Chris Edwards
We are seeing a remarkable cascade of fraud scandals in Minnesota. Program after program has been hit with taxpayer losses from organized scams in recent years.
In the Feeding Our Future scam, 78 individuals have been indicted and 57 convicted of various fraud-related crimes against US Department of Agriculture food programs. Taxpayer losses from these thefts in Minnesota total $250 million or more.
Meanwhile, in the sprawling Medicaid program, prosecutors allege that “half or more of the roughly $18 billion in Medicaid funds, which supported 14 Minnesota-run programs since 2018 may have been stolen due to fraud.”
And in the Minnesota childcare industry, new fraud allegations come after more than a decade of reports on financial malfeasance in the state’s subsidized childcare facilities.
Let’s look at these fraud scandals in more detail.
Feeding Our Future (FOF)
- FOF was a Minnesota nonprofit that claimed to be distributing federal aid for food programs but was actually a scam outfit that stole $250 million of taxpayer money. Dozens of people have been convicted of crimes related to the theft of public funds.
- FOF employees recruited people to open more than 250 supposed food distribution sites across the state and created paperwork to falsely claim 91 million meals served to children. The US Department of Agriculture funds food subsidy programs, but they are administered by the states and nonprofit groups.
- Before spearheading their scam, FOF leader Aimee Bock had worked in daycare and education, while co-conspirator Salim Said had owned a restaurant. Both were convicted in 2025.
- The 78th person charged in the scam, Abdirashid Bixi Dool, received $1.1 million in subsidies in 2021 and 2022 for supposedly feeding 40,000 meals to children each week, but he allegedly pocketed nearly all the cash.
- An audit criticized the state’s hesitancy to act on fraud warnings about FOF, which had ties to state politicians and had filed a lawsuit against the state alleging racial discrimination. The New York Times explores how Minnesota’s welfare program ripoffs spread through members of the Somali community.
Early Intensive Developmental and Behavioral Intervention (EIDBI)
- EIDBI is a Medicaid-funded program providing services to people with autism. The federal government pays 64 percent of the cost of Medicaid in Minnesota.
- Fraudsters created fake autism treatment firms and approached parents to recruit their children into the programs. They helped children get falsely diagnosed and then paid the parents a kickback for enrolling the kids.
- The US Department of Justice (DOJ) has charged individuals for billing Medicaid millions of dollars for inflated bills and services not provided in EIDBI.
- There are connections between the various scandals. One individual, Asha Farhan Hassan, has pled guilty “for her role in a $14 million autism fraud scheme … [and] with participating in the Feeding Our Future fraud scheme, for which she received $465,000.”
Housing Stabilization Services (HSS)
- HSS was a Medicaid-funded benefit that was supposed to help people with disabilities, mental illnesses, and substance abuse problems find housing. The program did not pay for housing but rather for consultants to supposedly find housing.
- The DOJ noted that the HSS program had “low barriers to entry and minimal records requirements for reimbursement that combined to make the program susceptible to fraud.”
- Minnesota launched the program in 2020, estimating that it would cost $2.6 million annually. The actual costs ballooned to $21 million in 2021, $42 million in 2022, $74 million in 2023, $104 million in 2024, and were on track to hit $122 million in 2025.
- In one scam, two Philadelphia residents heard about theft opportunities in Minnesota and registered as HSS providers in the state. They allegedly tried to loot $3.5 million from the program by finding low-income individuals whose names they could use and creating fake documentation for services supposedly provided.
- The HSS scam spread so widely in Minnesota that there were specialist firms helping fraudsters recruit clients and fabricate required paperwork.
- On account of it being overrun with fraud, Minnesota closed the HSS program in October, although the state plans to redesign and relaunch it.
Integrated Community Supports (ICS)
- ICS is a Medicaid-funded program in Minnesota launched in 2021 that is supposed to fill a service gap for people between assisted living facilities and living independently at home.
- Minnesota’s annual ICS spending grew explosively from $4.6 million in 2021 to $170 million in 2024.
- Fraudsters have apparently been billing the government millions of dollars for individuals not aided and services not provided, although there have been no federal charges yet.
Childcare Subsidies
- YouTuber Nick Shirley recently captured millions of views with his on-the-street video of alleged fraud in Minnesota’s subsidized childcare facilities. Most of the funding for the facilities comes from federal taxpayers.
- The US Department of Health and Human Services provides two main childcare grants to the states. The Child Care Entitlement cost $3.5 billion in 2025, and the Child Care and Development Block Grant (CCDBG) cost $9.6 billion. Pandemic-related legislation had inflated spending on the latter to more than $20 billion a year in 2022 and 2023.
- Minnesota’s Child Care Assistance Program receives funding from these federal programs and other sources. The states are required to write lengthy bureaucratic plans for how they will spend the federal money. Minnesota’s plan is 275 pages long with a 15-page appendix. Federal regulations pile on more bureaucracy, such as these 2024 rule changes for the childcare programs.
- The two federal childcare programs were launched in the 1990s. One advocacy group noted that the CCDBG was “popular on both sides of the aisle and given a record funding infusion in 2018 with bipartisan support from Congress and President Donald Trump.”
- We will see how the new fraud allegations pan out, but local news in Minnesota has been reporting on malfeasance in the subsidized childcare industry for more than a decade. CBS News summarizes some of the history here.
- In 2019, Minnesota auditors were finding millions of dollars of fraud in childcare programs, and in 2018, local Fox News reporters found that millions of dollars of cash stolen from welfare programs were apparently being flown out of the Minneapolis-St. Paul airport.
- A 2016 federal auditor’s report found that childcare subsidies are “susceptible to significant improper payments.” The report included a self-reported payment error rate of 19 percent in Minnesota’s childcare programs.
- Some of Minnesota’s childcare facilities currently in the news received payments from Feeding Our Future.
- The Trump administration is freezing child care aid for all states until administrators provide additional verification data for the services provided.
Minnesota Governor Tim Walz was slow to respond to evidence of widespread fraud in state programs, but he has now called for audits of 14 Medicaid programs that are high-risk “based on programmatic vulnerabilities, evidence of fraudulent activity, or data analytics that revealed potentially suspicious patterns, claim anomalies, or outliers.”
What do all the Minnesota programs in the news have in common? They are all mainly funded by the federal government and administered by the state. That is the same formula for waste we see in the current welfare scandal in Mississippi.
Cato scholars have long called for cutting federal aid-to-state programs because they are chronically wasteful. We have examined failures in Medicaid, school lunches, food stamps, and many other programs.
This Cato study discusses the many inefficiencies of aid-to-state programs. It argues that if the states funded their own programs, they would be leaner, less bureaucratic, and better tailored to local conditions.
The Minnesota scandals highlight the financial vulnerabilities of aid-to-state programs. The federal government should demand more verifications and auditing of these programs in all states. At the same time, Congress should begin downsizing federal aid for housing, childcare, health care, and other activities that the states should fund by themselves.