Jeff Baillon, Fox 9, May 14, 2018
For five months, Fox 9 has been investigating what appears to be rampant fraud in a massive state program.
This fraud is suspected of costing Minnesota taxpayers as much as $100 million a year.
The Fox 9 Investigators reporting is based on public records and nearly a dozen government sources who have direct knowledge of what is happening.
These sources have a deep fear, and there is evidence to support their concerns, that some of that public money is ending up in the hands of terrorists.
Suitcases filled with money
This story begins at Minneapolis-St. Paul International Airport, where mysterious suitcases filled with cash have become a common carry-on.
On the morning of March 15, Fox 9 chased a tip about a man who was leaving the country. Sources said he took a carry-on bag through security that was packed with $1 million in cash. Travelers can do that, as long as they fill out the proper government forms.
Fox 9 learned that these cloak-and-dagger scenarios now happen almost weekly at MSP. The money is usually headed to the Middle East, Dubai and points beyond. Sources said last year alone, more than $100 million in cash left MSP in carry-on luggage.
The national, go-to expert on what is behind these mysterious money transfers is Glen Kerns.
“What we were interested in is where it was going,” Kerns said.
He is a former Seattle police detective who spent 15 years on the FBI’s joint terrorism task force, until his retirement.
“It’s an outright crime, it’s unbelievable,” he said.
Kerns tracked millions of dollars in cash that was leaving on flights from Seattle.
It was coming from Hawalas, businesses used to courier money to countries that have no official banking system.
Some immigrant communities rely on Hawalas to send funds to help impoverished relatives back home.
Kerns discovered some of the money was being funneled to a Hawala in the region of Somalia that is controlled by the al Shabaab terrorist group.
“I talked to a couple of sources who had lived in that region and I said, ‘If money is going to this Hawala do you think it is going to al Shabaab?'” said Kerns. “And he said, ‘Oh definitely, that area is controlled by al Shabaab, and they control the Hawala there.’”
As Kerns dug deeper, he found that some of the individuals who were sending out tens of thousands of dollars’ worth of remittance payments happened to be on government assistance in this country.
How could they possibly come up with such big bucks to transfer back home?
“We had sources that told us, ‘It’s welfare fraud, it’s all about the daycare,’” said Kerns.
To better understand the connection between daycare fraud and the surge in carry-on cash, you have to look at the history of this crime.
Five years ago the Fox 9 Investigators were first to report that daycare fraud was on the rise in Minnesota, exposing how some businesses were gaming the system to steal millions in government subsidies meant to help low-income families with their childcare expenses.
In order for the scheme to work, the daycare centers need to sign up low income families that qualify for child care assistance funding.
Surveillance videos from a case prosecuted by Hennepin County show parents checking their kids into a center, only to leave with them a few minutes later. Sometimes, no children would show up.
Either way, the center would bill the state for a full day of childcare.
Video from that same case shows a man handing out envelopes of what are believed to be kickback payments to parents who are in on the fraud.
“We believe that there’s a scope of fraud out there that we really need to get our arms around and ensure that those dollars are going to kids that really need them,” Acting Commissioner for the Department of Human Services Chuck Johnson said.
He told the Fox 9 Investigators his agency has 10 daycares currently under active investigation for fraud.
Fox 9 has learned dozens more are considered suspicious.
Search warrants obtained by the Fox 9 Investigators show each one of the suspect centers has received several million dollars in childcare assistance funds.
According to public records and government sources, most are owned by Somali immigrants.
Sources in the Somali community told Fox 9 it is an open secret that starting a daycare center is a license to make money.