'Fraudsters billing DHS $800 thousand…': Whistleblower REVEALS shocking details of MN Somali fraud

Key Concepts

• CCAP (Child Care Assistance Program): A state-funded program providing financial assistance to low-income families for child care.
• Kickbacks: Illegal payments made by child care providers to parents in exchange for enrolling their children to inflate billing.
• Fraudulent Billing: The practice of submitting false claims to the Department of Human Services (DHS) for services not rendered or inflated hours.
• Minnesota Minority Child Care Association (MMCCA): An advocacy group that, according to testimony, actively lobbied to remove oversight and guardrails from CCAP.
• Feeding Our Future: A massive federal fraud scandal in Minnesota; the transcript notes that members of the MMCCA were later convicted in connection with this scheme.

1. Overview of CCAP Fraud

The testimony highlights a systemic exploitation of the Child Care Assistance Program (CCAP) in Hennepin County. By 2018, there were 320 child care centers in the county, a significant portion of which were identified as fraudulent.

• Red Flags: Centers often requested licenses for 7-day-a-week operations (16–18 hours daily), which is atypical for the industry.
• Financial Growth: Fraudulent centers showed rapid, illogical growth, often billing $800,000 in their first partial year and exceeding $1 million shortly thereafter, despite owners having no prior experience in child care.
• The Mechanism: Providers recruited mothers with multiple children, paying them kickbacks to secure their enrollment, which allowed the centers to bill the state for services that were either non-existent or inflated.

2. The Role of the Minnesota Minority Child Care Association (MMCCA)

The MMCCA acted as a lobbying entity that sought to dismantle regulatory oversight. Evidence from internal emails and meetings revealed their intent to:

• Limit Parent Mobility: They pushed for rules preventing parents from moving children between centers, explicitly stating that if parents were "locked in," providers would not have to pay as much in kickbacks, thereby increasing their profit margins.
• Increase Absent Days: They lobbied to increase allowable "absent days" for billing from 25 to 100, a known vector for fraud.
• Lower Burden of Proof: They opposed efforts by the DHS to lower the legal burden of proof for fraud investigations from "clear and convincing" to "preponderance of the evidence."

3. Key Interactions and Confrontations

The witness, Mr. Swenson, detailed two critical meetings with the MMCCA:

• Late 2016: The Deputy Inspector General met with the group. The association admitted that they wanted to restrict parent movement to reduce the "cost" of kickbacks. Swenson noted that the group was already under investigation for fraud at the time.
• April 2017: Swenson attended a meeting where the leader of the MMCCA attempted to intimidate him, demanding his personal cell phone number to dictate which competitors should be shut down. When Swenson refused to bypass standard, anonymous fraud-reporting protocols, the group walked out.

4. Notable Quotes

• On the motive for restricting parent movement: "If we make 50K a month but have to pay out 30K to mothers in kickbacks, we lose profits." (Attributed to MMCCA leadership during a meeting with DHS officials).
• On the lack of oversight: "If I would have been the commissioner, that would have been the last meeting DHS had with that association because they exposed who they were. They exposed the fact that they were criminals." (Mr. Swenson regarding the MMCCA).

5. Synthesis and Conclusion

The testimony suggests that the CCAP fraud was not merely a series of isolated incidents but a coordinated effort by bad actors to manipulate state policy. By lobbying to remove guardrails—such as limiting parent choice and increasing billing for absent days—the MMCCA sought to institutionalize their fraudulent business model. Mr. Swenson argues that had the DHS taken a firmer stance, ceased meetings with the group after their criminal intent was revealed, and implemented stricter oversight, the subsequent, larger-scale "Feeding Our Future" fraud might have been mitigated or prevented. The transition of these individuals from CCAP fraud to the Feeding Our Future scandal serves as evidence of a failure to address early warning signs within the state's regulatory framework.