A former investigator with the Minnesota Department of Human Services (DHS), Jay Swanson, has alleged that the state unlawfully attempted to end an investigation into child care fraud back in 2017.
During a hearing with the Minnesota House Anti-Fraud Committee, Swanson recounted an incident from 2018 where he was instructed by a senior official to remove specific information regarding misconduct from a report related to the state’s Child Care Assistance Program (CCAP). “In August 2018, while responding to inquiries from the Office of the Legislative Auditor (OLA), DHS directed me to submit my replies to them instead of sending them directly to OLA,” he stated.
Swanson’s testimony detailed how, after submitting his response on observed fraud trends in CCAP, a senior DHS staff member reacted angrily to his findings and demanded the removal of certain paragraphs from the document. Swanson recounted advising officials that such actions were illegal, as state law mandates cooperation with the OLA. Just days later, he was warned by the same official about “the white storm” coming as a result of his disclosures.
He also claimed that DHS employees harassed him and his team, and revealed that a consultant was paid $90,000 to label their fraud findings as fabricated. This hearing coincided with a massive FBI raid that targeted over 20 child care facilities in Minneapolis as part of a federal fraud investigation, including Quality Learning Center, which gained notoriety through a video showing it empty.
Swanson further described his team’s direct exposure to instances of fraud, stating that they maintained frequent contact with those engaged in the fraudulent activities. “In early 2017, we were shocked by how some DHS leaders responded when we reported misconduct,” he expressed. Looking back, he believes they witnessed the beginnings of a loosely organized criminal entity exploiting Minnesota’s public benefits system.
Swanson expressed concern that some of the DHS officials involved in the harassment of his team continue to remain employed there. When asked by committee chair Kristin Robbins to reveal more about these officials, he refrained, referencing the ongoing investigation but noted he had disclosed their names to the OLA.
His testimony painted a troubling picture, suggesting Minnesota has become a prime target for fraud. Many suspected fraudsters, he noted, claimed to have heard about the state’s lenient regulations from refugee camps in other countries. A typical line of conversation included statements about their intentions to run the fraud ring until they could afford luxurious homes abroad.
This issue of child care fraud has allegedly persisted in Minnesota since 2009. Recently, federal officials have intensified scrutiny, with President Donald Trump labeling fraud an “epidemic” and calling for action against it, while also criticizing Minnesota’s Democratic leadership for insufficient oversight—an accusation the state’s governor, Tim Walz, has denied. Walz even supported the FBI’s ongoing investigation, although he had previously filed a lawsuit against the Trump administration for freezing federal funds directed to the state.
In response to the ongoing concerns, Walz asserted that the recent law enforcement actions indicate that state agencies are doing their job to report fraudulent behaviors. However, Trump administration officials raised doubts about Walz’s cooperation claims, claiming that under his leadership, investigations were stifled.
In closing, these revelations have certainly raised eyebrows regarding the integrity of the child care assistance program in Minnesota and the actions of its overseeing officials.
