International Liberty

As noted in my First Theorem of Government, politics is a largely a scam, a way for well-connected insiders to obtain undeserved wealth.

With taxpayers, consumers, and businesses bearing the cost, of course.

Unfortunately (but perhaps predictably), politicians oftentimes defend fraud for self-interested reasons, either because money is being stolen by their voters or their campaign contributors.

For instance, I wrote 10 years ago about horrific Medicaid fraud in Texas.

Now let’s travel northwards for an equally atrocious report.

The New York Times has a remarkable story exposing jaw-dropping levels of welfare fraud in Minnesota.

Here are some excerpts from the report by Ernesto Londoño.

The fraud scandal that rattled Minnesota was staggering in its scale and brazenness. …Over the last five years, law enforcement officials say, fraud took root in pockets of Minnesota’s Somali diaspora as scores of individuals made small fortunes by setting up companies that billed state agencies for millions of dollars’ worth of social services that were never provided. Federal prosecutors say that 59 people have been convicted in those schemes so far, and that more than $1 billion in taxpayers’ money has been stolen in three plots they are investigating. …Minnesota’s fraud scandal stood out even in the context of rampant theft during the pandemic, when Americans stole tens of billions through unemployment benefits, business loans and other forms of aid, according to federal auditors.

Here’s one of the scams.

The first public sign of a major problem in the state’s social services system came in 2022, when federal prosecutors began charging defendants in connection to a program aimed at feeding hungry children. …The prosecutors focused on a Minneapolis nonprofit organization called Feeding Our Future, which became a partner to dozens of local businesses that enrolled as feeding sites. …State agencies reimbursed the group and its partners for invoices claiming to have fed tens of thousands of children. In reality, federal prosecutors said, most of the meals were nonexistent, and business owners spent the funds on luxury cars, houses and even real estate projects abroad. …The program’s annual cost ballooned to more than $104 million last year, the authorities said, from a budgeted projection of $2.6 million when it began in 2020.

Here’s another one.

In another program, aimed to provide therapy for autistic children, prosecutors said providers recruited children in Minneapolis’s Somali community, falsely certifying them as qualifying for autism treatment and paying their parents kickbacks for their cooperation.

The most disturbing part of the story is how politicians overlooked the fraud because Somalians are a big voting bloc (helped by the fact that Somalians learned to play the race card).

Mr. Pacyga, who also has represented other defendants in the fraud cases, said that some involved became convinced that state agencies were tolerating, if not tacitly allowing, the fraud. “No one was doing anything about the red flags,” he said. “It was like someone was stealing money from the cookie jar and they kept refilling it.” …Kayseh Magan, a Somali American who formerly worked as a fraud investigator for the Minnesota attorney general’s office, said elected officials in the state — and particularly those who were part of the state’s Democratic-led administration — were reluctant to take more assertive action in response to allegations in the Somali community. “There is a perception that forcefully tackling this issue might cause political backlash among the Somali community, which is a core voting bloc” for Democrats, said Mr. Magan.

The state’s incompetent governor, Tim Walz, obviously deserves primary blame for this catastrophe.

But he’s just the tip of the iceberg, as illustrated by this tweet.

Let’s now look at the issue from a taxpayer perspective.

The amount of fraud probably exceeds $2 billion, according to the experts at the Minnesota-based Powerline Blog (who have been on top of this story for years).

For some examples of how the government managed to waste so much money, here are some excerpts from an article in City Journal by Ryan Thorpe and Christopher Rufo.

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. …If you were to design a welfare program to facilitate fraud, it would probably look a lot like Minnesota’s Medicaid Housing Stabilization Services program. …It was designed with “low barriers to entry” and “minimal requirements for reimbursement.” Nonetheless, before the program went live in 2020, officials pegged its annual estimated price tag at $2.6 million. Costs quickly spiraled out of control. In 2021, the program paid out more than $21 million in claims. In the following years, annual costs shot up to $42 million, then $74 million, then $104 million. …Joe Thompson, then the Acting U.S. Attorney for the District of Minnesota, went even further, stating that the “vast majority” of the HSS program was fraudulent.

From $2.6 million to $104 million. Sounds like a typical government program.

Meanwhile, another program jumped from $3 million to $399 million.

…autism claims to Medicaid in Minnesota have skyrocketed in recent years—from $3 million in 2018 to $54 million in 2019, $77 million in 2020, $183 million 2021, $279 million in 2022, and $399 million in 2023. Meantime, the number of autism providers in the state spiked from 41 to 328 over the same period, with many in the Somali community establishing their own autism treatment centers, citing the need for “culturally appropriate programming.” By the time the fraud scheme was exposed, one in 16 Somali four-year-olds in the state had reportedly been diagnosed with autism

If this was merely a case of Minnesota politicians wasting the money of Minnesota taxpayers, I probably would not have cared that much.

I would have written one of my columns about “Great Moments in State Government” and assumed it was typical leftism from the Land of 10,000 Lakes.

But all of us are paying for this wretched fraud. Medicaid is mostly financed by Washington (meaning all of us) and and the federal government also kicks in big shares for other redistribution programs.

So there are two lessons to be learned from this grotesque episode.

1. Governor Tim Walz is a despicable hack.
2. The federal government should get out of the redistribution business.

P.S. Speaking of Tim Walz, I can’t resist sharing this tweet from whistleblower bureaucrats from Minnesota’s Department of Human Services.

I feel confident in asserting that Minnesota’s DHS is not staffed by rabid libertarians. Indeed, I suspect that employees overwhelmingly lean to the left.

But there are good and honest folks on the left who may be naively wrong on whether we should have big government (they are wrong, needless to say), but at least they don’t approve of fraud.

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