Nothing to See Here, or Is There?
Most Democrats and progressives who do not wish Shirley harm do not particularly wish him well. Writing in the New York Times Magazine, Peter Baker dismissed what he had to say as stuff and nonsense and conspiracy theories. Why, “The Minnesota Star Tribune found no evidence of fraud at the day cares that Shirley visited”, Baker wrote.
So there you had it. Both the local paper and the nation’s paper of record assured readers that there was nothing to see here, move along. But there was something to see there and, in this case, the YouTuber has been proven right and the scoffers embarrassingly wrong.
Minnesota-based editor Jon Miltimore wrote that Baker “owes Shirley a big apology, because the YouTuber helped expose a scandal that goes far beyond Mahamud”.
“Mahamud” would be Fahima Mahamud, 50, owner of the Future Leaders Early Learning Center. Her daycare featured prominently in Shirley’s videos. She has pleaded guilty to $4.6m in fraud against the government by setting up a sham daycare as part of what the KVUE television channel characterized as Minnesota’s “massive daycare fraud scheme”.
Many other Minnesota fraud cases are pending, in sham daycares and other businesses that claim to be serving some public good. For instance, Jillaine Ann Mertens, 42, pleaded guilty to defrauding the government of more than $425,000 through three daycare centers that she owned.
Fraud and Immigrant Communities
During the COVID pandemic lockdowns especially, billions of dollars were released by the federal government and overseen by the bureaucracies of all 50 states. Some states were exceptionally lax in their oversight, and this lackadaisical till watching attracted organized fraud.
Two widely reported centers of fraud were Washington state and California. In Washington, the Employment Security Department paid out at least $650m in bogus claims, much of that to Nigerian scammers. In California, then-state Secretary of Labor Julie Su did such a poor job overseeing the disbursal of billions of dollars in relief funds during COVID that the US Senate ultimately did not confirm her for the same job at the federal level.
A non-trivial amount of the fraud had to do with members of immigrant populations. Bad actors within those communities set up schemes to take in government funds without providing the services that were supposed to go along with those funds.
In Minnesota, much of the fraud centered on immigrants from the country of Somalia. Somali immigrants form a significant part of the voting public in the Twin Cities of Minneapolis and St. Paul. Ilhan Omar, a progressive Democrat representing the state’s US House District 5, is the only Somali immigrant and one of only four Muslims serving in the current US Congress.
Somalis are an important part of the state’s Democratic-Farmer-Labor Party voter base. It has been alleged that many in state government worked to bury any scandals that could reflect negatively on the Somali community.
What the Investigators Found
Minnesota had a team in place to root out fraud, but a former leader in that department says the state purposefully undercut the investigators’ efforts.
Jay Swanson worked in the Office of the Inspector General for the Minnesota Department of Human Services between 2014 and 2019. His testimony before Congress on 20 May is what people mean when they call a pronouncement a bombshell.
“My team and I investigated child care centers that were defrauding the Child Care Assistance Program, also known as CCAP”, Swanson said in his prepared remarks: “In hindsight, it is clear to me that what our team saw was the early stages of a somewhat loosely organized criminal enterprise beginning to pillage Minnesota’s public benefit system.”
Investigations were based on tips that fraud may be taking place.
Incredibly, one day, Swanson’s office “received a call from a mother enrolled in the CCAP program, who reported that the owner of her children’s daycare center had stopped paying her the monthly cash kickback of $200 per month per child that they had agreed upon”.
A local fire department called asking if a daycare center was still open because the firefighters “had been attempting to conduct a fire safety inspection, but despite stopping multiple times, on various days of the week, at various times of the day, there was never any staff or children at the center”.
Swanson checked and found that the center “had been paid approximately $1m in CCAP funds in the past 12 months, and claimed to be caring for approximately 90 children at a time, during two shifts, from 6 a.m. to 10 p.m. seven days a week”.
Franchising Fraud
After two years of operation, Swanson’s team was “receiving so many leads on possible child care fraud that we simply couldn’t investigate all of them”. They had to investigate complaints only against those centers that were taking in at least $700,000 per year.
His team saw so many fake daycare centers proliferate using the same tactics that they did some digging and found that an “individual, of Eastern European descent ... had opened a child care consulting company”.
The consultant helped fraudulent daycares find the right locations, jump through all the licensing hoops and produce the necessary, fabricated evidence for the state “in exchange for a percentage of future profits”, Swanson said.
Yes, the man was literally franchising fraud, Swanson’s team found.
How Much Fraud? $100m? More?
Swanson said that he angered other elements in the department with his estimate that CCAP fraud amounted to $100m a year, or roughly 40% of the budget.
That was a career law enforcement officer’s estimate of the status quo before COVID funds washed even more money into the state. Much of it was promptly hoovered up by various scam outfits promising childcare, healthcare and other public goods.
Eventually, the Minnesota fraud department was bureaucratically kneecapped. Swanson quit in protest.
From the Minnesota legislature and the governor’s office came complaints that the fraud team was going hard on Somali and other immigrant daycare operators. They countered that it was all complaint driven. When people called in fraud concerns, they would go investigate, regardless of color, creed or national origin.
The state’s leadership has proved unwilling to listen to their own fraud inspectors or give much credence to a YouTuber’s documentation of empty daycare centers.
Still, there are likely more guilty verdicts ahead. Perhaps the state’s voters will hear and see things differently.
