A massive fraud scheme in Minnesota is staggering in its scale and brazenness.
Over the last five years fraud took root in Minnesota’s Somali immigrant population as scores of individuals made small fortunes by setting up companies that billed state agencies for millions of dollars’ worth of social services that were never provided.
According to the New York Times, “Minnesota’s fraud scandal stood out during the pandemic even in the context of rampant theft during the pandemic when Americans stole tens of billions through unemployment benefits, business loans and other forms of aid.”
Sixty-two people have been convicted so far, nearly all of Somali descent. Of those charged in the cases alleging fraud against meals, housing and autism programs, 85 of the 98 defendants are of Somali ancestry.
Since the 1990’s, when civil war broke out in Somalia, Minnesota welcomed Somali refugees. Today, the state’s Somali diaspora number over 80,000 with growing political power.
Nearly every Somali household with children (89 percent) receives some form of welfare.
“What we see in Minnesota is not a handful of bad actors committing crimes. It’s a staggering industrial-scale fraud,” Assistant U.S. Attorney Joe Thompson says.
“When I look at the claims data and the providers, I see more red flags than I see legitimate providers.”
Thompson, a non-partisan career prosecutor, estimates that with the latest evidence fraud losses could exceed $9 billion.
“No one was doing anything about the red flags,” one defendant’s attorney told The Times. “It was like someone was stealing money from the cookie jar and they kept refilling it.”
A nonprofit group called Feeding Our Future started it all with a scheme to set up a network of sham companies and sites that claimed to feed children in the pandemic. The scammers then submitted false invoices and fake attendance rosters to the state.
After state officials flagged suspect filings, Feeding Our Future cried racial discrimination and the money kept flowing, according to the federal indictment.
Individuals in the network laundered the money to buy luxury vehicles, residential and commercial real estate in Minnesota, real estate in Kenya and Turkey, and other extravagances. It now includes upwards of 75 defendants.
This summer, state officials shut down a fairly new program designed to help seniors and people with disabilities find housing after discovering “large-scale fraud.”
A month later, federal prosecutors charged eight people with defrauding the program, which was run through the state’s Medicaid service, by enrolling as providers and submitting millions in “fake and inflated bills.”
Another five people were charged with bilking the housing program in mid-December—including two Pennsylvanians with no connections to Minnesota who allegedly traveled there in what prosecutors describe as “fraud tourism.”
Costs for Minnesota’s Medicaid housing program, initially estimated at $2.6 million a year, ballooned to $104 million last year as it became a fund for grifters.
Recently, another scheme was discovered. Two people were charged with defrauding a third state program that provides services to children with autism. The defendants employed unqualified relatives as “behavior technicians” and submitted false claims to the state.
They recruited parents to enroll their non-autistic kids in their program by paying them kickbacks of up to $1,500 a month per child.
On Jan. 5, Minnesota Gov. Tim Walz abruptly dropped his bid for a third term amid outrage at the growing fraud scandal in which allegedly billions of taxpayer dollars were swindled on his watch.
The main problem here isn’t ethnicity or migration. It’s the incentives for fraud at the heart of the welfare state. All that free money with few guardrails is an invitation to theft.
Minnesota, “Land of 10,000 Lakes,” may have as many fraud schemes as lakes given the ease in which scammers tapped government funds.
The opinions expressed by contributors are their own and do not necessarily represent the views of Nevada News & Views.
