Minnesota probe finds no proof stolen money aided terrorists

ST. PAUL, Minn. — Minnesota’s legislative auditor said Wednesday that an investigation found no proof that money defrauded from a state child care program found its way to terrorist organizations overseas.

Lawmakers asked Legislative Auditor James Nobles to look into the issue after KMSP-TV reported last year that the Minnesota Child Care Assistance Program was defrauded out of as much as $100 million per year. The station, partly citing unnamed sources, also reported that state and federal agents had determined that some of the ill-gotten money had gone overseas and that they believed at least some of it was likely ending up with terrorists.

The station’s reports, which also cited Scott Stillman, a former computer forensics expert for the state Department of Human Services, which administers the program, suggested that fraudulently obtained money had gone to the Somali-based terrorist group al-Shabab.

In his report, Nobles said investigators couldn’t substantiate that such money ended up with terrorists. He also said that while fraud in the child care program is a problem, investigators couldn’t establish a reliable estimate of how much money has been defrauded from the program, though they believe it’s more than the $5 million to $6 million that prosecutors have been able to prove was stolen.

A separate review into whether the department’s oversight of the program is adequate to safeguard its financial resources will be released early next month.

The Minneapolis area is home to the country’s largest Somali-American community, and Nobles noted in his report that it’s common for Somali-Americans to send money back to the East African country to help family and friends. He said it’s possible that some money defrauded from the program made its way overseas, but that there is no proof.

“It is possible that the individuals who sent the money sent it intending to provide support to a terrorist organization,” the report states. “It is also possible that individuals in Minnesota sent money to Somalia and other countries to help their families and friends pay for food, medicine, or shelter, but terrorists obtained the money through theft or extortion. All of these are possibilities, but for none of them did we find evidence to substantiate a connection between CCAP fraud money and support for a terrorist organization.”

The Child Care Assistance Program provides federal money to low-income families to help them pay for child care while the parents work or attend school. Some daycare centre operators allegedly overbilled the state for children who weren’t really there. State and federal prosecutors have charged at least a dozen Minnesota residents, including several with Somali connections, and child care centres with defrauding the program in the past five years.

After the allegations surfaced, Republican lawmakers demanded stronger oversight to root out fraud in social service programs, while Somali community leaders and some Democratic lawmakers objected to the rush to judgment.

Nobles said his office interviewed Department of Human Services officials, program investigators, law enforcement officials and prosecutors. His office subpoenaed Stillman and interviewed him under oath in December. Investigators also reviewed court records from about two dozen terrorism-related cases in Minnesota. To obtain some information from prosecutors, investigators and law enforcement, they agreed not to disclose certain details and to protect the identities of individuals who provided the information, his report states.

“We are confident that given the history and expertise of investigating and prosecuting terror-related cases in Minnesota, if there were any allegations of CCAP fraud money going to terrorist organizations, investigators would certainly follow up and prosecutors would prosecute them for providing material support to terrorist organizations,” the report states.

Human Services Commissioner Tony Lourey said in a response accompanying the report that his department is committed to fixing the problem of fraud in the child care program, and that it has asked the Legislature for money to beef up its oversight efforts.

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Steve Karnowski, The Associated Press