Committee report: Executive Summary

Fraud Prevention and Agency Oversight Committee Final Report

Executive Summary

In January of 2025, the Minnesota House of Representatives created the first House Committee with a sole focus on oversight. The Fraud Prevention & State Agency Oversight Committee was formed in the wake of the Feeding our Future (FOF) COVID-era meal fraud scheme and increasing concern that the non-traditional portion of Minnesota’s Medicaid program (the so- called “waivered services”) was also riddled with fraud. At the time, leaders thought that FOF might exceed $200 million, and thought that this unprecedented level of fraud justified special focus by an Oversight Committee.

After two dozen hearings with dozens of witnesses, hundreds of whistleblower reports and reviewing hundreds of documents and reviewing years of Office of Legislative Auditor reports, it is clear that the breadth and depth of fraud in Minnesota is much worse thananyone thought possible, and stretches across multiple agencies in the Walz Administration. The Committee has concluded that:

Ellison’s office knew that large-scale fraud was likely occurring in the Child Care Assistance Program (CCAP), and by 2020 within the Minnesota Department of Education (MDE).

across more than a dozen Medicaid waiver programs, including EIDBI/Autism, Emergency Medical Transportation (EMT), Integrated Community Supports (ICS), sober homes, Adult Day Care, Assisting Living Services, and many others.

administration accountable, despite years of credible whistleblower and OLA reports and actual federal criminal indictments and convictions. Instead of addressing the problem directly early in 2019 in the wake of the OLA reports on CCAP fraud, he downplayed or ignored the evidence and closed the criminal investigation unit that was having the greatest impact. Over the 8 years he has been in office, he has sought to shift blame rather than take responsibility and solve problems. A prime example was during the height of the Feeding our Future (FOF) scam, when Governor Walz tried to blame a court order for his failure to stop payments to fraudsters, despite significant evidence of fraud. This tactic was repudiated by the judge.

action, the Walz Administration ignored, demoted, and retaliated against whistleblowers, sometimes accusing them of being racists.

place new controls when necessary, the Walz Administration allowed the fraud explode to unprecedented levels.

Minnesota taxpayers across multiple programs for years. The Walz Administration has been lax and permissive, allowing indicted fraudsters and their associates to continue stealing from Minnesotans in other programs.

fraud and up to $9 billion in Medicaid fraud. These numbers do not include potential hundreds of millions more in fraud in childcare and SNAP benefits.

Democrats Have Created a Culture of Fraud

In the inaugural Fraud Committee meeting, we stated, optimistically, that “fraud is not a partisan issue.” This is certainly how Minnesotans feel – they are fed up with billions of their hard-earned tax dollars being stolen by criminal and they want accountability.

But, unfortunately, the past two years of oversight hearings have demonstrated that the Walz Administration does not take fraud seriously. They have failed to use the tools at their disposal to combat fraud – basic due diligence that Minnesotans assumed were part of routine internal controls and program management.

The record uncovered through our hearings has demonstrated that Democrats in the Dayton and Walz Administration prioritized getting as much money out the door as possible, with little regard to protecting taxpayers or vulnerable citizens in need of services. As Gov. Walz’s recently- appointed Program Integrity Director, Judge Tim O’Malley stated in his report1 and in our hearing on March 9, 2026, they “prioritized compassion over compliance.”2

While most Democrats may theoretically oppose fraud, many in fact have come to accept fraud as a cost of doing business and are unwilling to spend the political capital necessary to stop the fraud.

More disturbing, our hearings also revealed that Democrats in the Dayton and Walz Administrations, as well as in the Minnesota House of Representatives, took steps to suppress findings of fraud. These issues will be discussed in detail in the report, but some examples include:

1 Tim O’Malley, Roadmap to Program Integrity and Fraud Prevention: Strengthening Minnesota’s Stewardship of Public Resources, Feb. 23, 2026. 2 YouTube video, House Fraud Prevention and State Agency Oversight Policy Committee 3/9/2026.

the supervisor of the Childcare Provider Criminal Investigation Unit regarding fraud to the Office of Legislative Auditor.

reduce the estimated amount of childcare fraud.

released a report3 about fraud in the Child Care Assistance Program (CCAP). Then-OLA Jim Nobles later wrote that former Speaker of the House Melissa Hortman told him “that House Committee Chairs had been instructed not to give OLA reports about fraud.”4

of the OLA reports, the Walz Administration closed down the criminal investigation unit examining childcare fraud at DHS. This complicit acceptance of fraud by the Democrat leaders allowed a culture of fraud to take root in Minnesota. Additionally, as has been widely reported, the vast majority of those indicted and convicted in the fraud schemes to date are from the Somali community. Of course, not all Somalis are involved in fraud, and we are always quick to point out that some of our best whistleblowers have come from the Somali community. Nevertheless, many of the fraudsters, who have demonstrated ties to Democrat politicians, came to believe that fraud was tolerated and paid in a big way. They saw friends and neighbors with political connections get rich by scamming Minnesota taxpayers, and very few have suffered significant consequences.

The Scale of the Fraud

Predictably, this culture of tolerance for fraud resulted in a staggering amount of fraud in Minnesota. Merrick Garland, President Joe Biden’s Attorney General, called Feeding our Future, the largest COVID fraud case in the country. Former Acting U.S. Attorney Joe Thompson estimated that the fraud in 14 high-risk Medicaid program exceeded $9 billion.To put that in perspective, that is enough to give every adult Minnesotans a check for $1,969. $9 billion would also buy an average-priced home for almost 26,000 Minnesotans.

And $9 billion in Medicaid fraud is just the tip of the iceberg. That figure doesn’t account for more than $250 million in Feeding Our Future fraud in the federal school nutrition program and doesn’t include fraud in other program areas, such as SNAP benefits, childcare and dozens of grant programs.

Another way to measure the fraud is criminal prosecutions. To date, federal prosecutors have charged more than 90 people with fraud-related crimes, with over 65 convicted or pleading guilty. They promise that there is much more to come.

3 Office of the Legislative Auditor, Child Care Assistance Program: Assessment of Fraud Allegations, March 13, 2019. 4 Jim Nobles, “Former Legislative Auditor: Is the Walz Administration Finally Awake About Fraud?,” Minnesota Star Tribune, Oct. 22, 2025.

However it is measured, it is clear that the scale of Minnesota’s fraud is both massive and unprecedented.

The Opportunity for Fraud

The breathtaking level of fraud demonstrates that the criminals have figured out how to efficiently fleece the taxpayers of Minnesota while those with oversight responsibility turned a blind eye.

We’ve learned that the “anatomy of fraud” contains many elements, but it starts with the reality that fraud is a crime of opportunity. While criminals defrauding public programs are clearly intent on scamming taxpayers, they are only able to do so if the conditions are right. This report will demonstrate that two Democrat Administrations:

The Walz Administrations Enabled Fraud by Poor Program Design and Weak Controls

Some of their faulty program management and design features include: o Creating too many new waivered services programs – Starting in 2020, the Walz Administration created several new Medicaid waivered service programs. They ignored the reality that when a new program is created, the regulatory and compliance structure are often undeveloped. In addition, new staff and service providers are both learning new program requirements. All of this uncertainty provides space for fraudsters. As this report will show, many of the programs that saw large amounts of fraud, such as Housing Stabilization Services, EIDBI or Autism Services, and Integrated Community Supports (ICS), were new - both in Minnesota and nationally.

o Low Barriers to Entry – When a program requires little more than an online form to become a provider, with no documentation, pre-approval site visits, capital investment, or infrastructure, fraud flourishes. Similarly, when a program consists primarily of consultative services or easily outsourced services, such as Peer Recovery Services, Housing Stabilization, Adult Companion Services, EIDBI/Autism, Personal Care Assistance, among others, the risk of fraud is also significantly increased.

o Attestation vs. Documentation – When agencies rely on attestation from providers and recipients instead of documentation for eligibility, fraud risk is higher.

o Programs Billed Based on Attestation of Attendance – Many programs, like NEMT, Child Care, meal programs, and EIDBI/Autism, are billed based on attestation of attendance. Because such records are easy to forge or backdate, programs that rely on attendance without electronic verification are magnets for fraudsters. When the Walz Administration realized its poor program design and controls had allowed fraud the flourish, it should have clamped down. Instead, it ignored OLA and whistleblower reports, obvious red flags, and failed to address oversight gaps or use existing tools/authority to combat fraud.

The Walz Administration’s failure to hold anyone accountable for fraud, especially after having had the benefit of the OLA reports in March and April of 2019, is what enabled fraud to grow from an estimated $5 - $100 million in the childcare program to billions across multiple Medicaid services.

The Anatomy of Fraud

The Committee identified the same basic pattern used by criminals across multiple programs:

barriers to entry.

simply an address in a coworking space, office building, apartment building, or personal home.

enrolling recipients in multiple programs (the Committee found these practices in NEMT, Interpretative Services, Sober Homes, Autism Services, Childcare, and others)

provision of service to your company to multiply the scale of the fraud

meals, transportation, and consulting.

technicians” to increase the amount of fraudulent billings and profit

saw this practice in the Autism, Adult Daycare, Childcare, and other programs.

the scheme or threatens them with exposure if they raise questions. We saw this with the Minnesota Minority Childcare Association and have had whistleblower reports of this same scam happening in Adult Day Services.

accusing them of being racist or Islamophobic, or threatening legal action.

Attorney General Ellison Has Failed to Protect Taxpayers and Vulnerable Minnesotans

The State’s Attorney General, who is supposed to regulate non-profits, prosecute Medicaid fraud and bring civil cases against other bad actors, instead took a meeting with fraudsters who were suing his client, the Minnesota Dept. of Education. In this meeting, which was recorded by the fraudsters, AG Ellison promised to work on their behalf against his own client, who he is supposed to represent.

General Ellison has been largely passive in addressing the rampant fraud in Minnesota, while accepting campaign contributions from some of them (returned only after public exposure, including by our Committee). Depending upon his political needs at any given time, General Ellison has either claimed to be deeply involved in helping prosecute the Feeding Our Future school nutrition fraud case or he has denied knowledge of the case.

General Ellison has also prosecuted relatively few Medicaid fraud cases, despite having original jurisdiction for Medicaid prosecutions and a federally-mandated Medicaid Fraud Control Unit within his office. As we have seen, childcare fraud morphed into Feeding our Future, which has further expanded into multiple vectors of Medicaid fraud – including Housing Stabilization Services (HSS), Integrated Community Supports (ICS), Non-Emergency Medical Transportation (NEMT), Interpretative Services, Adult Day Care, and many other Medicaid-funded programs, including the 14 program areas belatedly designed by Governor Walz as “high-risk” in October, 2025.

Representative Ilhan Omar Created the Conditions for Feeding our Future

The Committee also has uncovered evidence of Representative Ilhan Omar’s involvement in creating the conditions that led to Feeding our Future. It started with her introduction of the MEALS Act in March of 2020, which removed the guardrails in the federal school nutrition program and allowed restaurants to participate for the first time.

Rep. Omar then pushed the Trump Administration to extend the waiver rules throughout 2020 and the waivers remained in place throughout 2021, which undoubtedly helped the fraud expand.

The Committee Also Addressed Potential Election and Paid Family Leave Fraud

While most of the Committee’s work, and this report, focused on the massive fraud in childcare, Feeding Our Future, and Medicaid programs, it is important to recognize that we tackled other areas of fraud as well.

We held a hearing on election fraud5 which highlighted two cases of voter registration fraud in 2025. The Committee called Secretary of State Steve Simon to discuss his office’s response to this scheme, in which a state-funded non-profit paid independent contractors to register absentee voters. These contractors were convicted of election fraud when they submitted between 500 and 600 fake absentee ballot applications, which were sent to 13 different counties. These fake voter registrations were not caught by the Secretary of State’s Office but were, instead, caught by a diligent county election worker in Carver County.

While Secretary Simon assured the Committee that no actual voter fraud had occurred, his inability to tell the Committee which counties received the fraudulent registrations raised alarms, and the Committee is left with no confidence that affected counties were properly notified. Further concerns were raised when Secretary Simon admitted that the fake voter registrations were not deleted from the state’s voter registration system. His claim that they are now “inactive” voter files provided no comfort.

Secretary Simon’s staff also testified that non-citizens who are now eligible to receive driver’s licenses may, in fact, end up voting. While doing so would be a felony under current law, Secretary Simon’s staff admitted that some non-citizens may still, indeed, use their driver’s licenses to register to vote, or to cure a challenged ballot, and that their illegal ballot would end up being counted. These facts did not leave the Committee confident in the security of our voter roles or election system.

The Committee also held a hearing on the Paid Family and Medical Leave (PFML) program6, which was due to take effect on January 1, 2026. The hearing focused on the risk of fraud in the program given the broad and imprecise definitions in the program, and the reliance on attestation in accepting claims. The Committee is quite concerned that the PFML program may become Minnesota’s next vector of fraud if the Administration does not take this risk seriously and ensure that adequate controls are put in place.

Hope for the Future

While the Committee has uncovered significant fraud throughout Minnesota’s government, and a severe lack of accountability by the Walz Administration and the agencies which administer the programs, we remain optimistic for four reasons. First, we believe in the common-sense and good faith of everyday Minnesotans. We know that Minnesotans want honest, clean government, and will not stand for corruption. We trust that voters will hold those who either negligently or intentionally enable or allow fraud accountable.

Second, we are pleased that the Legislature has taken significant bipartisan action to address the staggering fraud the Walz Administration has ignored. In addition to the bipartisan creation of the Oversight Committee in 2025, we expanded whistleblower protections, strengthened internal controls, and provided the Administration with more tools to fight fraud. Thus far in 2026, we passed a bill to create an Independent Office of Inspector General (OIG) in the executive branch, with real law enforcement powers. This OIG will be an important tool in stopping fraud even if

5 YouTube video, House Fraud Prevention and State Agency Oversight Policy Committee 10/14/2026. 6 YouTube video, House Fraud Prevention and State Agency Oversight Policy Committee 11/19/2026.

the executive branch fails to do its job. We hope additional fraud prevention measures will still pass this session.

Third, we are encouraged by the work of federal investigators and prosecutors under both Democrat and Republican administrations. The professionalism and dedication of our federal partners has created real accountability for dozens of criminals, with more to come. These efforts are bringing long-delayed justice to criminals, providing a significant deterrent by increasing the risk and cost of defrauding public programs, and are helping to provide the accountability the public has long sought.

Finally, we note with gratitude the tireless efforts of the Office of Legislative Auditor, who has been sounding the alarm for more than a decade and whose detailed recommendations have, unfortunately, often fallen on deaf ears. Our gratitude also extends to the hundreds of brave whistleblowers who have reached out to share their stories. We want to particularly thank Faye Bernstein, Scott Stillman and Jay Swanson, who spoke out years ago at great personal and professional cost and yet bravely stepped forward again to share their stories and illuminate the depth of the fraud they have seen first-hand. We also owe a debt of gratitude to the many excellent local and national investigative journalists who have done dozens of in-depth stories and galvanized the public’s attention on these crimes.

We are also grateful for the efforts of our colleagues in the U.S. Congress, including Chairman James Comer and the House Oversight Committee, and Chairman Ted Cruz and the Senate Judiciary Subcommittee on Federal Courts, Oversight, Agency Action, and Federal Rights, as well as Senator Joni Ernst, Senator Ron Johnson and members of the Minnesota Congressional delegation, Tom Emmer, Pete Stauber, Michelle Fishbach and Brad Finstad. We are also grateful for the work of the Trump Administration to help us stop the fraud, including Vice President JD Vance, the Department of Justice, the Department of Treasury, the Centers for Medicare & Medicaid Services (CSM), and the Small Business Administration.

Finally, our report would not be complete without expressing tremendous thanks to Will Golding, our Majority Researcher. Without Will’s dogged research, excellent writing and meticulous attention to detail, this report would not have been produced. We also want to thank the entire partisan and non-partisan Committee staff, whose excellence, professionalism and hard work will leave a lasting impact on our beloved state.

Ultimately, we are hopeful that all branches and levels of government will continue to work together to create the fraud-free Minnesota that the hard-working Minnesota taxpayers and vulnerable citizens deserve. We owe them nothing less.