Bernardino received none, according to vice president of operations John Crooks; and the Foodbank of Santa Barbara received none, says chief executive Erik Talkin.
“We have only one provider for all of Southern California for the Farmers to Families Food Box program,” Talkin said. “Like the trade mitigation program, this was designed to do two things at once — help the farmers and feed hungry people — but rather than use the already efficient network of how USDA foods get to food banks, this has led to an inefficient program.”