Political Pressure From Somali Community Hampered Minnesota Fraud Probes, Whistleblower Says

A key whistle-blower, and one of the first to draw attention to what he believed was widespread fraud in the Minnesota welfare system, says that state officials hampered probes into the allegations over concerns about pressure from the state’s Somali immigrant community. 

That community has been at the center of recent welfare fraud accusations, including the Feeding Our Future fraud case, in which prosecutors say more than 70 defendants — most of them part of Minneapolis’ Somali community — were charged in connection to a $250 million pandemic-era fraud on a state-funded meals program for children. 

Last year, new charges in the Feeding Our Future case sparked renewed interest in the state’s federally-funded daycare program. Independent journalists flocked to Minneapolis and recorded videos of empty daycare centers that had received millions in state grants. 

“It was obvious that they were committing fraud”: DHS investigator

But, concerns about Minneapolis daycare centers go back at least a decade, according to the whistle-blower, Scott Dexter, who worked as an investigator at the Minnesota Department of Human Services (DHS) from 2013 to 2019. He told Just the News that his team uncovered evidence of fraud in the state’s taxpayer-funded daycare system almost immediately after he started his work. 

“The very first [daycare] that we investigated […] had received about $3.75 million in one year, and so it was obvious that they were committing fraud,” Dexter told the Just the News, No Noise TV show on Tuesday.  

“And the number of these childcare centers would be owned by the same owners, or there’d be, you know, intertwined people involved in it. So one daycare center was involved with another daycare center, so it was obvious that it was a coordinated fraud scheme,” said Dexter. 

In his testimony before the House Judiciary Committee earlier this year, Dexter said that he was hired after a 28-year law enforcement career to be part of a new investigative unit in the Office of the Inspector General at the Minnesota DHS tasked with identifying fraud in the state’s Child Care Assistance Program (CCAP). 

Dexter testified that what his team uncovered was “deeply concerning” regarding daycare centers operating out of commercial spaces “with windows covered, no visible play areas, and very few children ever present.” After reviewing records and surveilling locations, they found “documented patterns of overbilling, nonexistent attendance, and in some cases, children being signed in for hours they were never actually at the center.” 

Allegations of racial bias used as an excuse to thwart legitimate investigations

The investigators noticed a further trend “many of the centers receiving the highest levels of CCAP funding were owned and operated by Somali individuals, and the families served were predominantly Somali.” Dexter said that was also one of the reasons that state officials used to curtail the teams’ work, accusing them of being racially biased. 

The whistle-blower stringently denies that the investigations were in any way based on the racial or ethnic identity of the daycare center owners. He suggested, rather, that politics may have played a role in undermining the investigations. “Our investigations were based off of the dollar amount that they were receiving. So, the more money in CCAP funds they were receiving, those were the ones that we looked into,” Dexter told Just the News.  

“Those were the ones that we found fraud. Well, unfortunately, because of the pressure that they were getting from the Somali community, a lot of our investigations were shut down or they made it more difficult for us to investigate, and basically, kind of stripped away the law enforcement power, the law enforcement end of it, and began making them more internal, administrative type cases,” he explained. 

“Minnesota was really proud of the fact that they had the largest Somali community. They had the Somali refugee resettlement program, and so that was a big political hot button back then, and we were being accused of disproportionately targeting the Somali community, even though that’s not the basis of our investigations,” said Dexter. 

Because of this, the investigator and law enforcement veteran said he resigned from his role at the Department of Human Services in 2019. “[It] became harder and harder for us to actually try to stop the fraud,” he told Just the News.

Investigations go as far back as at least 2019

The Minnesota Office of Legislative Auditor probed the executive branch’s investigation into childcare center welfare fraud and released a report in 2019, Just the News reported last year.  

The office – which is part of Minnesota’s legislative branch – was alerted to allegations of fraud in the state’s childcare system the year before when Jay Swanson, the manager of the DHS Recipient & Child Care Provider Investigation Unit for the state, testified to lawmakers about his unit’s findings. 

Swanson said the investigators “routinely uncovered large scale overbilling” and estimated the fraud rate in the program was likely as high as 50% of the total disbursements. According to the official, his team found that a large percentage of the highest paid daycare centers in the state raised significant fraud concerns for investigators – as many as 72 of the top 100 recipients of state money bore concerning markers.

Investigators found that it appeared many daycare centers were opened entirely for the purpose of defrauding CCAP, noting one Office of Inspector General study from 2017 found there “was an excess of 320 child care centers” receiving money from the program in Hennepin County — home to Minneapolis — alone.  

Swanson also told the legislature that his investigators determined that some childcare centers recruited mothers eligible under the state’s Child Care Assistance Program (CCAP) by offering kickbacks using government funds.

Minnesota’s DHS pushed back on Swanson’s assessment, telling lawmakers there was no evidence to support the investigators’ claims that fraud exceeded $100 million a year or that money was sent overseas.  

However, the agency acknowledged there was a “great deal of work to do to improve the integrity of CCAP and our investigation processes.” Despite this, the legislative auditor ultimately concluded in its final report that the evidence that it had gathered pointed to a large fraud problem inside the CCAP program, even if it could not directly substantiate the claims, noting that it would be “extremely difficult” to do so, Just the News reported. 

The office in 2019 released the results of a separate investigation into the Department of Human Services’ fraud controls and found them “insufficient to effectively prevent, detect, and investigate fraud in Minnesota’s Child Care Assistance Program (CCAP).” 

Creation of a National Fraud Enforcement Division at the Department of Justice

The Minnesota DHS moved in 2019 to revamp the office that investigates childcare fraud after Swanson’s letter. But, this was before the Feeding Our Future scandal rocked the agency in subsequent years, raising questions about the efficacy of the reforms. 

The Trump administration has sought to keep up the pressure on combating welfare fraud across the country, in part inspired by the prosecutions in the Feeding Our Future case and the renewed attention on Minnesota. 

Earlier this week, Acting Attorney General Todd Blanche announced the creation of a National Fraud Enforcement Division at the Department of Justice. The new division will be made up of 93 prosecutors “devoted to the mission of combating fraud” across the country, Blanche said. 

Last month, President Donald Trump signed an executive order establishing the Task Force to Eliminate Fraud and tapped Vice President JD Vance to lead the commission. The primary focus of the commission is on fraud in federal benefits and social-welfare programs, such as Medicaid, nutrition assistance, autism care, and other taxpayer-funded benefits. 

Vance touted a series of arrests last week in Los Angeles as part of a crackdown on hospice and healthcare fraud as part of the commission’s crackdown.  

Reprinted with permission from Just The News.

The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.