UPDATE: The Minnesota Senate has called for an emergency hearing tomorrow on the MASSIVE daycare fraud scheme in the Somali community, exposed by a Fox 9 investigation, that is costing Minnesota taxpayers over $100 million a year and may be funding ISIS terrorists in Somalia. Governor Dayton says he is aware of the problem and has hired more staffers:
"It is really disgraceful, so I appreciate the report and very important visibility. It's something we have been aware of and working against, but there is a lot more that needs to be done," Dayton said.
State lawmakers have scheduled an oversight hearing Tuesday with the Health and Human Resources Reform Committee to discuss what the Fox 9 investigation revealed. They have asked the Attorney General, the DHS Inspector General and members of the Dayton administration to come testify.
EARLIER: Wow, Minnesota, I hope you're sitting down for this one. Millions of dollars in carry-on cash in suitcases fly out of the Minneapolis airport every week. But, why? Daycare fraud. Daycare fraud is costing Minnesota taxpayers as much as $100 million a year. According to public records and government sources, most Minnesota daycare fraud is perpetrated by Somali immigrants.
How does it work? Where does the money go? The story begins at Minneapolis-St. Paul International Airport (MSP), where mysterious suitcases filled with cash have become a common carry-on. On the morning of March 15, a man took a carry-on bag through security that was packed with $1 million in cash. Travelers can do that, as long as they fill out the proper government forms. This happens almost weekly at MSP. The money is usually headed to North Africa, the Middle East, Dubai and points beyond. In 2015, investigators documented $14 million in carry on cash. By 2016, it had mushroomed to $84 million. Then last year, $100 million. So, last year alone, more than $100 million in cash left MSP in carry-on luggage. The same thing is happening in other cities, like Seattle.
The money is sent via "Hawalas." Hawalas are businesses used to courier money to countries that have no official banking system. Some immigrant communities rely on Hawalas to send funds back to their home countries. However, investigators discovered some of the money was being funneled to Hawalas in the region of Somalia that is controlled by the al Shabaab terrorist group. When the money arrives in Somalia, whether it's intended for legitimate purposes or not, al Shabaab terrorists demand a cut. Tens of thousands of dollars’ worth of remittance payments are from immigrants who are on US government assistance. How could they possibly come up with such big bucks to transfer back home to Somalia?
It’s welfare fraud through daycares. To better understand the connection between daycare fraud and the surge in carry-on cash, you have to look at the history of this crime. Daycare fraud is on the rise in Minnesota. Daycare businesses are gaming the system to steal millions in government subsidies meant to help low-income families with their childcare expenses. In order for the scheme to work, the daycare centers need to sign up low income families that qualify for child care assistance funding. Parents check their kids into a fake daycare center, only to leave with them a few minutes later. Sometimes, no children would show up. Either way, the center would bill the state for a full day of childcare.
Then the daycare give kickback payments to parents who are in on the fraud. Fozia Ali, while she was being sworn in as a member of the city of Hopkins Park Board, was also under investigation for daycare fraud, wire fraud and theft of public money. Hopkins??
State and federal agents had already raided Ali’s daycare center in south Minneapolis. The business was suspected of billing the government for more than a million dollars’ worth of bogus childcare services.
“We found records that she was collecting a significant amount of money for a much larger number of children than were actually attending the center. We are aware that some of the funds went overseas, what she was cashing out, money from the business."
Investigators analyzed Ali's cell phone to track her activities. She took a two-month trip from Minnesota to Dubai and then Kenya, staying at times in $800 a night hotel rooms. She used an app on her phone to bill the state of Minnesota for childcare services while she was out of the country. Ali pled guilty to the daycare fraud and in March started serving time in a federal prison.
"We believe that there's a scope of fraud out there that we really need to get our arms around and ensure that those dollars are going to kids that really need them. There are 10 daycares currently under active investigation for fraud and dozens more are considered suspicious."
According to public records and government sources, most are owned by Somali immigrants. When asked if the Department of Human Services has any evidence to suggest this looks like organized crime, HHS responded, "There's a common pattern in how a lot of these are carried out, but beyond that, not something that I would directly categorize as organized crime."
Sources in the Somali community say it is an open secret that starting a daycare center in Minnesota is a license to print money. The fraud is so widespread they said, that people buy shares of daycare businesses to get a cut of the huge public subsidies that are pouring in. This crime is spreading. Fraudsters in other states are now using the Minnesota playbook to rip off millions of public dollars meant to help kids.
Reminder. This is just one fraud scheme. Daycare fraud. What about all the other Government assistance fraud schemes going on? Imagine the dollars.
http://www.fox9.com/news/investigators/senate-calls-for-hearing-after-fox-9-daycare-fraud-investigation
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