Massive Daycare Fraud in Minnesota Tied to Somali-Run Operations, $100 Million in Taxpayer Funds Missing
The findings of a comprehensive investigation by Fox 9 have unveiled a troubling picture of fraud within Minnesota’s daycare system. It appears that Somali-operated daycares received up to $100 million in taxpayer funds for childcare services that were never provided. This staggering misallocation of resources has significant implications for taxpayers, as the reimbursements intended to support working families may have been misappropriated and, in some cases, funneled overseas through informal money transfer networks known as hawalas. Such networks have been linked to funding extremist groups like al Shabaab.
On March 15, significant evidence emerged when investigators captured video of an individual at Minneapolis–St. Paul International Airport reportedly carrying $1 million in cash destined for the Middle East. This instance is part of a broader pattern, with surveillance images showing multiple similar transactions being conducted. Nearly a dozen sources within various government agencies have confirmed these occurrences, underscoring the gravity of the fraud investigation.
As indicated by a powerful social media statement, “They KNEW about massive Somali fraud in 2014. Somali daycare — $100 MILLION missing! … using the money to set up fraudulent childcare clients, then providing a kickback. This is a major issue!” The scale of deceit is shocking, with operations utilizing a network of Somali-run businesses to create fictitious client rosters. They reported thousands of hours of claimed child supervision and submitted these fictitious figures to the state. In return, they received substantial checks from state funds, only to withdraw the money in cash and smuggle it internationally.
Glen Kerns, a former detective involved in investigating hawala operations, noted the troubling trajectory of these funds. According to him, “The money’s leaving Minnesota. It gets sent to hawalas in the Middle East or Africa—and from there, it’s impossible to track. In Somalia, hawalas are often controlled or taxed by al Shabaab.” Such operations highlight a dual threat, where the abuse of welfare systems intertwines with national security concerns.
The robustness of Minnesota’s childcare aid program raises further questions, as the state distributes over $250 million each year. Reports suggest that as much as $100 million may be subject to fraud, yet formal charges are lacking. The evidence hints at systemic issues tied to inadequate oversight and insufficient federal support in monitoring financial activities linked to immigrant communities.
This situation is not unprecedented. Back in 2015, concerns about fraudulent practices emerged, particularly regarding the vetting of refugees settled in Minnesota. Republican congressional candidate Jim Hagedorn emphasized, “We’re worried about fraudulent entitlement payments, and we’re worried about money getting in the hands of terrorists.” Hagedorn’s alarm reflects a longstanding wariness among critics who fear that public funds are being exploited to undermine community safety.
In contrast, some Democratic officials have pushed back against such claims, labeling them as unfounded or discriminatory. However, the recent findings indicate that substantial sums of taxpayer money have disappeared through inadequate oversight. A specific report from 2014 highlighted inconsistencies in the billing practices at various Somali-run daycare centers, yet no significant steps were taken in response to the findings.
One Minnesota state employee noted the challenges, saying, “We had multiple licensed daycare facilities billing the maximum amount allowed—hundreds of hours per child—and they were approved for payments over and over again. It didn’t add up.” This statement underscores ongoing issues with fraudulent billing practices that continue despite increased scrutiny. Many centers reported child-to-caregiver ratios that were unfeasible, and several listed children were found to either not exist or never attended the facilities. Payments for these fraudulent claims occurred consistently, accumulating millions for some locations.
The nature of hawalas complicates enforcement efforts. They serve as financial lifelines for immigrant communities needing to send money home amidst weak banking systems overseas. However, the system’s informal structure renders it vulnerable to exploitation. In areas influenced by al Shabaab, these groups often impose fees or seize portions of funds, converting normal transactions into potential channels for financing terrorism.
“Those trying to raise concerns were often accused of profiling or racism,” claimed a former official at the Department of Human Services. This sentiment paints a picture of political reluctance, where highlighting fraudulent activities carries significant risks. The failure to implement sound fraud detection measures in Minnesota’s childcare assistance program exacerbates the issue, allowing the continuation of false claims and mass withdrawals of funds with little scrutiny.
The ramifications of this fraud extend beyond mere financial loss. If, indeed, American taxpayer dollars are funding terrorist activities, the implications are dire, representing potential threats to national safety. A Fox 9 investigation tracked the movement of at least $25 million in daycare payments that reportedly navigated a route leading to suitcases stuffed with cash leaving U.S. airports. While not every dollar may end up with terrorists, the unclear trail and insufficient enforcement create a significant cause for concern.
As the discussion reignites in social media and political circles, state lawmakers are facing mounting pressure to enhance oversight within the childcare funding system. Calls for comprehensive audits, stricter vetting of businesses linked to refugees, and reforms in daycare subsidy qualification criteria are gaining traction among Republican legislators.
For Minnesota taxpayers, these fraud revelations harbor disturbing implications. It breeds mistrust—not only regarding the management of taxpayer dollars meant for supporting families but also about the potential for these funds to finance violence abroad. “This isn’t about targeting a community,” Kerns stressed. “This is about preventing our own tax dollars from supporting those who would do us harm.” The urgency for reform and accountability resonates profoundly, tethering community welfare to national security in an increasingly complex landscape.
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