Could a $100 million fraud scandal linked to terrorism have been prevented with decisive action?
Uncovering the Fraud
A Fox 9 investigation in May 2018 spotlighted a massive fraud operation within Minnesota’s Child Care Assistance Program (CCAP). Spearheaded by DHS investigator Scott Stillman, the probe estimated that $100 million annually was siphoned off through fraudulent claims by Somali-owned daycare centers. These centers allegedly overbilled for children who were not present, a scheme caught on hidden cameras. Alarmingly, suspicions arose that the funds were being wired overseas to support the terrorist group Al Shabaab.
Stillman’s allegations were backed by evidence of wire transfers to regions in the Middle East and Africa. Despite the gravity of these claims, the Department of Human Services appeared to have taken insufficient action. Chuck Johnson, the Acting Commissioner of the DHS in 2018, acknowledged ten active investigations at the time but faced criticism for not thoroughly addressing the problem.
Historical Context and Background
In the early 2010s, Minnesota saw an influx of Somali refugees, leading to the establishment of a significant Somali community, particularly in Minneapolis. This demographic shift coincided with a surge in CCAP spending, reaching $254 million in 2018. The rise in expenditure brought with it increasing reports of fraud, characterized by kickbacks, ghost children, and subpar daycare services. Investigations revealed that some operators, like Fozia Ali and the Deqo centers, defrauded millions through complex family schemes.
The DHS faced internal scrutiny for its “insufficient internal controls,” as documented in a 2019 audit. This lack of oversight enabled fraudulent operators to exploit the system for years, often with little fear of reprisal, until the media exposé brought the issue to the forefront.
The Role of Key Stakeholders
Scott Stillman, a whistleblower from within the DHS, became the focal point of the investigation by estimating the scale of the fraud and its potential links to terrorism. His claims were given a platform by Fox 9 journalists, who utilized surveillance footage to substantiate allegations of widespread overbilling. On the other side, Somali daycare operators like Fozia Ali faced legal consequences, with multiple convictions for theft and fraud schemes.
Governor Tim Walz, then a member of Congress, was criticized for failing to take decisive action when alerted to the issue. Recent allegations suggest he may have had prior knowledge of the fraud but failed to report it, drawing ire from political opponents and the public alike.
Recent Developments and Future Implications
As of December 2025, the Department of Justice charged 98 individuals in a related $250 million pandemic food aid fraud case, with significant overlaps with the daycare fraud network. DHS recently conducted raids on several daycares following a viral video by journalist Nick Shirley, which revitalized public interest and scrutiny over the issue.
These developments have reignited discussions about the need for stricter oversight and policy reforms within welfare programs. The political implications for Governor Walz could be significant, as public outrage continues to mount over perceived inaction and accountability failures. Meanwhile, the Somali community faces increased stigma, although the fraudulent activities are limited to a small group of perpetrators.