Federal agencies have dispatched investigators to Minneapolis to examine allegations of fraud involving Somali-run daycare centers. This decision follows a viral video featuring independent journalist Nick Shirley, who claims these centers received substantial government funding while failing to provide proper care for children.
FBI Director Kash Patel stated that agents were already on the ground in Minnesota to dismantle what they believe to be extensive fraud schemes before Shirley’s video surfaced late last week. Patel highlighted a previous case where the FBI uncovered a $250 million fraud scheme that misappropriated federal food aid intended for vulnerable children during the pandemic. This investigation resulted in 78 indictments and 57 convictions. He remarked, “The FBI believes this is just the tip of a very large iceberg. We will continue to follow the money and protect children, and this investigation very much remains ongoing.”
The Department of Homeland Security is also involved, sending agents to inspect the suspected fraud sites in Minnesota. Federal prosecutors have indicated that the state has flagged 14 high-risk Medicaid programs, leading to the suspension of payments and a mandate for a third-party audit. First Assistant U.S. Attorney Joe Thompson reported that these programs have cost the government $18 billion since 2018, with indications that over half of this amount may be fraudulent.
“The fraud is not small. It isn’t isolated. The magnitude cannot be overstated,” Thompson stated during a recent press conference. “What we see in Minnesota is not a handful of bad actors committing crimes. It’s a staggering industrial-scale fraud. It’s swamping Minnesota and calling into question everything we know about our state.”
One of the latest defendants, Abdinajib Hassan Yussuf, aged 27, allegedly received $6 million in Medicaid funds based on fraudulent claims for a program designed to provide one-on-one therapy to children with autism. Yussuf is accused of paying kickbacks to parents within the Somali community to have their children misdiagnosed with autism spectrum disorder and enrolled in his program.
Additionally, two defendants linked to a Housing Stabilization Services fraud scheme traveled from Philadelphia to Minnesota, where they reportedly obtained $3.5 million in fraudulent Medicaid payments, motivated by claims that it was “easy money.”
In response to Shirley’s video, KARE TV in Minnesota reported that state officials, including Commissioner Tikki Brown of the Department of Children, Youth, and Families, have sent inspectors to verify the operations of the daycare centers featured in the footage. Brown noted that several of these centers are already under investigation, but previous inspections have not uncovered evidence of fraud. She confirmed that state inspectors visited each of the daycare facilities highlighted in the video within the last six months and found children present.
Commenting on the situation, Chris Edwards, a federal budget expert at the Cato Institute, expressed caution regarding Shirley’s allegations but acknowledged that Minnesota faces significant issues with fraud. “It’s huge,” he stated. “I mean, Minnesota is not a big state, and this is a lot of money for a fairly small state.” Edwards explained that fraud risks are heightened in federal aid programs because state administrators often lack incentives to manage taxpayer money prudently. The automated processing of claims, coupled with the sheer scale of federal programs, exacerbates the potential for abuse.
“There are too many government programs, and the federal funding model creates a perfect storm for this kind of trouble,” Edwards added. He suggested that allowing states to manage their own welfare programs would likely improve oversight, as state policymakers must balance budgets and monitor spending closely.
Edwards advocated for the federal government to extend the lessons learned from the ongoing Minnesota investigation to other states, seeking patterns of similar fraudulent activities.
As the investigation unfolds, authorities remain vigilant in their efforts to protect public funds and ensure that aid reaches those in genuine need. For further updates on this developing story, please contact Cory Smith at [email protected] or visit x.com/Cory_L_Smith.