Newly resurfaced evidence confirms that Minnesota officials ignored years of warnings about a massive daycare fraud scheme—draining hundreds of millions from welfare programs—while political leaders turned a blind eye, allowing the corruption to flourish.
By yourNEWS Media Newsroom
ST. PAUL, Minn. — A decade-old playbook of fraud, long buried by bureaucratic inaction and political indifference, has resurfaced in Minnesota, where Somali-owned daycare centers stand accused of systematically bilking taxpayers out of hundreds of millions of dollars through a widespread scheme first exposed in 2013. The scandal, now erupting into a national controversy, follows a viral investigation by YouTuber Nick Shirley, whose door-knocking confrontations with daycare operators prompted the FBI and Department of Homeland Security to launch a massive probe into what appears to be one of the largest welfare fraud operations in state history.
The scheme’s roots trace back to 2013, when a Ramsey County forensic auditor—whose identity remains protected—uncovered four daycare centers exploiting Minnesota’s Child Care Assistance Program (CCAP), with dozens more suspicious cases totaling over $100 million in fraud, according to a 2025 KSTP 5 Eyewitness News report. The whistleblower, who spoke to reporters under condition of anonymity, revealed that they had repeatedly alerted the Department of Human Services (DHS) and state lawmakers—only to be ignored for years.
“We were the ones who came up with the $100 million a year in CCAP fraud in 2013,” the whistleblower told KSTP. “We identified 60-some-odd suspicious cases, and other cases as well. Personally, I want to know why. I think this is a much bigger issue than just a handful of bad actors. This runs deep, and it runs all the way to the top of some departments and agencies.”
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Despite the clear evidence, no meaningful action was taken. “I have been in shock that nothing has happened except for the last couple of years,” the whistleblower said. “There are so many agencies that should have oversight of this.”
A Fraud Operation Hiding in Plain Sight
The fraudulent practices were brazen and well-documented. Surveillance footage from a 2015 Hennepin County prosecution showed parents checking children into daycare centers—only to leave with them minutes later. In some cases, no children appeared at all, yet the centers billed the state for full days of childcare, pocketing taxpayer-funded subsidies meant for low-income families.
“It’s a great way to make some money,” Hennepin County Attorney Mike Freeman admitted in a 2018 Fox 9 investigation.
That investigation revealed an even more shocking dimension of the scam: Cash-stuffed suitcases, sometimes containing $1 million or more, were routinely carried through Minneapolis-St. Paul International Airport (MSP) and flown to Dubai, the Middle East, and East Africa. By 2016, investigators documented $84 million in undeclared carry-on cash leaving MSP. By 2017, that figure ballooned to over $100 million annually.
Former FBI Joint Terrorism Task Force investigator Glen Kerns told Fox 9 that some of the money was funneled through hawalas—informal money-transfer networks—linked to al-Shabaab, a U.S.-designated terrorist organization.
Political Leaders Looked the Other Way
Despite years of warnings, Minnesota’s far-left political establishment—including Governor Tim Walz, Attorney General Keith Ellison, and Rep. Ilhan Omar—failed to act. Internal emails from Scott Stillman, a digital forensics manager at DHS, showed desperate pleas for action in 2017, where he warned superiors:
“We are working on and overwhelmed by a significant amount of fraud cases involving organized crime, defrauding hundreds of millions of dollars annually in taxpayer monies.”
Stillman explicitly stated that stolen funds were being sent overseas to organizations connected to terrorism. His warnings were delayed, redacted, buried—and never acted upon. Frustrated by the lack of response, Stillman resigned.
A Case Study in Corruption: Fozia Ali
One of the most egregious examples involved Fozia Ali, a Twin Cities childcare provider who was sworn into the Hopkins Park Board in 2016—while under active federal investigation for wire fraud and theft of public money.
Ali, who operated the Salama Child Care Center, was accused of billing Minnesota for more than $1 million in bogus childcare services. Prosecutors said she falsely inflated attendance records by over 400% on some days, even billing for days her center was closed. While under investigation, Ali took a two-month luxury trip to Dubai and Kenya, staying in $800-per-night hotels while remotely billing the state for services she never provided.
She later pleaded guilty and was sentenced to federal prison.
A System Designed to Fail
The 2018 Fox 9 report laid bare how the scheme worked: Daycare centers recruited low-income families eligible for CCAP funding, then submitted fraudulent claims for children who never attended—or who were checked in and out within minutes. The stolen money was laundered overseas, often through informal networks tied to extremist groups.
Yet, prosecutors never expanded investigations into the dozens of other suspicious cases flagged by auditors. No high-level officials were held accountable. And no systemic reforms were implemented—until public outrage forced their hand.
The FBI Steps In—But Is It Too Late?
The recent surge in federal activity comes only after Shirley’s viral videos exposed the ongoing fraud, sparking national outrage. The FBI and DHS are now “surging” resources into Minnesota, but critics question why it took a decade—and a YouTube investigator—for authorities to act.
Meanwhile, millions of dollars continue to flow out of the country, while Minnesota’s most vulnerable children—the very ones CCAP was meant to help—remain underserved.
As the federal investigation unfolds, one question looms: How could this go on for so long? The answer may lie in years of political cover-ups, bureaucratic negligence, and a refusal to confront a scandal that implicates some of the state’s most powerful figures.
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