The former manager of a fraud investigations unit within the Minnesota Department of Human Services (DHS) delivered shocking testimony about his time investigating child care fraud for the state agency.
For years, fraud in Minnesota child care centers has been a major concern as the state has dealt with widespread fraud in government programs. On Tuesday, federal authorities raided several child care centers in the Twin Cities. The overwhelming majority of those arrested and convicted in Minnesota’s ongoing fraud saga are from the Somali community.
Speaking to a legislative committee on Tuesday, Jay Swanson said he was hired by DHS in 2014 to lead a unit charged with investigating fraud in the Child Care Assistance Program (CCAP). Swanson previously served as a Minnesota state trooper for over 30 years.
In his testimony, Swanson talked about some of the things he saw when he was with DHS. For example, Swanson said his unit once got a call from a mother who complained that she was not getting an agreed-upon kickback from the owner of a child care center.
Recalling another incident, Swanson said his unit got a call from a former owner of a child care center who said he had been “cheated out of his share of the fraud proceeds.”
The former state trooper also told the committee that a fire department called to say they had repeatedly tried to conduct a fire safety inspection at one child care center, but nobody was there. Swanson said that center received roughly $1 million in the 12 months prior.
“I wish I could tell you that these types of incidents were rare, but they weren’t,” Swanson said. “This is what our team dealt with on a weekly basis.”
Swanson said his unit would prioritize fraud tips based on the amount of money a center was receiving. During one investigation, Swanson said he saw a text conversation in which an owner of a child care center admitted to fraud and said he would buy homes in Kenya.
By early 2017, Swanson said DHS stopped payments to 11 child care centers where they could prove fraudulent activity occurred. He said the payment halts always resulted in the center closing “because the centers we investigated never had any private-paying clients, only publicly-funded CCAP clients.”
Additionally, Swanson said he regularly joined authorities when they interviewed people associated with child care centers under investigation. According to Swanson, some owners and employees said they first heard about child care scams in a refugee camp in Kenya.
“These individuals told us that they had heard you could run the scam in a number of different states, but it was easiest, and you could make the most money doing it, in Minnesota,” Swanson said.
Swanson says DHS harassed his team
In 2018, the Office of the Legislative Auditor (OLA) began looking into a claim that fraud within CCAP had grown to $100 million annually. The OLA produced a report about CCAP fraud in March of 2019.
While the OLA said it did not find evidence to substantiate the claim of $100 million in fraud, the OLA said it believed “the level of CCAP fraud is more than the $5 to $6 million that prosecutors have been able to prove, but we cannot offer a reliable estimate of how much fraud exists in the program.”
During his Tuesday testimony, Swanson said he prepared written statements for the OLA in August of 2018 about CCAP fraud trends he had seen. However, he said a DHS official told him to submit those statements to DHS directly rather than the OLA.
“When I forwarded my answer regarding what fraud trends we had been seeing in CCAP, as I had been directed, I soon had a senior DHS official in my office — angry, red-faced, and almost yelling,” Swanson said.
Swanson said the DHS official instructed him to delete several paragraphs, but Swanson told the official that what was being asked was against the law.
“A few days later, the same official told me, ‘I just came from the commissioner’s office, and they’re sending your document to the OLA. You better be ready for the [expletive] storm that’s coming your way,” Swanson told the committee.
The former state trooper said his unit was “harassed and bullied” by DHS officials in the months that followed. According to Swanson, that conduct included an attempt to discredit him, placing false information on a supervisor’s performance review, and his unit being berated as incompetent by a senior DHS official.
Swanson said he resigned from his position in 2019 after he and a supervisor were stripped of the authority to decide what child care centers to investigate. Swanson did not provide names of the DHS officials he referenced in his testimony.
Since Swanson’s departure from DHS, CCAP has been moved outside the purview of DHS and is now run by the Minnesota Department of Children, Youth, and Families (DCYF).
At Tuesday’s hearing, DCYF Commissioner Tikki Brown told the committee that “numerous changes” have been made to protect CCAP from fraud since 2019. She told lawmakers she had not heard Swanson’s testimony prior to Tuesday’s hearing.
Additionally, the DCYF commissioner said she was “not certain” if individuals referenced by Swanson were still employed in state government as she had not seen a list of employees that worked with Swanson.
Alpha News contacted DHS for this story late Tuesday afternoon. However, an agency spokesperson said, “It’s unlikely I will have a response for you today.”
Luke Sprinkel
Luke Sprinkel previously worked as a Legislative Assistant at the Minnesota House of Representatives. He grew up as a Missionary Kid (MK) living in England, Thailand, Tanzania, and the Middle East. Luke graduated from Regent University in 2018.
