Show Notes
“Sickening creativity.” That’s the backhanded compliment Peter Schweizer gives to the mostly Somali fraudsters in Minnesota who may have committed $1 billion worth of fraud under the nose of the state’s governor, Tim Walz. “It’s shocking… the scale and scope of it.”
On the most recent podcast of The Drill Down, Schweizer and co-host Eric Eggers look at the staggering welfare fraud that was committed by multiple scam nonprofit groups which, among other things, billed the government for delivering “125 million” meals that were never given. Was no government office suspicious?
Welfare fraud is nothing new, and hardly unique to Minnesota. Smaller but similar cases have happened in nearly every state. Still, the brazenness and the ingenuity of the fraud in Minnesota has shocked the state’s residents and dumbfounded Gov. Walz.
They shouldn’t have been shocked. In 2018, the Government Accountability Institute reported on fraud in the food stamp program, finding lots of ingenious thievery in many states. EBT cards were rung up for phantom purchases, turned into cash and split 50/50 with crooked store owners, the study showed, based on interviews with welfare fraud investigators. Most alarmingly, in Minnesota and Michigan, fraud investigators provided GAI with proof that welfare funds intended to feed hungry people were being sent by Somali immigrants back to Somalia and finding their way to terror groups. The fraudsters used a network of “hawalas,” which work like an informal version of moneygrams.
The Drill Down has covered welfare fraud many times, presenting GAI’s research on the topic and interviewing fraud investigators.
Schweizer and Eggers note that the Manhattan Institute also published a report in late November alleging that Al-Shabaab, a Somali terror group, was receiving millions of dollars that were related to the Feeding Our Future scheme.
Yet, despite the reporting, nothing was done. Problems got worse during the COVID pandemic as government relief efforts upped the ante for fraud and theft. In Minnesota, kickback schemes gave 10% government money to a sham nonprofit called “Feeding Our Future.” Eggers quotes from an FBI announcement that “Feeding Our Future” claimed to have served 125 million meals between March 2020 and January 2022. Schweizer cites a Minneapolis eatery called the Safari Restaurant, which made $12 million while claiming its largely empty tables were feeding “3,500 people daily.”
Yet, the state’s senior officials knew there was a problem, but were apparently willing to look the other way, at a price, as co-host Eric Eggers notes in the show. Prosecutors in the “Feeding Our Future” case played an audio recording from a meeting in which Somali-American businessmen begged the state’s Attorney General, Keith Ellison, to stop fraud investigators from “harassing them.” Ellison was happy to oblige, and received campaign contributions from members of the group.
The political reality in Minnesota is that the community of Somali refugees, many of whom came to the US in the late 1990s, is a powerful force in Minneapolis. One the state’s Democratic politicians are willing to please. A Minnesota judge, Sarah West, is now under scrutiny for overturning a $7.2 million fraud jury conviction of a couple who were found guilty of misappropriating Medicaid funds to support their “lavish lifestyle” of fancy cars and designer clothes. That was too much even for Ellison, whose office filed an appeal contesting West’s ruling.
Schweizer notes Minnesota’s situation today is little different from Boston in the early 1900s, when Irish immigrants banded together and became a political machine in that city. Politicians understand that kind of power. “Somalis in Minneapolis are a powerful political force,” Schweizer notes. The city’s member of Congress, Rep. Ilhan Omar (D-MN) is a Somali American and part of the left-leaning “Squad” in Congress. The city nearly elected another Somali as mayor last month, narrowly returning the incumbent.
Schweizer also wonders if perhaps some prosecution is in order for the politicians who look the other way when they know or suspect this kind of fraud is occurring. “They have a fiduciary responsibility to call out corruption when they know what’s going on,” he says, “not to look the other way, not to, as Keith Ellison suggests by sending a letter to kind of tell a prosecutor to ‘chill out.’ And voters ultimately need to hold them into account.”
Both hosts regret that eliminating welfare fraud has become a partisan issue. “It doesn’t have to be this way,” Schweizer says. “It’s become a partisan issue because in these ethnic communities that vote overwhelmingly Democratic, it leads Democrat politicians into this kind of protective mode… It should be a bipartisan issue.”
