A former investigator for Minnesota’s Department of Human Services alleged that the state’s government illegally tried to shut down his investigation into childcare fraud in 2017.
Jay Swanson, a former investigator in the Office of Inspector General for Minnesota’s Department of Human Services, described in detail a 2018 incident in which a senior official allegedly instructed him to delete paragraphs from a report on fraud in the state’s Child Care Assistance Program (CCAP).
“In August of 2018, as I was preparing answers to questions posed to me by the OLA [Office of the Legislative Auditor] in an email, I was told by a DHS [Department of Human Services] official to submit my answers to them instead of sending them directly to the OLA,” Swanson, who previously served as a Minnesota State Trooper, said Tuesday during a Minnesota House Fraud Prevention Committee hearing.
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“When I forwarded my answer regarding what fraud trends we’re seeing at CCAP, as I had been directed, I soon had a senior DHS [Department of Human Services] official in my office, angry, red-faced and almost yelling. The senior DHS [Department of Human Services] official told me to delete a number of paragraphs of the document that I had sent,” Swanson testified.
“I then advised the official that I believed what they were telling me to do was illegal. I advised them that Minnesota law requires state employees to cooperate with the OLA and to turn over information as requested. 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 blank storm that’s coming your way,'” Swanson said.
Swanson described an alleged campaign of harassment by state Department of Human Services officials against him and his staff. He testified that a consultant was paid $90,000 to label his assessments of fraud as made up.
Swanson’s testimony Tuesday was heard the same day the FBI raided more than 20 Minneapolis childcare facilities as part of a sweeping federal fraud investigation.
Included in the raid was the Quality Learning Center, a daycare made infamous by video blogger Nick Shirley’s December video showing the sign out front misspelled as “Quality Learing Center” and the facility empty.
According to Swanson’s testimony, that business shared an address with Salama Childcare Center, the owner of which was indicted for theft and fraud in 2017. Swanson said he led that investigation resulting in that indictment.
Swanson testified that he and his team “had a front row seat to watch the fraud happening, and we had regular contact with those committing the fraud.”
“Beginning in 2017, we became dismayed and shocked by the response of some senior DHS [Department of Human Services] officials to whom we reported the fraud to. As I look back with the benefit of 20/20 hindsight, I realize that what our team saw was the early stages of a somewhat loosely organized criminal enterprise beginning to pillage Minnesota’s public benefits system,” he told the committee hearing.
Swanson alleged that “a few of the senior level DHS [Department of Human Services] officials who harassed and abused our unit for committing the sin of trying to expose a huge amount of fraud in the CCAP program are still working in DHS [Department of Human Services] today.”
When pressed by state Rep. Kristin Robbins, the committee chair, to provide the names, Swanson declined, citing an ongoing investigation. He did, however, say that he had provided the names to the OLA.
Fox News Digital contacted the OLA for additional information.
Further revelations from Swanson included the disclosure that Minnesota was allegedly known far and wide to would-be scammers as a hotspot ripe for exploitation.
“More than once I heard an owner or employee respond when we asked for the first learned about the daycare scam, he would say they had first heard about it while in the refugee camp in Kenya,” Swanson testified.
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“These individuals told us that they heard that you could run a scam in a number of different states. But it was easiest, and you could make the most money, doing it in Minnesota,” Swanson added.
“I was shown a text conversation between the owner of the center and a friend,” Swanson testified. “The friend had asked the owner ‘how much longer are you going to do the daycare scam?’ The owner replied, ‘another year or two, I want to buy some nice homes in Nairobi. The owner was on public assistance at this time. They happened to be on vacation in Dubai when this text conversation took place.”
Childcare fraud has been a pervasive issue in Minnesota dating back to 2009, Swanson testified.
In recent months, the federal government has homed in on the issue. In a March executive order, President Donald Trump called the fraud cases an “epidemic” and vowed to take action.
Trump’s executive order also claimed that Minnesota’s Democratic leadership has offered “non-existent oversight” on the issue, a claim the state’s Democratic Gov. Tim Walz has denied.
Despite initially suing the Trump administration for freezing federal funding for Minnesota, Walz publicly celebrated Tuesday’s FBI raids.
“Today’s raids by state and federal law enforcement happened because our state agencies caught irregular behavior and reported it. That’s how the system is supposed to work, and our agencies will keep at it as long as there are fraudsters around to put behind bars,” Walz said in a Tuesday post on X.
Members of the Trump administration questioned Walz’s claims of cooperation.
“Come again? This FBI and DOJ with our DHS [U.S. Department of Homeland Security] partners drafted and executed every search warrant today. But go ahead and take credit for our work while we smoke out the fraud plaguing Minnesota under your governorship,” FBI Director Kash Patel wrote in a Tuesday post on X.
Minnesotan leaders also cast doubt on Walz’s tough-on-fraud claims.
“After the OLA reports came out, the new Walz administration took a look at that. And rather than accelerating the criminal investigations, they closed the criminal investigation unit. That allowed the fraud to continue,” Robbins told Fox News Digital.
“And there was no criminal deterrent anymore. The people got sanctioned for overpayment. And then they just kept billing the state. So the Walz administration enabled the fraud to flourish by stopping the criminal investigations,” Robbins concluded.
Fox News Digital contacted Walz, the U.S. Department of Homeland Security, the U.S. Department of Justice and Vice President JD Vance’s anti-fraud task force for added comment.
