Senator Banks Calls for Federal Investigation into Minnesota Child Care Fraud Scandal
Senator Jim Banks of Indiana is pushing for a federal investigation into what could be a staggering $9 billion fraud scandal involving Minnesota’s Child Care Assistance Program. In a letter to the U.S. Department of Health and Human Services (HHS), Banks is specifically calling for investigative reports on alleged Somali networks that created fake daycare centers to divert federal funds. As a member of the Senate Committee on Health, Education, Labor and Pensions (HELP), Banks has oversight responsibilities for healthcare funding and policy. His concern centers on the Minnesota program which, while state-administered, receives approximately $300 million in federal subsidies through two national childcare support programs.
In his letter to Alex J. Adams, the Assistant Secretary for Family Support at HHS, Banks didn’t mince words about his concerns. “I urge ACF to investigate reports of Somali networks creating fake ‘daycare centers’ as vehicles to steal millions of dollars from Minnesota’s Child Care Assistance Program,” he wrote. The senator further criticized Minnesota Governor Tim Walz’s administration for failing “to meet the most basic benchmarks required by ACF.” Banks emphasized that any unlawful behavior discovered should be immediately referred to appropriate federal authorities, including Immigration and Customs Enforcement (ICE), the Department of Homeland Security (DHS), and federal prosecutors. His call for accountability comes at a time when Minnesota is already under scrutiny for potential systemic failures in oversight.
The situation has already prompted action from federal authorities. On Monday, DHS’s Homeland Security Investigations (HSI) and ICE agents were reportedly conducting investigations in Minnesota. South Dakota Governor Kristi Noem shared on social media that the agencies were “conducting a massive investigation on childcare and other rampant fraud,” with more information forthcoming. This investigation follows a separate probe launched in 2022 into Feeding Our Future, a nonprofit that prosecutors say was central to one of the largest COVID-relief fraud cases ever uncovered. That investigation identified approximately $250 million in false claims, resulting in criminal charges against 78 people, with prosecutors suggesting the total fraud could reach as high as $9 billion. A significant number of those charged were reportedly members of Minnesota’s Somali community.
The scandal has created internal turmoil within Minnesota’s government as well. Over 400 state employees have reportedly raised concerns that Governor Walz, now the Democratic vice presidential nominee on the Kamala Harris ticket, failed to adequately respond to repeated warnings about the fraud. These employees also alleged that whistleblowers who attempted to bring the misconduct to light faced retaliation. This aspect of the scandal raises questions not just about the fraud itself but about potential institutional failures and cover-ups that may have allowed it to continue unabated for an extended period.
Senator Banks emphasized to Fox News Digital the importance of thorough investigation and accountability in this case. “Minnesota’s childcare system relies on American taxpayer dollars,” he stated. “As a member of the HELP Committee, I am calling for an investigation into the fake childcare centers run by Somali crime networks.” His comments reflect growing concern among lawmakers about the misappropriation of federal funds intended to help working families access childcare. The senator added, “I will not stand by while tax dollars meant to support hardworking families are stolen and state officials refuse to act,” underscoring his commitment to pursuing the matter.
This developing story highlights the tension between federal and state responsibilities in administering social service programs. While states like Minnesota have significant autonomy in implementing federally funded programs, the federal government maintains an oversight role, especially when large-scale fraud is suspected. The outcome of this investigation could have far-reaching implications not only for Minnesota’s childcare system but potentially for how similar programs are monitored nationwide. It also comes at a politically sensitive time, with Governor Walz on the Democratic presidential ticket and questions being raised about his administration’s handling of the situation. As federal investigations continue, there will likely be increased scrutiny on both the fraud itself and the systems that may have failed to prevent it.
