A former Minnesota state investigator just lobbed a political grenade into an already boiling scandal, claiming state officials didn’t just miss massive fraud in a child care program — they allegedly tried to bury it.
Jay Swanson, once tasked with sniffing out fraud inside the state’s Department of Human Services (DHS), told lawmakers this week that higher-ups leaned on him to water down — even delete — findings that pointed to widespread abuse of taxpayer-funded child care subsidies.
Swanson says that when he responded to questions from legislative auditors back in 2018, a DHS official stormed into his office “angry, red-faced, and almost yelling,” demanding he retract key details about fraud. His response? “I then advised this official that I believed what they were telling me to do was illegal.”
According to Swanson, days later the same official returned with a warning straight out of a mob movie: the report was going forward — but “you better be ready for the s–t storm that’s coming your way.”
Swanson testified that he and his colleagues were harassed and undermined for doing their jobs, while DHS allegedly shelled out $90,000 to a consulting firm — one with no real fraud expertise — to dismiss his findings as unreliable. Meanwhile, the fraud itself? Not exactly a secret.
Swanson dropped another bombshell: he says it was widely known in East African refugee communities that Minnesota was the place to cash in. “They had heard you could run the scam in a number of different states,” he testified, “but it was easiest and you could make the most money doing it in Minnesota.”
This wasn’t some hidden glitch in the system. According to testimony, it was practically word-of-mouth marketing.
The allegations come as federal agents recently raided nearly two dozen daycare centers across the state — part of a sprawling investigation into what prosecutors say could be billions in stolen funds. One estimate pegs the total at over $9 billion. Others say it could climb even higher. And yet, amid all this, Gov. Tim Walz is suddenly talking tough.
After years of downplaying concerns — even brushing off critics as peddling “white supremacy” narratives — Walz took to social media this week to declare, “If you commit fraud in Minnesota you’re going to get caught.”
That line might land better if not for the inconvenient timeline.
Republican lawmakers say that shortly after Walz took office in 2019, a key investigative unit with real enforcement power — including the ability to execute warrants and seize evidence — was effectively dismantled.
“They were told they could no longer do criminal investigations,” said state Rep. Kristin Robbins. “They were told they could no longer meet with [state investigators] without supervisors’ approval.”
Critics argue that instead of cracking down, the administration kneecapped the very people trying to expose the problem — all while the fraud ballooned.
Federal prosecutors have already charged nearly 100 individuals in connection with related schemes, with dozens of convictions secured. One case alone saw a daycare operator sentenced to prison and ordered to repay $1.4 million after pleading guilty.
Even more eyebrow-raising: multiple fraudulent operations were tied to the same Minneapolis address — including a daycare with a misspelled name that somehow still managed to rake in government cash before getting raided this week.
Now, with the FBI and Justice Department leading the charge, Walz is eager to share credit. But federal officials aren’t exactly applauding.
One top law enforcement figure shot back at the governor’s claims, essentially saying: Nice try — we did the work.
Another dismissed Walz’s sudden anti-fraud posture as lacking “credibility.”
The bigger question hanging over all of this: how did a program meant to help families turn into such a massive piggy bank for fraudsters — and who looked the other way while it happened? Swanson’s testimony suggests the answer may be as troubling as the scandal itself.
