The Billion Dollar Theft in Minneapolis
The scale of fraud and corruption being exposed in Minneapolis may be the largest theft of taxpayer money in American history.
The scale of fraud and corruption being exposed in Minneapolis may be the largest theft of taxpayer money in American history.
Acting US Attorney Joseph Thompson said on Sept. 18 in reference to a Medicaid housing scheme that fraudulent actors in the state and their various systems of fraud “form a web that has stolen billions of dollars in taxpayer money.”
On Sept. 24, he said of another case involving millions stolen from a government program to help children with autism “the depth of the fraud in Minnesota takes my breath away.”
Janice Hisle of the Epoch Times outlined three different scandals of stolen taxpayer money in Minneapolis. Each scandal is stunning. That all three could emerge in one city is dumbfounding.
First, the nonprofit Feeding Our Future reportedly stole at least $240 million from taxpayers. This single scandal has led to 78 people being charged with fraud with 50 of them convicted. They were so bold they set up more than 250 nutrition sites with dozens of shell companies.
Gov. Tim Walz’s administration refused to take theft seriously, so the program’s costs went from $3.4 million in 2019 to more than $200 million in 2021. That is a 5,782 percent growth rate in two years. The woman reportedly running the program received $465,000 for meals that were never delivered. Apparently, no one in the Walz administration noticed that anything was wrong.
Second, the state’s Housing Stabilization Services program, which was set up to help the elderly and homeless, was first planned to cost $2.6 million a year. This cost exploded, due in large part to fraud. In 2024 alone, it cost taxpayers $104 million.
Third and finally, fraudsters reportedly stole from a government autism assistance program which provides parents of children with autism $300 to $1,500 per month per child for early developmental therapies. A group of thieves started a fake therapy company which funneled $14 million from the program by claiming children were autistic when they weren’t.
The taxpayers of the United States and Minnesota thought they were helping feed the poor, improve the lives of autistic children, and house seniors and the homeless. However, most of the money was being stolen by crooks while the government looked the other way.
The scale of the theft is so large and pervasive the Walz administration finally announced it is putting a 90-day pause on 14 different programs to see how many of them have become centers of theft.
The most complete outline of the billion-dollar theft is a remarkable article by Ryan Thorpe and Christopher Rufo in the City Journal from Nov. 19 entitled “The Largest Funder of Al-Shabaab is the Minnesota Taxpayer.”
As they summarized:
“Minnesota is drowning in fraud. Billions in taxpayer dollars have been stolen during the administration of Governor Tim Walz alone. Democratic state officials, overseeing one of the most generous welfare regimes in the country, are asleep at the switch. And the media, duty-bound by progressive pieties, refuse to connect the dots.
“In many cases, the fraud has allegedly been perpetrated by members of Minnesota’s sizeable Somali community. Federal counterterrorism sources confirm that millions of dollars in stolen funds have been sent back to Somalia, where they ultimately landed in the hands of the terror group Al-Shabaab. As one confidential source put it: ‘The largest funder of Al-Shabaab is the Minnesota taxpayer.’”
This prompted four congressional Republicans – Whip Tom Emmer, Peter Stauber, Michelle Fischback, and Brad Finstad – to write to the US Attorney. They asked for a continuing and in-depth investigation of the ties between corruption in Minnesota and terrorism in Somalia.
There are four big lessons from this billion-dollar fraud in Minnesota.
First, big, entrenched, outdated bureaucracies are simply incapable of effectively policing modern crooks. Bureaucrats leave work at 5 p.m. and don’t work on weekends. Thieves work all the time. The bureaucrats simply can’t keep up. Further, bureaucrats are paid the same whether the system they operate is well policed and honest or sloppy and constantly corrupt. We must totally rethink and rework how government programs are monitored and administrated – and potentially hire outside auditors. Private sector companies would never tolerate this level of theft.
Second, the entire American system of honesty has clearly decayed. The need for honesty is something which George Washington, Alexander Hamilton, Ben Franklin, Alexis de Tocqueville, and Friedrich Hayek all described as central to free society and a free market system. Theft, fraud, and dishonesty have all become acceptable behaviors for millions of people. The long-term danger of an increasingly dishonest system is a major threat to our survival as a nation.
Third, the amount of wealth now generated by corruption, fraud, and theft intimidates most people from trying to fix the system. As Chris Papst wrote in his extraordinary book “Failure Factory” about the Baltimore school system, a $1.3 billion bureaucracy can crush virtually any reform effort. The failing Baltimore City School top executive alone makes more money than all the education reform groups in Baltimore can muster.
Fourth, during the last great cycle of corruption, Lincoln Steffens wrote “The Shame of the Cities” in 1904. This launched a generation of urban reformers and gave moral force to a progressive movement. For more than a decade, it dominated American government and politics. The impact of muckraking investigative journalism was deeply powerful. It was the forerunner to President Franklin Delano Roosevelt’s nine-decade impact on American big government. He moved America to a progressive experiment which was dramatically different than the first 150 years of limited central government.
Much of today’s media is overwhelmingly pro-government and progressive. It is virtually impossible to get many journalists interested in stories which undermine the liberal establishment, criticize the progressive left, or accuse the left of criminal behavior.
The turning point for me was Papst’s remarkable eight-year study – and then our own validating studies done by Darek Silva at Gingrich 360. Silva took publicly available information about New York City, Chicago, Los Angeles, Indianapolis, Minneapolis, and St. Paul and compared it to the amazing insights Papst had developed to understand Baltimore. In city after city, the teachers’ unions and the education bureaucracies work together to lie about their failures – and to get money they have not earned. There is a massive amount of fraud undermining education efforts in virtually every big city.
Now, the Minneapolis billion-dollar scandal has emerged. At a billion dollars stolen in just one city, the news media and politicians may finally be forced confront the dishonesty and corruption crisis.
The time has come for the Congress and state legislatures to identify and secure every part of government spending which is being undermined, distorted, and crippled by theft. This widespread fraud threatens the nature of our free society and our free market entrepreneurial system.
Minneapolis offers an indisputable billion-dollar example that something is profoundly wrong. Now, we must take the fight to the crooks and return to honest government – in an honest country.
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