Highly Paid Minnesota DHS Official Reassigned Over Welfare Fraud Scandal

Ham is a top DHS official who was the inspector general for the program, but she had incredibly cozy connections with the very childcare providers who were benefiting from the lack of oversight. 

via Minnesota Sun

Minnesota’s Department of Human Services (DHS), an $18.5 billion state agency that makes up a third of the state’s budget, and employs 7,300 people, is under continued scrutiny since the election of Democrat Governor Tim Walz. 

A few highlights include Walz’s first pick to head DHS, Tony Lourey, resigning after several months on the job. Walz still won’t explain what’s going on at DHS that made Lourey and other top officials resign, but it is likely that there’s an incredible rot in DHS leftover from the Mark Dayton administration, that Walz isn’t cleaning up—because Dayton is a fellow Democrat.

Childcare Assistance fraud

Another scandal is the massive fraud taking place in Minnesota’s Childcare Assistance Program (CCAP), a welfare program that provides low-income mothers with full or partial assistance in covering daycare bills. The program is federally-funded (it was first signed into law by George H.W. Bush), but states may choose to supplement, or top-up, the program to reach more persons. 

That’s why—as opposed to southern states who don’t supplement the program, and usually have long waiting lists of persons wishing to receive the program—Minnesota’s program is generously funded by state dollars, to the tune of about $250 million per year

The program also comes with high marriage penalties, because of the way a family’s income is calculated and other bureaucratic loopholes, and helps cover a cost that amounts to about $10,000 per year, per-child, for many Minnesotans.

The fraud in the CCAP amounted to anywhere from ten million to up to a hundred million a year, or almost half of the state’s cost of the program. The fraud involved daycares essentially billing for children who weren’t under their care, and splitting that money with the parents involved who were in on the scheme. Much of this fraud occurs in ethnic Somali daycares, and there were even allegations from experts on the matter that some of the state monies could be indirectly funding terror, simply because it was being sent back to Somalia. 

One Minnesota center, according to DHS documents, had its accounts frozen by the U.S. government because the operator was linked to a Taliban official.

Even today, the state of Minnesota has no idea how much money was stolen, or is currently being stolen. 

Carolyn Ham

The lack of details on the fraud is largely because the person who used to be in charge of investigating and overseeing the CCAP program, Carolyn Ham, was not doing her job. Ham is a top DHS official who was the inspector general for the program, but she had incredibly cozy connections with the very childcare providers who were benefiting from the lack of oversight. 

When the story broke about the fraud several years ago, Ham was “more interest in managing political ramifications of fraud than making sure fraud itself was investigated.” For example, before the Fox 9 story that initially covered the topic went public, Ham warned the Minnesota Minority Childcare Association (MMCA) that the story was about to be released. 

That’s a problem because the MMCA was involved with childcare providers implicated in the fraud. And Isaak Geedi, head of the MMCA, was himself allegedly sanctioned for fraud by DHS. State Rep. Mary Franson claims the MMCA operates like the mafia, after she a letter stating that a childcare outfit “would be in trouble” if it didn’t join the MMCA for $1,200 a month. Franson also says that the MMCA, because of its ties to DHS, would threaten to report centers outside of its membership circle for fraud. 

Carolyn Ham also met with MMCA and “Kids Count,” another lobby group, to discuss the investigation. “Her office is working with members of the Somali community and Somali child care providers, as well as with the Minnesota Minority Child Care Association, and Kids Count to address this issue and its consequences for political agendas,” said a memo from that meeting.

When the Office of Legislative Auditor (OLA) began to dig into the fraud, Ham’s office worked to stymie the OLA’s efforts.

The dysfunction is allowed to continue

For all these misdeeds, Ham received paid leave of around $50,000. She was reinstated, and 9 months after the OLA found “disarray” in her department, she has been transferred to a new position within DHS. Here, she will be overseeing a division that services seniors on Medicaid. At the new position, Ham will keep her $132,800 salary.

That has many state Republicans incensed. They are seeking to have the DHS inspector general office moved outside of DHS, so the DHS is no longer investigating itself. And the question remains: Why aren’t state Democrats commenting on this scandal, or willing to do anything about it? Will Democrats support moving the office of inspector general outside of DHS?

Ham is the reason we know so little about the fraud, but one reason why more fraudsters haven’t been brought to justice is that former Democrat Attorney General Lori Swanson, and current Democrat Attorney General Keith Ellison, have refused to do anything about it. During the state AG race, Ellison claimed that allegations of fraud amounted to racism.

Willis Krumholz
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Willis L. Krumholz is a fellow at Defense Priorities. He holds a JD and MBA degree from the University of St. Thomas, and works in the financial services industry. The views expressed are those of the author only. You can follow Willis on Twitter @WillKrumholz.