'You'll never eliminate fraud totally': Expert says Minnesota isn't an outlier in pandemic fraud

YouTuber Nick Shirley gloated on social media Monday that he "ended Tim Walz" with his video alleging fraud in Minnesota child care centers. His comments were referring to Walz's decision to end his bid for a third term as Minnesota governor.

But Walz has been dogged for years by mounting fraud cases in the state, the most notable of which — Feeding Our Future — grew out of the pandemic.

The circumstances under which the fraud scandal began haven't gotten much attention in the latest news cycle on fraud, so All Things Considered called up Cardiff University professor Michael Levi talk pandemics and fraud.

Levi is an internationally recognized criminology expert who's held advisory roles with the United Nations and World Economic Forum. And he recently studied the link between pandemics and fraud. He spoke with ATC host Clay Masters.

Hear their conversation using the audio player above or read a transcript of it below. it has been lightly edited for clarity and length.

Right now, it feels like it's all eyes on Minnesota. But when it comes to fraud related to the COVID-19 pandemic, was this state an outlier?

I don't think Minnesota was particularly an outlier. One of the challenges that we often face is that more fraud appears the more you look at it.

What is it about pandemics and other crises that breed fraud?

One of the major threads is what we try to do as a society to mitigate the impacts of pandemics. In those societies that tried to keep businesses afloat, tried to keep families afloat, tried to make sure that education was still running, they suffered the most fraud because they were instituting programs to underwrite people's health care and business running costs so that business wouldn't collapse as a result of the pandemic. Part of that was weak controls and devious people taking advantage of the schemes, and that's why those societies like the U.S. and the United Kingdom suffered the most fraud.

These cases are still unfolding in Minnesota courtrooms. Is that a normal thing?

It is a normal thing. There's always an elapsed time from the commission of fraud to the detection of fraud to the investigation and perhaps prosecution. If we look back at Enron and some of the dot com boom frauds, they took many years to appear and be dealt with, and this is no different.

What does your research say about those who tend to get caught?

Well, the simpler frauds are the easiest ones to catch. But what we do know is that bad ideas, like good ideas, tend to spread pretty quickly amongst people from similar groups.

So in the case of Minnesota, it's not surprising that some of the Somalis who were kind of linked together all knew about this. In the UK and Europe, very often it's Pakistani groups doing Value Added Tax fraud. For certain types of tax fraud, it may be white Americans or particular social groups. These networks — and we often think of networks rather than organized crime groups nowadays — they will operate amongst people they trust.

The issue of ethnicity is always a very delicate subject in fraud, because what we need to do is to think about the relationship between the amount and distribution of fraud identified and the number of people prosecuted. It may be that a smaller proportion of Minnesotan fraudsters are Somalis in the light of more intensive investigation. So we need to think about prevention in a more complicated way than blaming a particular group.

Gov. Walz said this week that he was ending his re-election bid so he could focus on rooting out and preventing fraud. Do you have any tips from your research?

You know, without being too much of a Boy Scout, be prepared. Organize your purchasing strategies to make sure that they're not as corrupt as they might be, and have critical friends onsite to critique the expenditures and to challenge the programs to make sure that what happened — not just in Minnesota, but in many other places — can't happen to the same extent again.

You'll never eliminate fraud totally. The point is to reduce it to an acceptable level and stop the kind of legitimacy crisis in not just in Minnesota, but in many other places.