Report unable to offer reliable estimate of day care fraud

A government watchdog report on the scope of fraud in Minnesota’s Child Care Assistance Program (CCAP) is unable to offer a reliable estimate of how much fraud actually exists.

Last May, a FOX 9 investigation based on government sources familiar with the fraud problem revealed as much as $100 million was being stolen every year.

A report released Wednesday by the Office of Legislative Auditor (OLA) said it did not find evidence that as much as $100 million annually is being ripped off from the program. But, the report said the level of fraud is more than the $5 to $6 million prosecutors from across the state have been able to prove.

“We are trying to get to the number of $100 million in fraud, but we simply could not get there. We couldn’t find evidence to substantiate $100 million in fraud every year, we couldn’t find any reasonable estimate of fraud," Legislative Auditor James Nobles told lawmakers on Wednesday.

CCAP helps low-income parents pay for child care so they can work or participate in job training.


The OLA report includes an assessment from Jay Swanson, who manages the Minnesota Department of Human Services unit which investigates child care assistance fraud. According to Swanson’s assessment, the “overall fraud rate in this program is at least 50 percent of the $217 million paid to child care centers in 2017.” But, the OLA said it could not find evidence to substantiate that number.

Another OLA finding is that "there is a serious rift" between Inspector General Carolyn Ham and Swanson and other investigators, even saying she never met with them. 

"I think there is an undercurrent by some in the department that certain investigators bring a certain bias, so that is possible, but to tell you frankly I couldn't understand why the current Inspector General distanced herself from day one from this group," Nobles told Fox 9.

Nobles recommended the DHS Inspector General become a separate, independent office from DHS.

"DHS knows there is fraud and they haven't done enough to clamp down," said Republican Representative Mary Franson from Alexandria.


Another allegation originally reported by FOX 9 was that state and federal authorities were concerned that some of the CCAP funds were being sent overseas and that some of the money was being skimmed by terrorist organizations. The report said it was unable to substantiate the allegation, but did acknowledge it's a possibility. In testimony before state lawmakers, Legislative Auditor James Nobles said, "we cannot say definitely that it has occurred, but we cannot say that it has not."

The report goes on to say, “We found that federal regulatory and law enforcement agencies are concerned that terrorist organizations in certain countries, including Somalia, obtain and use money sent from the United States by immigrants and refugees to family and friends in those countries."


DHS issued a statement in response to the OLA report, promising to address the fraud problem.

“We recognize we have a great deal of work to do to better prevent, detect, and investigate fraud," DHS said in the statement. "We will build on efforts already underway to develop a more proactive, data-driven approach.”

DHS Commissioner Tony Lourey said CCAP fraud is a problem in other states, as well. 


ISAIAH, the multi-faith group held a news conference to address the issue. 

"I hope the dangerous political games are over", said Imam Mohammed Omar from Dar Al Farooq.  

"Let's start by addressing the fact that more than 2,100 families who are entitled to child care assistance don't have access to it today, that is the real scandal," added Imam Asad Zaman from the Muslim American Society.