Gov. Tim Walz on Friday signed an executive order and proposed legislation to catch and stop the theft of public money from safety net programs – many intended to help children, low-income residents and the elderly – after numerous audits, prosecutions and investigations uncovered massive fraud schemes that have misappropriated hundreds of millions in taxpayer dollars.
Walz’s executive order creates a fraud investigation unit within the state’s Bureau of Criminal Apprehension. Fraud investigators from the Department of Commerce will move to the new BCA unit. The governor’s plan would also add nine staff members to Minnesota Attorney General Keith Ellison’s Medicaid fraud unit.
Walz is also proposing legislation to give state agencies greater authority to stop payment from going to those suspected of fraud. Also, he’s proposing agencies use artificial intelligence to detect patterns of fraud and flag them for state employees to investigate. (Lower tech methods like visiting food sites might have been just as effective during the so-called Feeding Our Future scandal, when some entities claimed to be serving thousands of children per day out of an apartment building and townhome, for instance.)
“These are not just financial crimes against the state and the taxpayers of Minnesota. These are crimes against children, and what we’ve seen in Minnesota is these crimes have basically targeted programs that either feed children or help children in need … It’s simply unacceptable,” Walz said at a Friday press conference.
The governor is proposing legislation to enact stiffer penalties for those convicted of fraud, including a new “theft of public funds” statute that increases criminal penalties by 20% compared to the existing theft law. Walz is also proposing making kickbacks a state crime, in an attempt to deter state employees from conspiring with bad actors for profit.
Walz’s fraud package comes about one month after FBI agents served search warrants at two autism providers. The feds in their search warrant alleged the autism providers massively overbilled for services they didn’t deliver.
The autism investigation is linked to the Feeding Our Future scandal, the $250 million theft of federal money intended to feed hungry children during the pandemic. Some of the autism centers were also part of the food aid program, and the FBI’s autism provider search warrant states that “at least a dozen of the defendants charged for their role in the Feeding Our Future scheme owned, received money from, or were associated with autism clinics.”
Walz said that Minnesota has a culture of helping those in need, which may have created more opportunities for fraud.
“I think it’s probably a culture of generosity. I think it’s a culture of being a little too trusting on this,” Walz said. “I don’t think those are bad character traits, but I don’t think they’re necessarily as effective in a time where we’re seeing fraud increase.”
The governor would need bipartisan support to pass any fraud legislation, as the Senate is tied 33-33 between Republicans and Democrats after Sen. Kari Dziedzic, DFL-Minneapolis, died from cancer on Dec. 27.
House Republicans also currently have a 67-66 majority, at least for now, after a judge ruled that a Democratic candidate was ineligible to hold the seat.
House speaker-designate Rep. Lisa Demuth, R-Cold Spring, called Walz’s proposal “smoke and mirrors.”
“We need real change to crack down on fraud, and that starts with a process that is truly independent of the leadership that allowed fraud to run rampant over the last five years,” Demuth said in a statement. “House Republicans will be unveiling a comprehensive fraud package that treats this as the serious problem it is, and includes meaningful accountability for fraudsters and agencies who have failed to protect Minnesotans tax dollars.”
Editor’s note: The Minnesota Reformer is an independent, nonprofit news organization dedicated to keeping Minnesotans informed and unearthing stories other outlets can’t or won’t tell.
Michelle Griffith wrote this story, which originally appeared in the Minnesota Reformer on Jan. 3. Griffith covers Minnesota politics and policy for the Reformer, with a focus on marginalized communities.
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