Federal agencies have dispatched investigators to Minneapolis, Minnesota, in response to allegations of fraud involving several daycare centers purportedly operated by the Somali community. The investigation follows a viral video by independent journalist Nick Shirley, who claimed these centers received government funding without providing adequate care for children.
FBI Director Kash Patel stated that agents were already engaged in dismantling significant fraud schemes prior to the video’s release late last week. He highlighted a recent case where the FBI uncovered a $250 million fraud operation that misappropriated federal food aid intended for vulnerable children during the pandemic. This initiative led to 78 indictments and 57 convictions. “The FBI believes this is just the tip of a very large iceberg,” Patel conveyed via X, emphasizing the agency’s commitment to investigating financial misconduct tied to the welfare of children.
In tandem with the FBI, agents from the Department of Homeland Security are investigating the suspected fraud sites in Minnesota. The state has identified 14 high-risk Medicaid programs, leading to the suspension of their payments and the initiation of a third-party audit. First Assistant U.S. Attorney Joe Thompson reported that these programs have cost the government approximately $18 billion since 2018, with more than half of this amount believed to be fraudulent.
“The fraud is not small. It isn’t isolated. The magnitude cannot be overstated,” Thompson stated during a recent news conference. He characterized the situation in Minnesota as “staggering industrial-scale fraud,” raising serious questions about the integrity of state welfare programs.
One of the latest defendants, Abdinajib Hassan Yussuf, aged 27, allegedly received $6 million in Medicaid funds through false claims related to a program designed to provide individualized therapy for children with autism. Thompson noted that Yussuf reportedly paid kickbacks to parents in the Somali community to have their children diagnosed with autism spectrum disorder and enrolled in his program.
Two other defendants involved in a Housing Stabilization Services fraud scheme traveled from Philadelphia to secure $3.5 million in fraudulent Medicaid payments after hearing that it was “easy money,” according to Thompson.
In light of Shirley’s video, the Minnesota Department of Children, Youth, and Families has begun inspecting the daycare facilities in question. Commissioner Tikki Brown indicated that several of these centers are already under investigation. She noted that inspections conducted within the last six months found children present at each location and did not substantiate claims of fraud.
Chris Edwards, a federal budget expert at the Cato Institute, expressed caution regarding Shirley’s allegations. While he acknowledged that Minnesota faces significant challenges with fraud, he emphasized the importance of a comprehensive examination of the systems at play. “It’s huge,” Edwards remarked, highlighting the financial implications for a state of Minnesota’s size.
Edwards pointed out that federal aid programs managed by states are particularly vulnerable to fraud due to insufficient incentives for state administrators to manage taxpayer money responsibly. He attributed this vulnerability to the automated nature of the claims process and the sheer scale of federal programs. “There are too many government programs, and the fact that the feds are providing so much of the funding creates a recipe for trouble,” he noted.
Proposing a potential solution, Edwards suggested that states should be responsible for funding welfare programs, as they are required to balance their budgets. He argued that this would encourage state policymakers, regardless of political affiliation, to monitor expenditures more closely.
As the investigation continues, officials are focusing on identifying patterns of abuse that may be present across other states. The findings from Minnesota could serve as a crucial reference for addressing similar issues nationwide.
