Walz Admin Actually Ordered Fraud Unit to Stand Down Early in His Term, Whistleblowers Say

Whistleblowers have accused Minnesota Gov. Tim Walz’s administration of squashing criminal fraud investigations as far back as 2019, according to a Republican state representative who oversees fraud prevention in state programs.

Rep. Kristin Robbins, a Republican and chair of the Minnesota House’s fraud committee, told The Daily Signal that four whistleblowers inside the Department of Human Services’ Office of Inspector General revealed they were ordered to stop investigations after revelations of systemic fraud in the state’s Child Care Assistance Program.

The Office of the Legislative Auditor published the revelations in an April 2019 report, citing an Aug. 2018 email by Jay Swanson, manager of the Recipient and Child Care Provider Investigations Unit, that claimed large-scale fraud schemes in child care assistance.

“It was after that that his unit was told they can no longer do criminal investigations,” Robbins, who testified in Congress about the fraud on Wednesday, told The Daily Signal in a phone call Friday. “In the summer of 2019 they were told, ‘You can’t do search warrants, you can’t do criminal investigations anymore’.”

That order to stop investigations “and switching only to investigating ‘overbilling’ and not fraud shows that they were willfully turning a blind eye to actual criminal fraud,” she argued.

So far, nearly 100 people have been charged with welfare fraud in multiple state scandals. One federal prosecutor has estimated the amount of welfare fraud in the state to have topped $9 billion.

Systemic Fraud Uncovered in 2019

According to Swanson, the state human services department created the Child Care Provider Investigations Unit in 2014, staffing it with four investigators and one manager, as well as two special agents from the Minnesota Bureau of Criminal Apprehension, which refers cases to law enforcement.

Swanson’s email alleging the fraud notes that his unit found “providers using a similar scheme to successfully steal large sums of taxpayer money from this program.”

While he acknowledges that most responsibility for the fraud “rests with sophisticated criminals,” he nonetheless warns that “an equal amount of responsibility rests with the lack of internal controls involving statutes, CCAP policies, and rules that dictate how this program operates.”

Swanson cites records showing some program recipients transferred money to the Middle East or Africa, and that federal officials warned—as far back as 2015—that some fraud proceeds end up funding foreign terrorist organizations.

He describes a complex system of fraud, where providers engage in “large scale overbilling,” where mothers are pressured to register many children for child care, and where children at child care centers do not eat if their mothers do not work at the same center.

“Investigators have repeatedly heard stories of mothers with 8 or 10 children who have gotten into ‘bidding wars’ with various providers wishing to register those children at their center because of the CCAP billing they would generate,” Swanson writes.

The overall report also identifies many weaknesses in the way the Office of Inspector General sought to monitor fraud in the child care program.

When the legislative auditor “sought to collect basic information about the work of the CCAP Unit,” staff “were unable to easily provide us with information about the number of complaints and fraud case referrals to DHS, or the source, timing, or status of the case referrals.”

The Inspector General administrators also wrote that Swanson’s unit “did not have policies or a formal intake process for screening and prioritizing tips or referrals, such as identifying duplicate cases or cases involving the same providers in multiple counties.”

As of August 2018, the investigation unit “did not have a case management system for tracking pending or closed referrals and the status of ongoing investigations.”

Whistleblower Claims

According to whistleblowers, after Swanson’s email was made public, administration staff created a wedge between Swanson’s unit and the Bureau of Criminal Apprehension, Robbins said.

Administration staff told BCA special agents in Swanson’s unit that “they could no longer communicate with the BCA without prior approval from their supervisor.”

“This is not just one whistleblower,” Robbins added. “I’ve talked to four investigators in this unit now and they all say the same thing.”

A spokesperson with the state’s Department of Public Safety told The Daily Signal on Friday that the state separated the criminal apprehension agents from the human services investigators because of concerns about “the blending of civil and criminal investigations.”

The spokesperson explained that “certain information can be involved in a civil case that would not be available to a criminal investigation without a legal process to obtain the information,” and thus any crossover between the two could pose challenges to criminal prosecutions.

Thus, human services investigators “were provided with instructions on how and when they were to communicate directly” with criminal apprehension agents on cases, and BCA supervisors now meet with the human services department “to ensure ongoing dialogue on cases,” the spokesperson noted.

While Robbins noted that many Minnesota Democrats voted to create tools to investigate fraud, she faulted the Democratic Farmer-Labor Party for failing to hold Walz’s administration accountable for the fraud.

“Not a single Democrat has still ever called him out for this,” she said. “I think they’re all culpable.”

The Daily Signal reached out to Walz’s office, to the state Department of Human Services, and to the state Bureau of Criminal Apprehension for comment. None of them responded by publication time.

This article originally appeared at The Daily Signal.