The Minnesota legislative auditor is launching an investigation into allegations that some child care providers are defrauding the state's publicly funded child-subsidy program with excess billings.
The auditor's office, an independent, nonpartisan arm of the Legislature, will explore the scope of the alleged fraud and the internal controls in the Minnesota Department of Human Services (DHS), which oversees the child-subsidy program.
"This is very serious," Legislative Auditor James Nobles said in an interview Friday. "The allegation is that the fraud is much bigger than previously thought, and that money … derived from the fraud is being used for international terrorism, which gets people's attention."
Nobles is responding to a television news report suggesting widespread fraud in the Child Care Assistance Program, or CCAP, which subsidizes the child-care expenses of nearly 30,000 low-income children per month.
The Fox 9 report alleged that Minnesota refugee families are taking suitcases full of cash on flights from the Minneapolis-St. Paul International Airport to Somalia and Middle Eastern nations where terrorist groups are active.
Nobles said his investigation will focus on the day-care fraud allegations — not whether public money wound up in the hands of terrorist groups, which he said falls within the jurisdiction of federal authorities.
Since the TV report appeared Sunday, Nobles said, several legislators contacted his office and asked him to investigate. He said the investigation could begin as early as next month and could take several months.
Acting Human Services Commissioner Chuck Johnson said the agency welcomed the review and would work closely with Nobles and his staff. Fraud in the CCAP is particularly egregious, "because in addition to exploitation of taxpayer funds, it harms the children and families the program is intended to help," he said in a written statement Friday.