Trump administration heightens focus on alleged fraud in Minnesota
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The Trump administration heightened its focus on alleged fraud in Minnesota this week, indicating it was freezing grants and loans for small businesses and child care centers in the state.
In a social media post Friday night, the White House spelled out actions it was taking to “dismantle the massive fraud empires built in Minnesota.”
Among them are suspensions of child care assistance and small business grants, along with investigations into businesses in the state conducted by several federal agencies. The ramp up in attention and moves to freeze funds come in the aftermath of a single YouTube video posted last week. It captured the attention of the White House and Republican lawmakers.
A MAGA connected social media influencer visited Minnesota and questioned Minneapolis day care centers operated by Somali-Americans. He claimed without evidence that they’d committed fraud.
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In a news release, the White House said President Donald Trump “promised decisive action and his administration is delivering, with unprecedented investigations, freezes, and prosecutions spanning multiple agencies.” It goes on to say that it will require “methodical work to build cases that secure convictions and recover taxpayer dollars,” and cast blame on Gov. Tim Walz for allowing the fraud to happen.
Walz, a second-term DFLer, said Minnesota has been conducting investigations for years and they are ongoing. And payments have been suspended for suspicious providers.
“Whether these programs got here before we got here or after, we’re here now. We’re the ones fixing it,” Gov. Tim Walz told reporters just before Christmas.
Fraud has been a subject of ongoing reporting and federal investigations in Minnesota for years. Most notably, a COVID-19 era child nutrition program was defrauded out of more than $250 million. Dozens were convicted in connection to that scheme.
More recently, federal prosecutors charged several more for allegedly defrauding state Medicaid programs.
Walz said the federal effort to spotlight fraud in Minnesota is purely political.
“Nobody, nobody in the (state) Legislature on the Republican side is interested in solving this,” Walz said. “My God, it would be the worst thing in the world for them if this is solved like we’re doing it here early this year, because then what are they going to run on?”
One of the Republican candidates running to face off with Walz next year has said her caucus helped feed information to Nick Shirley, the content creator who made the YouTube video. House Speaker Lisa Demuth, R-Cold Spring, said earlier this week that there should be consequences for providers who break the rules, and for officials that allow fraud to take place.
She said she was glad to see federal agencies step in.
“Fraud needs to end in the state,” Demuth said. “And if this is what it takes, since there’s been inaction by our current governor, then this is where we’re at.”
Another Republican gubernatorial hopeful, Rep. Kristin Robbins, will testify before the U.S. House Oversight Committee next week, along with Reps. Marion Rarick and Walter Hudson. The trio sit on Minnesota’s House Fraud Prevention and Agency Oversight Committee. Gov. Tim Walz has been invited to testify before the federal panel next month.
A freeze in child care, business funds
On Thursday, the head of the Small Business Administration said it was suspending COVID-era loans for almost 7,000 business owners in Minnesota and it stopped annual grant payments. And owners could be subject to prosecution and ordered to repay loans.
Administrator Kelly Loeffler said the loans were suspended due to suspected fraudulent activity.
Earlier this week, Department of Health and Human Services Deputy Secretary Jim O’Neill announced the department would cut child care assistance funding to the state.
“We believe the state of Minnesota has allowed scammers and fake day cares to siphon millions of dollars over the last decade,” O’Neill said in a social media video.
The department cited a social media post from O’Neill when MPR News reached out asking what evidence led them to suspect fraud. That post doesn’t provide specifics. Still, federal officials have since expanded the scope to freeze child care assistance funding to all states until they can prove funds are being spent legitimately.
Across the country, 1.4 million children rely on the funds to attend day care, according to the latest federal data. Currently, more than 23,000 of them are in Minnesota.
Somali community faces threats
In the aftermath of the viral video and enhanced federal spotlight on Minnesota, Somali child care providers say they’ve fielded threats, and worse. And parents say they’re fearful.
Sacdiyo Aden shared her concerns at Nokomis Child Care earlier this week. A thief broke into the day care earlier this week and is alleged to have stolen records including staff and student information.
“I’m a working parent and I bring my kids here while I’m at work,” Aden said through an interpreter. “And now I cannot bring my kids anymore because they are too scared.”
Nasrulah Mohamed, one of the center’s managers, said parents and staff are frightened about how their information could be used. And threats continue.
“We don’t know why this is targeting our Somali community as one video made by a specific individual made this all happen,” Mohamed said. “We’ve been receiving hateful messages through our voice notes threatening us since the past couple of days, including one that happened yesterday morning, after the break in. This is frightening and exhausting.”
