Soak the bread crumbs in the milk; mix with the ground beef. Add the eggs, onion, garlic powder, salt, pepper, nutmeg, and mustard; mix throughly. Shape into 40-50 bite sized meatballs. Bake meatballs at 350 degrees for 20 minutes.
Mix the remaining ingredients in a separate pan or crockpot. Simmer until the sauce thickens. If necessary, add a little flour or cornstarch to give the sauce enough body to stick to the meatballs. Add cooked meatballs. Serve with toothpicks.
Variations: Ground tofu may be used instead of the beef.