MN lawmakers press state officials on day care fraud after FBI raids
Fraud raids carried out by FBI, BCA
The FBI and BCA carried out raids across Minneapolis on Tuesday that they say were focused on fraudulent state services linked to child care and autism centers. FOX 9’s Karen Scullin has the latest.
ST. PAUL, Minn. (FOX 9) - Minnesota officials with the Department of Children, Youth, and Families faced scrutiny from Republican lawmakers during a fraud hearing Tuesday, the same day the FBI conducted raids on nearly two dozen Medicaid-funded facilities across the Twin Cities.
House fraud hearing
What we know:
Department of Children, Youth, and Families Commissioner Tikki Brown and Inspector General Randall Keys appeared before the Minnesota House Fraud Prevention and State Agency Oversight Policy Committee on Tuesday to present steps the department has taken to combat fraud.
The hearing also included testimony from Jay Swanson, a former Minnesota state trooper who also served as a Minnesota Department of Human Services investigator. Swanson gave testimony claiming the Department of Human Services refused to move forward with criminal cases when he brought forth evidence of fraud numbering in the millions of dollars.
Big picture view:
The hearing came hours after the FBI and Homeland Security Investigations executed search warrants at 22 businesses across the Twin Cities, including day care facilities and autism clinics as part of ongoing Medicaid fraud investigations. FOX 9 is told some local partners, including the Minnesota BCA and Hennepin County Sheriff's Office, did assist in the raids.
Among the spots raided on Tuesday was the Quality Learning Center, the former day care that was featured in YouTuber Nick Shirley's video exposing alleged fraud at day care centers in Minnesota. Shirley's video was a driving factor that led to the ICE surge in January.
MN fraud: Lawmakers hold hearing as FBI raids businesses
Minnesota lawmakers held a hearing on Tuesday hours after the FBI raided 22 businesses in the Twin Cities as part of ongoing fraud investigations.
'Fraudsters on notice'
What they're saying:
At the beginning of the hearing, Brown addressed the Tuesday raids, claiming the search warrants executed on Tuesday were the results of information shared by the department.
"Today is an excellent example of the Department of Children, Youth and Families, local law enforcement, federal partners, each playing its part to end fraud in Minnesota," said Brown. "Each entity, as you know, plays a distinct role in protecting taxpayer dollars. And we are seeing the strength of that collaborative working relationship in action. The Department of Children, Youth and Families works every day to protect program integrity, and we're pleased to see the state's Bureau of Criminal Apprehension and our federal partners taking strong action based on the information that we have shared with them."
"We will continue to share information with law enforcement to ensure that they are able to conduct thorough criminal investigations," Brown added. "Today's actions put fraudsters on notice that Minnesota does not tolerate fraud in our public programs."
Gov. Walz issued a statement earlier in the day, also stating that the raids happened because "our state agencies caught irregular behavior and reported it."
The other side:
FBI Director Kash Patel balked at Gov.Walz's tweet, responding with his own statement: "This FBI and DOJ with our DHS partners drafted and executed every search warrant today. But go ahead and take credit for our work while we smoke out the fraud plaguing Minnesota under your governorship."
MN lawmakers grill state officials over day care fraud
Department of Children, Youth, and Families Commissioner Tikki Brown faced questioning from lawmakers at Tuesday's House fraud hearing, hours after FBI investigators raided nearly two dozen Twin Cities businesses. One lawmaker accused Brown of lying about the state's investigation into day care's following the release of a video by YouTuber Nick Shirley.
Warning signs ignored
The backstory:
Swanson told lawmakers of his time as an investigator. He said, as a trooper, he couldn't imagine overlooking a theft or loss of $50.
But, he claims, he and his fellow investigators were shocked to find that the theft of millions of dollars was tolerated within the Department of Human Services (DHS).
Swanson said DHS opted for administrative penalties over criminal investigations for fraudsters.
He recounted hearing from one suspect in a child care fraud case that they learned of the fraud scheme back at a refugee camp in Kenya. There they were told they could make money running day care fraud schemes in a number of states, "but it was easiest, and you could make the most money doing it in Minnesota," Swanson recounted.
Swanson also told lawmakers he was pressured in 2018 by a DHS official to remove parts of a report he was submitting to the Office of the Legislative Auditor regarding day care funding fraud. Swanson says the official demanded he delete several paragraphs of a report he was submitting to the auditor. Swanson said he told the official he would be in violation of state law if he deleted the passages.
After that, the officials came back to Swanson and told him, "You better be ready for the [blank] storm that's coming your way."
"In the following months, members of our unit were harassed and bullied by DHS officials in the following manner," said Swanson. "First, DHS paid $90,000 to a consultant with no experience in public benefit program integrity or financial fraud investigations to label the CCAP fraud allegations in my email as unreliable and unable to be proven. During an interview with the consultants, which became heated, I told them that I really didn't care what they put in their report, but if they said there was no fraud or that our investigators were making this up, that when this became public, their company would lose all credibility. I told them that the fraud was so huge that sooner or later it would come to light."