Minnesota Is Just the Beginning: A Nationwide Web of Welfare Fraud Is Unraveling

With evidence emerging of more than $9 billion worth of taxpayer fraud in Minnesota, the media are finally starting to cover the problem of criminals stealing from the taxpayer. But fraud is by no means limited to Minnesota—it is a nationwide problem that leaders at both the federal and state levels need to tackle before it gets even worse.

Even the New York Times was forced to take notice, publishing an explosive article showing evidence of more than $1 billion of taxpayer money stolen by about 80 different Somali immigrants to Minnesota. Just days after the Minnesota story broke, a Somali immigrant in Maine was accused by a whistleblower of defrauding both Medicaid and the pandemic-era Paycheck Protection Program. The alleged fraudster in the case, while ostensibly working in Maine, ran for office in Somalia and boasted of raising money for the Somali military. According to the whistleblower, his non-profit organization had, for years, sought reimbursement from the federal government for non-existent “services” under Medicaid.

Now, federal prosecutors in Massachusetts announced charges against two Boston men for trafficking more than $7 million worth of food stamps, and a local news station in Oregon uncovered more than $91,000 in food stamp fraud in Oregon just in the month of November alone.

This dizzying list of fraud cases just keeps getting longer.

For years, conservatives have been sounding the alarm about the problem of fraud, but too often those warnings fell on deaf ears. Finally, it seems like the sheer scale of the fraud has shocked the media and their viewers alike: The fraudsters in these cases have stolen more than 10 times as many tax dollars than the entire Somali community in Minnesota pays in taxes each year.

Much of the reporting has focused on the missteps of Minnesota Governor Tim Walz, who backed down on any attempts to stop the fraud out of fear of being labeled a racist. This scandal is career-ending for Governor Walz, but the story is much bigger than him or Minnesota.

The fraud in these sensational news stories is just the tip of the iceberg.

The non-partisan Government Accountability Office (GAO) has documented nearly $3 trillion in known waste, fraud, and abuse in the federal government over the last 22 years. This number is just the waste, fraud, and abuse that we know about—and it does not even include all federal programs. According to GAO, more than 10 cents out of every food stamp dollar is wasted or stolen.

The good news is that President Trump is fighting back against the fraudsters. Not only is the Department of Justice arresting them and putting them in jail, but President Trump signed new policies into law that will make it a lot more difficult to steal from the taxpayer. Instead of checking eligibility annually, states will be required to double-check the eligibility of Medicaid recipients every six months.

President Trump’s new law will also kick millions of illegal immigrants off welfare, reserving welfare resources to help Americans who need it the most. The new law will even penalize states who fail to protect taxpayer dollars, requiring the worst offenders to pay back a percentage of their own erroneous payments.

But there is a lot more to do. Many states, including Minnesota, Maine, and Massachusetts, are using budget gimmicks to hide the real rate of fraud from the federal government. The most salient is called Broad-Based Categorical Eligibility, which is when states don’t bother to check if someone is eligible for one welfare program if they’re already receiving another kind of welfare. This just multiplies fraud where it occurs and gives the false impression to the federal government—and to voters—that fraud is less common than it really is. Every state in America needs to stop using this blatant loophole, do their jobs, and check to ensure that people receiving our tax dollars are actually eligible.

This holiday season’s string of fraud cases is infuriating to hardworking Americans who pay their taxes and follow the rules. But after decades of waste and fraud of our tax dollars, they ought to be the trigger that finally leads to the real reforms we need.

Adam Gibbs is the Communications Director for the Foundation for Government Accountability.

Leave a comment