Senate hearing held, legislation proposed to crack down on daycare fraud

- State lawmakers on Tuesday held a special hearing to investigate daycare fraud following a Fox 9 Investigators report on what appears to be rampant illegal activity resulting in the loss of millions in public money.

These are millions of dollars intended to help low income families pay for childcare, but some daycare operators are gaming the system to cash in a state subsidies.

Among those called to testify was Scott Stillman, a Former State Computer Forensic Investigator who worked on the fraud cases.

"I was concerned, deeply concerned," he told the Human Services Reform Finance and Policy Committee Tuesday.

A year ago he wrote an e-mail to his supervisors at the Minnesota Department of Human Services.

"We are working on and currently overwhelmed with significant fraud cases involving organized crime defrauding hundreds of millions of dollars," the e-mail reads. "Significant amounts of these defrauded tax dollars are being sent overseas to countries and organizations to entities known to fund terrorism ... The internal controls on these programs really need to be examined." 

Other government sources tell the Fox 9 Investigators Stillman's estimate of $100,000 million in fraud, a year, is on the mark.

The acting Commissioner of DHS, however, disputes the number is that high.

"I can't give you that exact number," he told the committee Tuesday. Everyone wants to know what the number is and I'm not sure what it is either."

Ten daycare centers are currently under active investigation, suspected of overbilling the state millions of dollars. Most of them are owned by Somali immigrants.

One community member encouraged lawmakers to get tougher with daycare owners committing the fraud.

"This issue is epidemic, very serious," Somali community member Omar Jamal said. "Is that money going out of the country, yes."

DHS Management believes a small number of bad actors are to blame.

"There are many, many fine Somali Childcare Centers that are providing excellent care to our children," Carolyn Ham, DHS Inspector General said.

DHS said none of the cases it's charged so far have any direct link to terrorism. But Fox 9 is told by state and federal agents that some of the fraud money is going overseas, and it's likely some of it is being skimmed by terrorist organizations when it arrives.

In response, Republican lawmakers have proposed new legislation designed to help investigators crack down on daycare fraud going forward.

If passed, the measure would allow the Department of Human Services to shut down childcare centers that do not cooperate with investigators. It would also ask for an investigation by the Legislative Auditor. 

Up Next:


  • Popular

  • Recent

Stories you may be interested in – includes advertiser stories