House Oversight Committee concludes Tim Walz' administration knew of fraud, failed to act

( Just the News )

Senior Minnesota government officials, including Gov. Tim Walz and Attorney General Keith Ellison, were aware of claims of widespread fraud in the state’s federally funded welfare programs for years, but failed to act other than to retaliate against whistleblowers, the House Oversight Committee concluded in a report released Wednesday. 

Both Walz and Ellison are scheduled to testify before the committee on Wednesday at 10:00 AM, the committee previously announced. They are likely to face questions from the committee about fraud schemes estimated to have cost taxpayers as much as $18 billion and that were first reported by Just the News in summer 2024.

Dozens of defendants, many of them Somali immigrants who settled in Minnesota, have been indicted or convicted in a sweeping federal fraud investigation.

Walz and Ellison were aware of fraud

“Testimony obtained by the Committee reveals that Gov. Tim Walz and Attorney General Keith Ellison were aware of widespread fraud in social service programs, lied about their knowledge of the fraud, and retaliated against employees who dared to raise concerns,” Oversight Committee Chairman James Comer said in a statement. 

“Instead of protecting vulnerable Americans, they handed over billions in taxpayer dollars to fraudsters and threw their own state employees under the bus,” Comer added.  

The committee launched an investigation in December into allegations of fraud in Minnesota’s public benefits programs after fresh evidence of daycare fraud in the state’s federally-funded childcare benefits program surfaced that month. 

The new video evidence allegedly showing empty daycare facilities registered to serve hundreds of children aligned with warnings from the state’s legislative auditor dating back to 2018 that there were persistent signs of fraud in the program, Just the News reported. 

The investigation also centered on a Minneapolis fraud ring connected to the state’s Somali immigrant community that exploited the state’s federally-funded food program. The Department of Justice first charged 47 people in 2021 as part of a $250 million scheme involving the nonprofit Feeding Our Future that prosecutors alleged diverted federal COVID-19 relief funds for personal gain. 

Attorney General Merrick Garland, who served during the Biden administration, called it the largest pandemic-era fraud scheme ever identified. 

Testimony from nine state officials

Walz, who was the Democratic nominee for vice president in 2024,

previously acknowledged there is fraud in his state, but said his administration has made it a priority to root out for years. 

However, the Oversight Committee believes the evidence shows the opposite, that Walz and his senior officials knew about the fraud concerns from the very beginning of his tenure and ultimately failed to act to address it before facing public backlash and pressure from the federal government in recent months. 

That evidence comes from testimony gathered by the committee from nine current and former Minnesota state officials that oversaw the benefits programs within the Minnesota Department of Education (MDE) and the Department of Human Services (DHS), the two government bodies that oversaw the programs at the center of the fraud allegations. 

You can read the Oversight Committee’s report below: 

File

 The Cost of Doing Nothing_How Tim Walz and Keith Ellison Fueled Minnesota's Fraud Explosion_3.4.26_FINAL-1.pdf

State officials said Walz’s government knew about fraud concerns in early 2020

Though Walz originally said that he was informed about suspicious activity related to Feeding Our Future in November 2020, but he could not recall the precise date, one MDE official told the Oversight Committee that the Minnesota government had received complaints about the program as early as 2018.  

MDE Assistant Commissioner Daron Korte, whose agency oversaw the money funneled to the Feeding Our Future food program from federal pandemic-era relief funds, confirmed that such complaints were received between 2018 and 2021. 

He testified that Gov. Walz’s office would have been informed of the concerns by April 2020 and that Attorney General Keith Ellison’s office would have received a notice also.   

When threatened with a lawsuit, Minnesota officials resumed funding 

Once MDE found in March 2021 that Feeding Our Future was in “serious deficiency,” the agency moved to cut off all funding to the organization. However, despite officials acknowledging the agency’s authority to unilaterally cut funds, it resumed payments by April 30, 2021 over fears that the nonprofit would sue, Korte told congressional investigators. 

“[We] could unilaterally make that decision, but we just knew, with Feeding our Future, it was going to end up in court and had the potential to be overturned,” Korte testified. 

Feeding Our Future’s founder and executive director Aimee Bock – who was eventually charged and convicted as part of the million dollar fraud scheme – threatened MDE with a lawsuit in April 2021 claiming racial discrimination if funding was terminated. The nonprofit formally filed the lawsuit in November that year alleging violations of state law. 

Minnesota official approved more food program sites after fraud concerns

Because of the threat of the lawsuit, MDE approved an additional four sites administered by Feeding Our Future even after fraud concerns had been raised by the agency. Korte said the agency did this because the U.S. Department of Agriculture refused to provide a justification under federal law for the state to cut off the funds.

“I think they were supportive generally of what we were saying we wanted to do, but they weren't willing to provide anything in writing. And we felt like, without having that backup from USDA that we just didn't have firm enough ground to stand on to continue to deny those sites in the face of the threatened lawsuit,” Korte told the committee. 

Walz’s office received notice of fraud concerns in daycare program

Officials also testified that Walz’s office knew about fraud concerns in the state’s Child Care Assistance Program, which funded daycare services in early 2019. Former DHS Commissioner Tony Lourey told congressional investigators that he was in communication with Walz’s then Chief of Staff Chris Schmitter about such concerns that year, the testimony shows. 

As Just the News previously reported, the Minnesota state legislature was also made aware of pervasive fraud in the Child Care Assistance Program in 2018, the year before Walz was sworn in as governor. Minnesota's legislative auditor brought concerns about widespread fraud in the program to both the legislature and state officials that year. 

One investigator cited in the report claimed that fraud rates could exceed 50% of all government funding for the program. The auditors reported that some child care centers recruit eligible mothers by offering kickbacks using government funds. They also identified signs of overbilling in as many as 72 of the top 100 recipients of state money.