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The Trump administration heightened its focus on alleged fraud in Minnesota this week, announcing it was freezing federal grants and loans for small businesses and child care centers. Minnesota Public Radio's Dana Ferguson has more.
DANA FERGUSON, BYLINE: The Trump administration continues to target Minnesota over allegations of fraud. On Thursday, the head of the Small Business Administration said she was suspending COVID-era loans for almost 7,000 business owners in the state and owners could be subject to prosecution and ordered to repay loans. Administrator Kelly Loeffler says the loans were suspended due to suspected fraudulent activity. And earlier this week, Department of Health and Human Services Deputy Secretary Jim O'Neill announced the department would cut child care assistance funding to the state.
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JIM O'NEILL: We believe the state of Minnesota has allowed scammers and fake day cares to siphon millions of taxpayer dollars over the past decade.
FERGUSON: The department cited a social media post from O'Neill when NPR reached out asking what evidence led them to suspect fraud. That post doesn't provide specifics. Still, federal officials have since expanded the scope to freeze child care assistance funding to all states until they can prove funds are being spent legitimately.
One-point-four-million children rely on the funds to attend day care nationwide, according to the latest federal data. Currently, more than 23,000 of them are in Minnesota. The ramp-up in attention and efforts to freeze funds came in the aftermath of a single YouTube video posted last week that captured the attention of the White House and Republican lawmakers. A MAGA-connected social media influencer visited and questioned Minneapolis day care centers operated by Somali Americans. He claimed without evidence that they'd committed fraud.
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NICK SHIRLEY: Answer the question. Are there children? There's no children inside this building?
FERGUSON: Somali child care providers say they've fielded threats and worse in the aftermath, and parents say they're fearful.
SACDIVO ADEN: (Speaking Somali).
FERGUSON: Sacdivo Aden speaks through a translator at her kids' day care center.
ADEN: (Through interpreter) I'm a working parent and I bring my kids here while I'm at work. And now I cannot bring my kids anymore because they are too scared.
FERGUSON: Someone broke into the center earlier this week. Nasrulah Mohamed, one of the center's managers, says thieves stole records.
NASRULAH MOHAMED: Unfortunately, we saw that there was important documentation - enrollment of the children and also employee documentation - that was gone.
FERGUSON: Fraud has been a subject of ongoing reporting and federal investigations in Minnesota for years. Most notably, a COVID-19-era child nutrition program was defrauded out of more than $250 million. Dozens were convicted in connection to that scheme. More recently, federal prosecutors charged several more for allegedly defrauding state Medicaid programs. President Donald Trump seized on reports of those charges and others, singling out and disparaging Minnesota's Somali community.
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PRESIDENT DONALD TRUMP: Somalians ripped off that state for billions of dollars - billions. Every year, billions of dollars. And they contribute nothing.
FERGUSON: Republican Minnesota House Speaker Lisa Demuth, a candidate for governor, says her caucus shared information about day cares with the creator of the YouTube video. Demuth says there should be consequences for providers and state officials who break the rules.
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LISA DEMUTH: Fraud needs to end in the state, and if this is what it takes, since there's been inaction by our current governor, then this is where we're at.
FERGUSON: State officials say Minnesota has been conducting investigations for years, and they're ongoing. And payments have been suspended for suspicious providers. Governor Tim Walz says the federal effort to spotlight fraud in Minnesota is political.
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TIM WALZ: Nobody in the legislature on the Republican side is interested in solving this. My God, it would be the worst thing in the world for them if this is solved like we're doing it here early this year because then what are they going to run on?
FERGUSON: A U.S. House Oversight Committee will hold a hearing about alleged fraud in Minnesota next week. Three Republican state lawmakers are scheduled to appear. Governor Tim Walz has been invited to testify next month.
For NPR News, I'm Dana Ferguson in Minneapolis.
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