Another fraud industry uncovered in Minnesota, losses reach tens of millions of dollars

By Bob Unruh

George Floyd
George Floyd

Minnesota, which is famous now for its Somali childcare fraud industry, which experts suggest may have cost taxpayers up to $9 billion over recent years, now has another fraud industry, according to a new report.

It’s the handouts delivered by the state, with relatively no oversight, following the death in police custody of George Floyd, an event that triggered riots across the country that cost the economy more billions of dollars.

A report from Fox News cites information about an audit that concluded more than 100 contracts handed out to “community groups” as alternatives to law enforcement officers enforcing the law in 2020, and lax oversight, cost up to tens of millions of dollars.

The new Neighborhood Safety Contract Management Audit Report looked at spending from 2020-2025 and found Minneapolis was “not providing sufficient contract oversight” or managing contracts effectively.

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Five major violence-prevention programs were given more than $36 million, the report said.

Evidence shows, the report said, “Minneapolis’ weak contract controls created a heightened risk of fraud and improper payments. Auditors found contractors often submitted invoices with limited supporting documentation, while the city sometimes continued making payments despite missing records or unresolved concerns. The department is also said to have lacked a standardized process for conducting and documenting site visits to verify that contracted services were actually being performed.”

Outgoing Gov. Tim Walz now is trying to clean up his legacy, complaining that it should not be tarnished by attribution of blame for the massive fraud industry, even though he has admitted liability.

Bill Glahn, of the Center of the American Experiment, pointed out that the city committed up to $7.5 million to the plan for alternatives to law enforcement in 2022-2023, and another $13 million later.

Without any “substantive evidence demonstrating that the program was reducing violent crime.”

He also suggested the groups getting the money had revenue streams and staffing far below the size of the grants they got.

“The city seems primarily interested in shoveling money out the door to ‘address’ urgent problems,” Glahn added. “Little if any care is given to ensuring that the grant recipients are capable of or have a track record of doing the work, are actually doing the work contracted for, or whether that work is resulting in net benefit for city residents and taxpayers.”

The childcare fraud industry has exploded in recent years, and there have been dozens of indictments and convictions by now. One program, Feeding Our Future, has featured largely in the criminal cases.

Mark Koran, a state senator, said it was almost too simplistic, as corporations were set up to claim reimbursements for caring for and feeding children, without evidence.

“If they would have just gone to the facilities, you know, you hear of the thousands of people being served out of an apartment twice a day, all they would have to do is show up and look at it,” he said.

“There was a legislative auditor report that showed that 30 property owners where these businesses claim to operate out of, contacted the Department of Education who manage it, who managed that program, and they told them one, the businesses don’t exist in their facilities, so they don’t exist, period, and one of them I think was a city park,” he said.

“Call it what it is,” retired Navy intelligence officer Phillip C. Parrish posted on X. “This isn’t a tracking glitch. It’s the same business model that looted child-nutrition money, Medicaid housing, autism therapy, and daycare: stand up a moral emergency, pour cash through politically connected nonprofits, skip site visits and receipts, then scream ‘livelihoods’ when anyone asks where the money went.”

A city official told Fox it’s programs and spending were a source of pride.

“We’ve taken several steps since the audit report to improve our processes and contract oversight. We are in the business of helping people and improving lives – and that means improving how we do it. It’s that simple.”

Bob Unruh

Bob Unruh joined WND in 2006 after nearly three decades with the Associated Press, as well as several Upper Midwest newspapers, where he covered everything from legislative battles and sports to tornadoes and homicidal survivalists. He is currently a news editor for the WND News Center, and also a photographer whose scenic work has been used commercially. Read more of Bob Unruh's articles here.


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