NE Auditor Mike Foley Expands Scrutiny of Pandemic Grant Program

State Auditor Mike Foley announced that his investigation into a $1.2 million pandemic-era grant has triggered broader questions regarding a $234 million development initiative, the Nebraska Examiner reported.

Foley described the progress of the targeted grant as “pathetic” while speaking about the wider funding effort managed by the state.

The review centers on the North and South Omaha Recovery Grant Program, an initiative approved by the Legislature to support economically disenfranchised communities impacted by the 2020 pandemic. Roughly 130 entities received funding under the program in January 2024. Foley said that while his office has no other investigations “in motion” regarding the broader program at this moment, the complexity of the initiative and a shrinking state monitoring agency demand a closer look.

“Intuitively, you gotta say there’s more here. We’ve got to dig deeper,” Foley said.

The auditor’s expanded concern follows an 11-page analysis examining the downtown-Omaha-based Nebraska Startup Academy. Investigators pointed to unmet job creation milestones, commingling of funds, potential conflicts of interest, and what Foley termed “lavish administrative salaries,” including $387,126 paid over two years to the executive director.

Following the release of the state watchdog’s analysis submitted to Maureen Larsen, DED executive director, the agency formally suspended the Startup Academy’s contract and its remaining $313,000 in grant dollars. Charlie Cuddy, executive director of the Startup Academy, told the Nebraska Examiner that his organization was unaware of the active investigation prior to the public letter.

Nebraska auditor raises concerns over Omaha nonprofit’s $1.2 million grant — First Alert 6

“We found out with everybody else,” Cuddy said.

Cuddy said that his organization had not received any reimbursements since last December and that its grant funding had effectively been suspended already. He added that the academy continues to work with DED to answer compliance questions and said that the findings did not establish “intentional misuse of public funds or fraudulent conduct.”

According to the grant application excerpt, the academy originally stated it would “directly help create and support 60 new startups” and that it anticipated 300-plus full-time jobs within three years. However, auditor records show that amended reports submitted by the academy indicated only two direct jobs and two indirect jobs were created over a two-year period.

State officials also flagged potential undisclosed conflicts of interest, noting that four academy administrators hold leadership positions in Move Venture Capital, a firm tied to startups assisted by the academy.

Foley suggested that many of the oversight complications facing the North and South Omaha Recovery Grant Program stem from a period when the state possessed an abundance of funds that officials felt pressured to disburse rapidly. He pointed to a separate $5 million grant for a film about Chief Standing Bear, which originated from pandemic-era dollars and which the DED stopped following a breach of contract notice from the auditor’s office.

Fallen Giant Films, Inc., another recipient, has also faced contract suspension after the state disbursed nearly $3.4 million. Founder Randy J. Goodwin has disputed the state’s interpretations in communications with Gov. Jim Pillen and state lawmakers, arguing that guidelines remain unclear.

DED spokesman Brennan Hallock confirmed that no other North-South recipients are currently under formal suspension, noting that the agency retains options including disallowing costs, contract termination, and recouping dollars. Meanwhile, state lawmakers continue to monitor whether projects will meet the end-of-2027 spending deadline.

“When you write those checks, what really happens next? No question, there’s more work we need to do,” Foley said.

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