Minnesota lawmakers highlight fraud schemes at hearing before House committee

Washington — The House Oversight Committee held a hearing Wednesday on a series of multimillion-dollar fraud schemes in Minnesota, with testimony from state lawmakers who alleged officials resisted efforts to address systemic financial impropriety.

"Minnesota social services, which are funded by you, the American taxpayer, are being ripped off," Rep. James Comer, a Kentucky Republican and chairman of the committee, said as he kicked off the hearing. "The breadth and depth of this fraud is breathtaking, and I fear that this is just the tip of the iceberg."

The panel heard from four witnesses: GOP state Reps. Kristin Robbins, Walter Hudson and Marion Rarick, along with Brendan Ballou, a former prosecutor for the Justice Department who is appearing as the Democrats' witness. 

Asked how fraud became so widespread in Minnesota, Hudson said that "when people recognized that the system wasn't working and they raised those concerns, those concerns were ignored and a culture suppressing raising those concerns was fostered by the Walz administration," referring to Democratic Gov. Tim Walz.

Republican officials have argued for years that Minnesota was slow to act in what federal prosecutors described as the "largest pandemic fraud in the United States." The issue saw a resurgence late last year, and it hasn't gone away. Republicans have cited the scandal to put pressure on Walz, who announced this week that he was ending his bid for a third term. 

In December, Republicans on the Oversight Committee launched an investigation into Walz's handling of the fraud cases. Comer has invited the Minnesota governor and Minnesota Attorney General Keith Ellison to testify before the committee next month, and has said the committee would subpoena them if they don't appear voluntarily. 

"Gov. Tim Walz, Attorney General Keith Ellison and Minnesota's Democrat leadership have either been asleep at the wheel or complicit in these crimes," the chairman said. "We must expose this theft of taxpayer dollars and hold everybody accountable who let it happen."

The fraud hearing

The three Republican state lawmakers testified about their concerns regarding the treatment of rampant fraud in Minnesota, while outlining the work they've undertaken in the state to bring it to light. 

Robbins said, as chair of a fraud prevention committee in the Minnesota House, she's been "working to uncover the massive fraud under Tim Walz, propose solutions and hold state agencies accountable." She alleged that Walz and his administration "have willfully turned a blind eye to crime in the face of countless whistleblower and auditor reports." 

"The time for accountability and justice is here," Robbins said. 

Robbins outlined that the committee has identified fraud in multiple Medicaid programs, including autism centers, sober homes, non-emergency medical transportation, integrated community supports and housing stabilization. And she said her committee held a hearing last month on "credible allegations of fraud in two new areas," pointing to adult day services and assisted living.

Robbins also testified that her committee has evidence that, as far back as 2012, money has been sent back to the al Qaeda affiliate al Shabaab. The Treasury Department said last month that it would investigate whether tax dollars from Minnesota's public assistance programs made their way to al Shabaab, which is based in Somalia.

Robbins claimed that there is "a network of people who have been politically supporting the Democrats, who have also been contributing to them, and who have been involved in multiple schemes."

Hudson argued that the "recent national conversation about fraud in Minnesota has been fraught with distractions, diverting from critical concerns regarding process, policy and oversight, to sideshow concerns about personalities and partisan politics." He said he hoped to provide a "clear picture of a culture which has developed over many years."

"The full scope of the problem is not just criminal fraud, but a culture of profiting from government programs in perpetuity," Hudson said. "Not as a safety net, but as an industry."

During questioning, Comer asked Hudson: "Why would Gov. Walz let $9 billion in fraud occur?"

"In my opinion, because it was politically beneficial to Democrats. Again, the Somali community is a huge constituency group, and we've had some tight races in Minnesota, and it makes a difference for them," Hudson said.

Rarick testified about whistleblowers who she said face a "constant fear of retaliation" that has "intensified under an avalanche of fraud in Minnesota." She alleged that the Walz administration "seriously retaliated against whistleblowers."


Ballou, the former DOJ prosecutor and the minority's witness, said he's fearful of "selective interest in fraud in America," saying "at the same time that these crimes are rightly being investigated by state and federal authorities, the larger infrastructure for prosecuting fraud and white-collar crime is being dismantled." 

Democrats on the committee acknowledged concerns about fraud, but underlined that the response should not punish communities unjustly, while pointing to what they said was hypocrisy from their GOP colleagues when it comes to taking fraud allegations seriously. 

Rep. Robert Garcia of California, the panel's top Democrat, acknowledged the dangers and prevalence of fraud in his opening statement, but said that "what we should not do is use fraud as an excuse to rip away aid from innocent people who follow the rules and need help in our society."

Garcia cited the administration's plans to halt billions of dollars in federal funding for social services programs in five states led by Democrats following allegations of fraud. 

"Republicans want to cut benefits and attack states with Democratic governors," Garcia said. "And when it's done — particularly in places like Minnesota — it has unleashed bigotry and hate."

What to know about Minnesota fraud

Federal law enforcement officials say a litany of social service programs in Minnesota were targeted by fraudsters, including child nutrition, autism services and housing stabilization programs, in what one prosecutor described as "industrial-scale fraud."

Some 92 people have faced federal charges so far, with 62 convicted.

The scandal began with allegations that people bilked nearly $250 million from a program that partnered with the Minnesota Department of Education and the U.S. Department of Agriculture to distribute meals to children during the pandemic. Dozens of people have been convicted or pleaded guilty to collecting reimbursements for meals that weren't actually served.

Prosecutors have also charged over a dozen people with submitting phony reimbursements to a now-defunct program that helped seniors and people with disabilities find housing — including two Pennsylvanians who allegedly traveled to Minnesota in what officials described as "fraud tourism." And a program that funds therapy for children with autism was allegedly hit with fraud.

And a conservative YouTuber alleged nearly a dozen day care centers in Minnesota that are receiving public funds are not actually providing any services. Some of the day care centers and state regulators have pushed back on those allegations.

Walz has faced criticism for his handling of the fraud schemes, with watchdog agencies and Republican lawmakers arguing the state government missed warning signs and moved too slowly to shut down fraudulent payments. 

The governor has long defended his handling of the crisis, arguing he has moved quickly to halt fraud and refer people for criminal prosecution.

Walz cited the fraud earlier this week in his decision to end his gubernatorial bid, acknowledging that in recent years, "an organized group of criminals have sought to take advantage of our state's generosity." He added that "even as we make progress in the fight against the fraudsters, we now see an organized group of political actors seeking to take advantage of the crisis."

President Trump has focused on the fact that most — but not all — of the fraud defendants are of Somali descent, drawing backlash from local officials like Walz, who called the president's comments "vile, racist lies and slander."