[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
WHEN PUBLIC FUNDS ARE ABUSED: ADDRESSING
FRAUD AND THE THEFT OF TAXPAYER DOLLARS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON CRIME AND FEDERAL
GOVERNMENT SURVEILLANCE
OF THE
COMMITTEE ON THE JUDICIARY
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
SECOND SESSION
__________
WEDNESDAY, JANUARY 21, 2026
__________
Serial No. 119-51
__________
Printed for the use of the Committee on the Judiciary
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via: http://judiciary.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
62-657 WASHINGTON : 2026
-----------------------------------------------------------------------------------
COMMITTEE ON THE JUDICIARY
JIM JORDAN, Ohio, Chair
DARRELL ISSA, California JAMIE RASKIN, Maryland, Ranking
ANDY BIGGS, Arizona Member
TOM McCLINTOCK, California JERROLD NADLER, New York
THOMAS P. TIFFANY, Wisconsin ZOE LOFGREN, California
THOMAS MASSIE, Kentucky STEVE COHEN, Tennessee
CHIP ROY, Texas HENRY C. ``HANK'' JOHNSON, Jr.,
SCOTT FITZGERALD, Wisconsin Georgia
BEN CLINE, Virginia ERIC SWALWELL, California
LANCE GOODEN, Texas TED LIEU, California
JEFFERSON VAN DREW, New Jersey PRAMILA JAYAPAL, Washington
TROY E. NEHLS, Texas J. LUIS CORREA, California
BARRY MOORE, Alabama MARY GAY SCANLON, Pennsylvania
KEVIN KILEY, California JOE NEGUSE, Colorado
HARRIET M. HAGEMAN, Wyoming LUCY McBATH, Georgia
LAUREL M. LEE, Florida DEBORAH K. ROSS, North Carolina
WESLEY HUNT, Texas BECCA BALINT, Vermont
RUSSELL FRY, South Carolina JESUS G. ``CHUY'' GARCIA, Illinois
GLENN GROTHMAN, Wisconsin SYDNEY KAMLAGER-DOVE, California
BRAD KNOTT, North Carolina JARED MOSKOWITZ, Florida
MARK HARRIS, North Carolina DANIEL S. GOLDMAN, New York
ROBERT F. ONDER, Jr., Missouri JASMINE CROCKETT, Texas
DEREK SCHMIDT, Kansas
BRANDON GILL, Texas
MICHAEL BAUMGARTNER, Washington
------
SUBCOMMITTEE ON CRIME AND FEDERAL
GOVERNMENT SURVEILLANCE
ANDY BIGGS, Arizona, Chair
TOM TIFFANY, Wisconsin LUCY McBATH, Georgia, Ranking
TROY NEHLS, Texas Member
BARRY MOORE, Alabama JARED MOSKOWITZ, Florida
KEVIN KILEY, California DAN GOLDMAN, New York
LAUREL LEE, Florida STEVE COHEN, Tennessee
BRAD KNOTT, North Carolina ERIC SWALWELL, California
CHRISTOPHER HIXON, Majority Staff Director
ARTHUR EWENCZYK, Minority Staff Director
C O N T E N T S
----------
Wednesday, January 21, 2026
OPENING STATEMENTS
Page
The Honorable Andy Biggs, Chair of the Subcommittee on Crime and
Federal Government Surveillance from the State of Arizona...... 1
The Honorable Lucy McBath, Ranking Memer of the Subcommittee on
Crime and Federal Government Surveillance from the State of
Georgia........................................................ 4
The Honorable Jamie Raskin, Ranking Member of the Committee on
the Judiciary from the State of Maryland....................... 5
The Honorable Jim Jordan, Chair of the Committee on the Judiciary
from the State of Ohio......................................... 8
WITNESSES
Scott F. Dexter, Independent Journalist
Oral Testimony................................................. 9
Prepared Testimony............................................. 12
Dylan Hedtler-Gaudette, Acting Vice President, Policy and
Governemnt Affairs, Project On Government Oversight
Oral Testimony................................................. 17
Prepared Testimony............................................. 19
Nick Shirley, Independent Journalist
Oral Testimony................................................. 29
Prepared Testimony............................................. 31
Jennifer Larson, Chief Executive Officer and Founder, Holland
Autism Center and Clinic
Oral Testimony................................................. 33
Prepared Testimony............................................. 35
LETTERS, STATEMENTS, ETC. SUBMITTED FOR THE HEARING
All materials submitted by the Subcommittee on Crime and Federal
Government Surveillance, for the record........................ 57
Materials submitted by the Honorable Andy Biggs, Chair of the
Subcommittee on Crime and Federal Government Surveillance from
the State of Arizona, for the record
An article entitled, ``Biden commutes sentences of 2 Illinois
megafraudsters,'' Dec. 13, 2024, Chicago Sun Times
An article entitled, ``North Dakota judge blasts Biden for
setting fraudsters free,'' Dec. 18, 2024, North Dakota
Monitor
An article entitled, ``Biden commutes roughly 1,500
sentences, pardons 39 in biggest single-day act of
clemency,'' Dec. 12, 2024, Detroit News
An article entitled, ``The Illinois lawmakers furious after
Biden commutes sentences of State fraudsters,'' Dec. 13,
2024, The National News Desk
Not provide at the time of publication
An article entitled, ``Biden clemency for convicted
fraudsters met with outrage: `Slap in the face,' '' Dec.
17, 2024, Fox News
Not provide at the time of publication
An article entitled, ``Victims `shocked' after Biden grants
clemency to `kids-for-cash' judge and $54 million
embezzler,'' Dec. 13, 2024, CNN
An article entitled, ``Biden sets presidential record on
pardons and clemency,'' Jan 20, 2025, Axios
Not provide at the time of publication
An article entitled, ``Minnesota day-care expose journalist
strikes again--and part 2 names the `hub' of the fraud
wheel,'' Jan. 21, 2026, The Blaze
A press release entitled, ``78th Defendant Charged in Feeding
Our Future Fraud Scheme,'' Nov. 24, 2025, U.S. Dept. of
Justice
An article entitled, ``Suitcases filled with millions in cash
flew out of MSP airport; ex-TSA agent connects dots years
later,'' Jan. 21, 2026, MSN
A press released entitled, ``HHS Freezes Child Care and
Family Assistance Grants in Five States for Fraud
Concerns,'' Jan. 6, 2026, U.S. Dept. of Health and Human
Services
A press release entitled, ``Six Additional Defendants
Charged, One Defendant Pleads Guilty in Ongoing Fraud
Schemes,'' Dec. 18, 2025, U.S. Dept. of Justice
An article entitled, ``Through the years: A decade of
investigating fraud Minnesota,'' Dec. 29, 2025, Fox 9
A press release entitled, ``ICE Continues Arresting Worst of
the Worst in Sanctuary Minneapolis Including Pedophiles,
Gang Members, and Drug Traffickers,'' Dec. 5, 2025, U.S.
Department of Homeland Security
Not provide at the time of publication
An article entitled, ``TSA flags suspicious cash outflow at
Minneapolis-St. Paul Airport,'' Jan. 21, 2026, MSN
An article entitled, ``Foreign ATM? Somali cash exodus from
Minneapolis exponentially larger than other major US
airports,'' Jan. 21, 2026, MSN
A report entitled, ``Report: SBA Cutting Off Grants to
Minnesota After Nick Shirley's Reporting on Somali
Fraud,'' Dec. 28 2025, Breitbart
Not provide at the time of publication
An article entitled, ``Vance Praises YouTuber Nick Shirley
Reporting on Minnesota Fraud,'' Jan. 21, 2026, Breitbart
An article entitled, ``Walz, Omar Using ICE Operations to
Distract from Fraud Scandal,'' Jan. 20, 2026, Breitbart
An article entitled, ``In Somali fraud scandal, Republicans
probe evidence of a blue state election scheme,'' Jan.
18, 2026, Just the News
An article entitled, ``Ringleader of $250M Minnesota welfare
fraud scandal ordered by judge to forfeit Porsche, luxury
goods,'' Jan. 6, 2026, New York Post
Not provide at the time of publication
An article entitled, ``TSA Whistleblower: Somalis Regularly
Flew Out with Suitcases Stuffed with Millions in Cash,''
Dec. 11, 2025, LifeZette.com
Not provide at the time of publication
An article entitled, ``Minnesota Welfare Fraud Targets Somali
Hawala Money Transfers,'' Dec. 11, 2025, Fox News
Not provide at the time of publication
An article entitled, ``Feds Probe Hundreds of Millions in
Suspected Somali Cash in Luggage Leaving Minneapolis
Airport,'' Jan. 7, 2026, Star News Network
Not provide at the time of publication
An article entitled, ``USCIS Announces Results of Operation
Twin Shield, a Large Scale Immigration Fraud
Investigation,'' Sept. 30, 2025, U.S. Citizenship and
Immigration Services (USCIS)
Not provide at the time of publication
An article entitled, ``Noem Says Homeland Security is
Investigating Fraud in Minneapolis,'' Dec. 29, 2025, PBS
Not provide at the time of publication
The document 18 U.S.C. 666, entitled, ``Theft or Bribery
Concerning Programs Receiving Federal Funds,'' Cornell
Law
Not provide at the time of publication
The document 18 U.S.C. 641, ``Public Money, Property or
Records,'' Cornell Law
Not provide at the time of publication
The document 18 U.S. Code 1001, Statements or Entries
Generally,'' Cornell Law
Not provide at the time of publication
Materials submitted by the Honorable Lucy McBath, Ranking Memer
of the Subcommittee on Crime and Federal Government
Surveillance from the State of Georgia, for the record
An article entitled, ``Republicans' Claims of `Fraud' Are a
Pretext for Unpopular and Drastic Medicaid Cuts,'' Apr.
16, 2025, Center on Budget and Policy Priorities
An article entitled, ``Trump's Child Care Funding Freeze in
Five States Could Cost Families $400 Million,'' Jan. 8,
2026, The Century Foundation
An article entitled, ``7 Ways Congress Should Sharpen Its
Oversight in 2026,'' Jan. 13, 2026, Project on Government
Oversight
Materials submitted by the Honorable Jamie Raskin, Ranking Member
of the Committee on the Judiciary from the State of Maryland,
for the record
An article entitled, ``Trump's pardons forgive financial
crimes that came with hundreds of millions in
punishments,'' Jan. 20, 2026, NBC News
An article entitled, ``Arizona Has Recovered Just 5% of
Taxpayer Dollars Lost in a $2.5 Billion Medicaid Fraud
Scheme,'' May 6, 2025, ProPublica
An article entitled, ``Columbus mother and daughter among 15
indicted in pandemic unemployment assistant scheme,''
Aug. 22, 2025, The Columbus Dispatch
A letter to the Honorable Robert F. Kennedy, Jr., Secretary,
U.S. Department of Health and Human Services, from
Representative Bennie Thompson, Oct. 21, 2025
A press release entitled, ``Governor Walz Issues Executive
Order Directing State Agencies to Take Additional Steps
to Continue combating Fraud,'' Sept. 17, 2025, Governor
of Minnesota Office
An Executive Order 25-01 entitled, ``Preventing Fraud and
Establishing the Financial Crimes and Fraud Section of
the Department of Public Safety,'' Jan. 3, 2025, Tim
Walts, Governer, State of Minnesota
An article entitled, ``Trump calls Somali immigrants
`garbage' as US reportedly targets Minnesota community,''
Dec. 2, 2025, The Guardian
An article entitled, ``5 states sue Trump administration for
withholding billions in social safety net funds,'' Jan.
9, 2026, PBS
An article entitled, ``Behind the Somali daycare panic is a
mother-and-son duo angling to be top Maga influencers,''
Jan. 10, 2026, The Guardian
An article entitled, ``Right-Wing Youtuber Behind Viral
Minnesota Fraud Video Has Long Anti-Immigrant History,''
Dec. 31, 2025, The Intercept
A fact check article entitled, ``Here's what's happening with
childcare fraud in Minnesota,'' Jan. 9, 2026, The 19th
News
An article enitled, ``The Trump Administration Says It's
Cracking Down On Fraud. It Gave A Red State A Pass,''
Jan. 13, 2026, Huffington Post
An article entitled, ``Timeline: Fraud investigations stretch
across Walz's tenure,'' Jan. 6, 2026, NPR News
APPENDIX
Materials submitted by the Honorable Andy Biggs, Chair of the
Subcommittee on Crime and Federal Government Surveillance from
the State of Arizona, for the record
An article entitled, ``Justice Dept. to Interrogate Tim Walz,
Four Other Top Minnesota Democrats,'' Jan. 21, 2026,
Breitbart
An article entitled, ``Biden clemency list includes
individuals who defrauded taxpayers out of millions,''
Dec. 17, 2024, Fox News
The Executive Order 25-10 entitled, ``Empowering State Agencies
to Continue Combatting Fraud,'' Sept. 17, 2025, State of
Minnesota, submitted by the Honorable Jamie Raskin, Ranking
Member of the Committee on the Judiciary from the State of
Maryland, for the record
WHEN PUBLIC FUNDS ARE ABUSED:
ADDRESSING FRAUD AND THE THEFT OF TAXPAYER DOLLARS
----------
Wednesday, January 21, 2026
House of Representatives
Subcommittee on Crime and Federal Government Surveillance
Committee on the Judiciary
Washington, DC
The Subcommittee met, pursuant to notice, at 10 a.m., in
Room 2141, Rayburn House Office Building, the Hon. Andy Biggs
[Chair of the Subcommittee] presiding.
Members present: Representatives Biggs, Jordan, Tiffany,
Moore, Kiley, Lee, Knott, Cline, McBath, and Raskin.
Mr. Biggs. Welcome, everybody, to today's hearing, and I
mean everybody who is in here, and everybody who will come in
here, is welcome to come in here and participate, and watch,
and participate orderly.
Our hearing is on fraud and theft of taxpayer dollars. I
now recognize the gentlewoman from Florida, Ms. Lee, to lead us
in the pledge of allegiance.
All. I pledge allegiance to the Flag of the United States
of America, and to the Republic for which it stands, one
Nation, under God, indivisible, with liberty and justice for
all.
Mr. Biggs. Thank you. I now recognize myself for an opening
statement.
Today's hearing will examine the widespread and outrageous
amount of fraud taking place in and around Minneapolis,
Minnesota.
Minnesota has lost billions of dollars in State
administered and federally funded programs, due to organized
fraud. Fraud networks operating in Minnesota dating back more
than a decade, have submitted over $9 billion, that's a billion
with a ``B,'' in false claims.
Some high-profile cases in Minnesota include organizations
and programs such as Feeding our Future, Early Intensive
Developmental and Behavioral Intervention, Housing
Stabilization Services, and Integrated Community Supports. Now,
we're going to watch a video.
[Video shown.]
Mr. Biggs. Fraud within these programs have involved false
claims, fictitious providers, and services not rendered,
highlighting the need for stronger verification, monitoring,
and enforcement to protect taxpayer funds.
These fraudulent actions have robbed taxpayer funds
intended to feed children, support individuals with autism,
provide housing for low-income and disabled Americans, and
deliver healthcare to Medicaid recipients.
Since 2021, the DOJ has charged 98 defendants in Minnesota-
based fraud cases, 85 of whom are of Somali descent. Of the 98
defendants, 64 have been convicted.
DOJ has now undertaken extensive investigative action,
which includes over 1,750 subpoenas, executing more than 130
search warrants, and conducting more than 1,000 witness
interviews.
Since the start of the Trump Administration, the Federal
response to fraud in Minnesota has intensified, following a
series of high-profile cases involving State administered,
federally funded programs.
One of the initial instances of high-profile fraud in the
State involved the nonprofit Feeding our Future, which was at
the center of a $250 million COVID-19 related fraud scheme. As
part of the scheme, fraudsters exploited Department of
Agriculture USDA food programs designed to provide meals for
children. Federal prosecutors ultimately convicted 57
defendants and described the scheme as the Nation's largest
COVID era fraud.
The issue gained renewed national attention in late
December 2025, following a widely shared YouTube video posted
by one of our witnesses, Mr. Nick Shirley. Mr. Shirley's work
highlighted suspected fraud in Minnesota childcare programs.
His reporting prompted Federal authorities to intensify
investigations, expand oversight, and coordinate multi-agency
enforcement efforts.
A week ago today, Mr. Shirley released a second video that
documented alleged fraud in the transportation industry,
intended to provide rides for children, the disabled, and the
elderly. Mr. Shirley uncovered companies with questionable
addresses, and vehicles intended to transport children, the
disabled, and the elderly, that remained idle for extended
periods of time.
We look forward to hearing from Mr. Shirley about what he
was able to uncover. How did we get here? Hopefully another
witness, Scott Dexter, a former fraud investigator for the
Minnesota Department of Human Services, can shed some light on
that for us.
I'd be remiss if I didn't point out that this massive wave
of fraudulent activity didn't just have the consequence of
ripping off taxpayer. It has drastically impacted legitimate
organizations that are truly helping their neighbors. Jennifer
Larson is here today to share her story about how this massive
fraud has crippled her organization that serves autistic
children.
We'd like to think that these fraudsters will one day face
justice, but it appears that is not always the case. For
example, Yasmin Ali, a daycare and home healthcare owner
charged with stealing millions from Minnesota taxpayers, after
being granted bail disappeared before a trial and has not been
located since.
That was more than a decade ago. The tentacles of this
fraud ring are widespread and include crimes other than fraud.
For example, the aforementioned Yasmin Ali. Her brother,
Adarus Abdulle Ali, pleaded guilty in 2009 to lying to a
Federal grand jury about his knowledge of a group of young
Somali men in Minnesota, who traveled to Somali to fight with
Al-Shabaab, a foreign terrorist organization against the
transitional Federal Government of Somalia.
We can also consider the fact that at least $700 million in
U.S. cash transported via passenger luggage through
Minneapolis-St. Paul International Airport. The incidents are
all currently under Federal investigation with the majority
carried by couriers traveling to Somalia, other African
Nations, and the Middle East.
While no definitive links to funding terrorism have been
established yet, we know that hundreds of millions of dollars
in cash are being transported to areas where foreign terrorist
organizations are active. What could possibly go wrong?
A whistleblower has alleged that TSA personnel at MSP,
Minneapolis-St. Paul International Airport, repeatedly
identified and flagged routine encounters with Somali men
carrying large suitcases filled with bundled cash, often
exceeding $1 million.
During an interview a former TSA agent at MSP from 2016-
2021, now a whistleblower, Liz Jacksa noted that she saw,
quote, ``suitcases packed with millions of dollars in cash
moving through MSP again and again, carried by the same type of
couriers, which raised questions that she feels law enforcement
and political leaders still haven't answered.''
Jacksa further explained her repeated encounters with
Somali men carrying suitcases packed with cash, and in one
case, a bag filled with new passports. According to Jacksa, the
volume, consistency, and profile of the transactions she
witnessed were well beyond ordinary or everyday behavior.
Treasury Secretary Scott Bessent has noted that the
Department is currently investigating where Minnesota's
taxpayer dollars are being placed.
Additional reports show what Somali individuals in the
United States send roughly $215 million abroad each year. On
January 9th, Secretary Bessent indicated that the Treasury
Department's Financial Crimes Enforcement Network, FinCEN,
informed four money transfer organizations that they are under
investigation for their roles in the fraud scheme involving the
theft of funds from social services in Minnesota.
He also indicated that some banks in Minnesota are being
investigated by the Internal Revenue Service's Civil
Enforcement Division for allegations related to money
laundering.
As you can see, there's much to unpack surrounding these
numerous fraud schemes taking place in and around Minneapolis,
Minnesota.
I would be remiss if I didn't suggest and urge additional
investigation throughout this entire country. I know that in my
home State of Arizona, our Democrat Attorney General came into
office and quickly said that there had been $2.5 million in
fraud just in the Medicaid program alone.
In recent studies released over the last year in Arizona,
it has been suggested that as much as $7.2 billion in fraud
annually take place in Arizona's similar programs.
This is not just a Minnesota issue, but it just happens to
be at the forefront of why we are here today.
I look forward to today's hearing, and I thank the Members
and witnesses for taking part. I'll yield back and recognize
the Ranking Member, Ms. McBath, for her opening statement.
Ms. McBath. Thank you, Mr. Chair, and thank you for
convening this hearing this morning to talk about the harm that
fraud can cause.
Thank you for everyone that is here this morning to
testify. It is so necessary that we continue to investigate and
prosecute all forms of fraud, including government fraud, which
can turn many into victims.
That is because a person committing fraud against a
government program, steals from all of us as taxpayers and
abuses the purpose, the initial purpose, of these programs.
They harm the organizations that need these programs to
operate and most importantly, they harm the people that the
program is designed to help.
Whether we're talking about a program that feeds school
children, helps seniors find housing, helps people overcome
addiction, or provides services to address disabilities, it is
critical that the dollars that we invest in these programs
actually serve the purposes that we have in mind when we, the
lawmakers, created them.
That's why the Department of Justice has always combated
fraud, including prosecuting dozens of people for perpetrating
fraudulent schemes in Minnesota in 2021, and under the Biden
Administration.
Prosecutions are not enough to combat or prevent fraud. The
Biden Administration also established a COVID-19 fraud
enforcement task force and increased oversight of programs that
were being targeted by fraudsters.
The Minnesota lawmakers have also taken steps to reduce
fraud in their State, strengthening the State's ability to stop
potential fraud sooner and improving investigations to hold
those scammers accountable.
Where President Trump has taken a very different approach
to fraud, just last week, Trump added quite a few fraudsters to
his growing list of people that he has pardoned. Not because
they are deserving of a second chance, but because they hired
his friends, back channeled a donation, or serve his political
purposes.
He has pardoned many people charged or convicted of fraud
and other financial crimes, wiping away more than $1 billion in
money that would otherwise have gone to victims of crime.
President Trump has also fired inspectors general,
instructed his DOJ to stop enforcing bribery statutes, and
gutted the offices that investigate white collar crime.
That is how we know this hearing is not really about fraud.
It is about trust. The Trump Administration does not want you
to trust these programs because if you don't trust them,
they're easier to destroy them.
They do not want you to trust entire communities because if
you don't trust them, they're easier to intimidate. We cannot
let that happen.
We will continue to fight for robust and responsible
oversight, and for the continuation of initiatives that make
all our communities safer, healthier, and more resilient.
Across the country, there are daycares, schools, hospitals,
treatment centers, research facilities, nursing homes, fire
departments, police departments, airports, and more, that all
depend on State or Federal funding, not just to help those in
need, but to serve every single one of us.
If President Trump succeeds an attempt to freeze childcare
funding across five states, which is temporarily blocked by a
court order, the effects would ripple across families and
businesses throughout our economy. It would affect more than
500,000 children, and these are children that are not just
within the State of Minnesota. The 500,000 children, their
parents, the businesses, and organizations where those parents
work, and the many people who depend on those businesses to
fulfil needs in those communities.
That's the fallout from just one program, addressing one
need across only five States. If President Trump continues this
assault on critical programs, the harms could be far greater.
These latest attacks come on top of the cuts that President
Trump and Congressional Republicans already forced through,
which are taking healthcare from 10 million Americans and
reducing food assistance to over 40 million Americans,
including many, many children.
We don't have to choose between programs that are
susceptible to fraud and nothing at all. With proper oversight,
we can make sure that every American is fed, that everyone can
access housing and medical treatment, and that our daycares and
our schools can keep guiding our children toward a better
future.
I look forward to hearing more today about how we can
achieve this goal. I thank our witnesses for being here, and I
yield.
Mr. Biggs. The gentlelady yields back, and I'll recognize
the Chair of Full Committee, Mr. Jordan. No, I don't recognize
him right now, but I will recognize the Ranking Member of the
Full Committee, Mr. Raskin, for his opening statement.
Mr. Raskin. Thank you kindly, Mr. Chair, and thank you to
all of our witnesses for joining us.
In a just world, the Judiciary Committee today would be
investigating why a masked ICE agent shot three times in cold
blood and killed an unarmed citizen, a 37-year-old mom, Renee
Nicole Good. We'd be investigating why Trump's DOJ is harassing
and investigating Renee's wife, instead of investigating her
killer.
We'd be asking why ICE agents are trained in basic CPR, but
911 tapes have shown none of the agents performing CPR on Ms.
Good. They left her bleeding alone in her car for almost three
minutes, and definitively rejected the help of a man who came
forward and identified himself as a doctor.
We'd be investigating why in another Minnesota case, ICE
agents deployed tear gas under the car of a family of eight
people, including a six-month-old, a two-year-old, and two kids
with severe asthma, who were just trying to get home from a
basketball game. The baby stopped breathing and his mom had to
administer CPR as they desperately waited for medical help to
arrive.
Our colleagues want to talk about fraud in Minnesota. Fraud
that was already being investigated and prosecuted under the
last administration. It is true that social services fraud,
serious fraud, occurred in Minnesota. That's why, under
President Biden, the Department of Justice opened multiple
criminal investigations that, to date, have already resulted in
more than 90 people being charged and 64 people being convicted
of Federal criminal offenses.
Indeed, Minnesota lawmakers acted to root out and prevent
fraud going forward in the public benefits program. That's why
last year, the Minnesota legislature passed legislation to
empower the Governor to cutoff payments or to claw back funds
whenever fraud is detected.
That's why Governor Walz appointed the first ever Director
of Program Integrity, to make sure the State is effectively
investigating and preventing fraud and corruption in their
programs.
The fraud in Minnesota was discovered not by a right-wing
social media influencer who has been harassing people in
communities all over Minnesota in recent weeks, but by the hard
work of real local-investigative journalists, brave
whistleblowers, and State and Federal auditors.
This fraud, which we must take seriously, is not unlike the
$2.5 billion breathtaking Medicare fraud scheme uncovered last
year in the home State of the Chair of this Subcommittee, as he
himself mentioned or the massive COVID-19 unemployment
assistance fraud scheme uncovered in Chair Jordan's home State
of Ohio.
Fraud is endemic in government all over the world. There
are fraudsters attacking our public institutions trying to
undermine them and rip them off. Even our President has been
convicted of 34 counts of criminal fraud by a jury of his peers
in New York, related to the fraudulent payments made to porn
star, Stormy Daniels, and also civilly convicted in New York
for different kinds of real estate fraud.
Fraud is not headquartered in one State, or one
municipality, much less one ethnic, racial, or religious
community. President Trump couldn't resist the temptation to
use fraud in Minnesota as an occasion to mobilize the power of
the Federal Government to bully and intimidate first- and
second-generation Somali Americans who live in that State.
Many of the people convicted in the fraud schemes were of
Somali ancestry. Under the pretext of cracking down on a fraud
that had already been discovered, investigated, and prosecuted,
Trump surged Federal immigration officers to Minnesota and
aimed them at the Somali-American communities, calling the
people who live there, repeatedly, garbage.
This is despite the fact that it is a complete nonsequitur,
obviously, to send immigration agents to conduct fraud
investigations.
The deployment of law enforcement resources against an
entire ethnic community after the criminal prosecution of a
small group of its members is to promote the sinister ideas of
collective guilt and guilt by association, two doctrines that
are emphatically rejected in Anglo-American jurisprudence and
by our courts.
The community targeted in Minneapolis is made up,
incidentally, overwhelmingly of U.S. citizens. Ninety-five
percent of Somalis in Minnesota are U.S. citizens, including 58
percent of whom were born in the United States.
Well, what is the Trump Administration's actual record on
fraud? Well let's see, President Trump pardoned the big-time
drug dealer and convicted fraudster, Juan Orlando Hernandez,
the former President of Honduras, sparing him a 45-year
criminal sentence after he brought in 400 tons of cocaine into
our country.
That's 800,000 pounds of cocaine that he said, quote, ``we
are going to stuff up the nostrils of the gringos.'' Trump
pardoned him.
If you're interested in that particular sweetheart deal,
that would be a great subject for a hearing, Mr. Chair.
Just last week again, the President granted pardons to more
convicted fraudsters. Julio Herrera Velutini was scheduled to
be sentenced this month for participation in a political
corruption and fraud scheme alongside his codefendant, the
former Governor of Puerto Rico, Wanda Vazquez.
In late 2024, Mr. Herrera was facing felony bribery charges
in a different case. His daughter donated $2.5 million to the
MAGA Inc., super PAC. Then, in May 2025, Mr. Herrera's lawyer,
who had served on President Trump's legal team, negotiated a
deal allowing him to plead guilty to a trivial misdemeanor
offense instead.
Several months later, Mr. Herrera's daughter donated
another $1 million to MAGA Inc. What do you know? President
Trump generously granted Mr. Herrera a full and unconditional
pardon just last week.
They're making fraud out of the pardon process in America
with pay-to-play rules as they pardon recidivist, hardened, and
unrepentant fraudsters.
Well, indeed in total, President Trump has pardoned more
than 1,600 people, depriving victims, survivors, and taxpayers
of an estimated, check this out, $1.55 billion in restitution
and fines owed to us, the American people, while shockingly,
because other Presidents didn't do this but Trump did, while
shockingly allowing corporate fraudsters and tax cheats to keep
all their ill-gotten gains.
This is a massive and unprecedented swindle from working-
class people and crime victims, as the administration gives all
these ill-gotten gains right back to the criminal fraudsters
who stole the money in the first place.
Finally, Mr. Chair, President Trump has dismantled the
infrastructure that actually prosecutes white-collar crime and
fraud in America, actually roots out waste, fraud, and abuse.
The Trump DOJ gutted the Public Integrity Section at DOJ that
prosecutes government officials who break the law, and nearly a
year ago, his DOJ suspended enforcement of the Foreign Corrupt
Practices Act, which prohibits foreign bribery, saying all bets
are off.
He's gutted the Consumer Financial Protection Bureau, which
is the first and the only agency devoted solely, at the Federal
level, to protect American consumers against being cheated by
big financial corporations. The CFPB delivered $21 billion back
to more than 200 million Americans, who were victims of fraud
and other predatory business practices, and the administration
has then gutted the CFPB, because they are on the side of
corporate fraud and white-collar crime.
That's the truth of what's going on there. They fired 17
inspectors general, the independent government watchdogs whose
job it is actually to root out waste, fraud, abuse, and
corruption, and left 28 IG offices without Senate-confirmed
leadership at all, allowing the corruption and the fraud to run
rampant.
If we're going to have a hearing about fraud in America,
Mr. Chair, let's do it. Let's take in the full scope of what's
taking place in our country.
I yield back to you.
Mr. Biggs. The gentleman yields back, and I recognize the
Chair of the entire Committee, Mr. Jordan.
Chair Jordan. Thank you, Mr. Chair. I'll be brief. I want
to thank our witnesses for being here. Estimates are
potentially as high as $9 billion; we're looking here at what
appears to be a decade long scam and fraud.
You can always look at one program I talked about a couple
weeks ago in an oversight hearing, was this Feeding Our Future
program, where taking Federal, Americans' hard earned tax
dollars, taking that money and supposedly providing meals to
children.
The problem was, there were no meals and no kids. They were
just stuffing it in their pockets. This is a great hearing to
have. We appreciate the witnesses and the work that they have
done.
Ms. Larson and the work she does, and actually making a
difference, doing a legitimate program. Mr. Shirley for
uncovering this, and Mr. Dexter and others who are here.
With that, I would yield back. I look forward to hearing
from our witnesses and the hearing itself.
Mr. Biggs. Thank you, Mr. Chair. I would recognize myself
just for UCs. The first one is ``President Joe Biden commutes
sentences for two of Chicago area's most notorious
fraudsters.''
Second, ``North Dakota judge blasts Biden for setting
fraudsters free.''
Third, ``Biden commutes roughly 1,500 sentences; pardons 39
in biggest single day act of clemency,'' including fraudsters.
Fourth, ``Illinois lawmakers furious after Biden commutes
sentences of State fraudsters.''
Without objection.
Mr. Raskin. Mr. Chair, could I enter some, as well?
Mr. Biggs. Yes, please.
Mr. Raskin. Thank you much. This UC request is from ABC
News, January 20, 2026, titled, ``Trump's pardons forgive
financial crimes that came with hundreds of millions of dollars
in punishment.''
This one is, ``Arizona has recovered just 5 percent of
taxpayer dollars lost in a $2.5 billion Medicaid fraud
scheme,'' that's from ProPublica.
From the Columbus Dispatch. ``Columbus mother and daughter
among 15 indicted in pandemic unemployment assistance fraud
scheme.''
Finally, a Minnesota fraud scheme timeline from NPR News,
``Fraud investigations stretched across Walz's tenure.''
Mr. Biggs. Without objection. Now, without objection, all
the opening statements will be included in the record, and we
will introduce today's witnesses.
Mr. Scott Dexter. Mr. Dexter is a former law enforcement
officer having served for 28 years. He also served with the
Minnesota Department of Human Services, Office of Inspector
General, where he investigated fraud in the childcare
assistance program. Thank you Mr. Dexter, for being here.
Ms. Jennifer Larson. Ms. Larson is the Founder and Chief
Executive Officer of the Holland Center for Autism, a clinic
that provides services to children and young adults with
autism.
She started the Holland Center to serve families like hers
that were not receiving adequate services and support
elsewhere. Thank you, Ms. Larson, for being here today.
Mr. Nick Shirley is an independent journalist. His recent
investigations and videos have shed light on the scale of fraud
in public benefit programs in Minnesota that are currently
ongoing, and thank you Mr. Shirley, for being here.
Mr. Dylan Hedtler-Gaudette. Mr. Hedtler-Gaudette is the
acting Vice President of Policy and Government Affairs at the
Project on Government Oversight (POGO).
POGO is a nonprofit organization that investigates alleged
wrongdoing by the Governor. Thank you, Mr. Hedtler-Gaudette,
for being here with us today.
We welcome all our witnesses and thank them for appearing
today. We will begin by swearing you in. Would you please rise
and raise your right hand?
Do you swear or affirm under penalty of perjury that the
testimony you are about to give is true and correct to the best
of your knowledge, information and belief, so help you God?
Thank you. Thank you, you may be seated.
The record will reflect that the witnesses have all
answered in the affirmative, and with the instruction of Mr.
Hedtler-Gaudette, I wanted to let all Members of the panel know
that when you have a question for him, please say his name so
he knows that you are addressing him, please.
I want the witnesses to know that your written testimony
will be entered into the record in its entirety. Accordingly,
we ask that you summarize your testimony in five minutes.
We'll begin now with Mr. Dexter. You are recognized for
your five-minute statement.
STATEMENT OF SCOTT F. DEXTER
Mr. Dexter. Thank you. Chair and the Members of the
Committee, thank you for the opportunity to speak with you
today. My name is Scott Dexter, I'm a retired law enforcement
investigator with 28 years of experience.
Most of it was spent conducting criminal and financial
fraud investigations, with experience in surveillance in
operations.
In 2013, after retiring from law enforcement, I joined the
Minnesota Department of Human Services as part of a newly
created investigative unit within the office of Inspector
General.
Our mission was straightforward, identify and investigate
fraud within the childcare assistance program known as CCAP.
I was one of the original four investigators hired, all of
us were former law enforcement professionals with backgrounds
in criminal investigations.
Our cases were not selected based on the name of the
center, the owner, or the community it served. They were
selected based solely on tips, complaints, and the amount of
CCAP funding being paid out.
The highest funded centers were reviewed first. Many of
those centers were referred to us through the public tip line,
or by licensing inspectors who observed activity inconsistent
with a legitimate daycare operation.
What we found was deeply concerning. Many of these centers
operated out of commercial spaces with windows totally covered,
no visible play areas, and very few children ever present.
Through surveillance, data collection, and review of
attendance and billing records, we repeatedly documented
patterns of over billing, nonexistent attendance, and in some
cases, children being signed in for hours they were never
actually at the center.
Our investigative process was thorough and methodical. We
collected licensing and billing data, installed covert
surveillance cameras, reviewed hours of video, identified
parents and employees, and calculated estimated overpayments
based on actual attendance.
Completed cases were then turned over to the Minnesota
Bureau of Criminal Apprehension for search warrants,
interviews, arrests, and potential prosecution.
As our investigations progressed, we noticed a trend. Many
of the centers receiving the highest levels of CCAP funding
were owned and operated by Somali individuals, and the families
served were predominantly Somali.
This was not the basis for selecting cases, but it did
become the basis for accusations against us. We were labeled as
racially biased, despite the fact that our case selection was
driven entirely by funding data.
An outside review was launched into our investigative
practices. We were questioned about how we selected centers,
and how we conducted surveillance.
Following that review, new restrictions were placed on our
work, including mandatory panel reviews before we could move
forward with investigations.
Investigators were also pulled from conducting new or
current investigations to enter data from all previous
complaints received by DHS, into a newly created database, a
process that took nearly a year to complete.
These changes significantly hindered our ability to do our
jobs effectively. Ultimately, in 2019, I chose to retire
because the investigative process had become so constrained
that meaningful work was no longer possible.
Through collaboration with Federal agencies including the
IRS Criminal Investigation Division, Homeland Security, and the
U.S. Department of Health and Human Services, we learned that
millions of dollars in cash from the Somali community was being
flown out of the Minneapolis-St. Paul airport by Somali
couriers.
At one point, nearly $70 million had been documented
leaving the country halfway through a single year.
Although we could not prove that the cash was obtained
fraudulently, we strongly suspected that it was.
We also encountered situations where Federal partners were
prevented from opening cases due to concerns about political
sensitivities surrounding the Somali community, and the refugee
resettlement program.
These decisions had real consequences, allowing fraud to
continue unchecked.
Throughout our work, we identified several loopholes that
made CCAP highly vulnerable to fraud. Centers were allowed to
bill for the full authorized hours, even when children were
present for only minutes.
Billing records could be submitted up to 30 days later,
creating opportunities for manipulation. Attendance records
were handwritten, unreliable, and often incomplete.
Despite our recommendations, no biometric attendance
systems, no electronic submission requirements, and no State
installed security cameras, were ever implemented.
Chair and the Members, the purpose of my testimony is not
to cast blame on any community. It is to highlight systemic
weaknesses that allowed large-scale fraud to occur, and to
emphasize the need for stronger safeguards, better oversight
and investigative processes that are allowed to function
without political interference.
Thank you for your time and your commitment to ensuring
accountability within publicly funded programs, and I am
prepared to answer any questions that you may have.
[The prepared statement of Mr. Dexter follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Biggs. Thank you, Mr. Dexter. Now, we're going to
recognize Mr. Hedtler-Gaudette, for your five minutes of
opening statement.
STATEMENT OF DYLAN HEDTLER-GAUDETTE
Mr. Hedtler-Gaudette. Chair Biggs, Ranking Member McBath,
and the Members of the Subcommittee, I appreciate the
opportunity to testify before you today on the important issues
of preventing fraud, and protecting taxpayer dollars.
My name is Dylan Hedtler-Gaudette, and I am the Acting Vice
President of Policy and Government Affairs at the Project on
Government Oversight.
We are a nonpartisan independent watchdog that promotes a
more accountable, transparent, and effective Federal
Government.
We view it as our mission to combat abuse of power and
corruption in the Federal Government, which includes working on
rooting out waste, fraud, and abuse.
The unfortunate truth is that fraud in government programs
is a fact of life. Since the U.S. Government has existed, fraud
in government has also existed.
For much longer than that, in fact. For as long as human
beings have been organizing ourselves into societies and
building institutions to govern those societies, there have
always been those who will seek to take advantage.
This is a harsh, but real truth related to the human
condition, related to our fundamentally fallen and flawed
natures.
That said, it is still incumbent on every one of us to do
what we can to prevent fraud, and to hold perpetrators of fraud
accountable.
This is especially true when fraud implicates hard earned
taxpayer dollars, and critical public programs and services.
This is true whether we're talking about fraud in the context
of the Feeding Our Future program, or any other program in
Minnesota. Whether we're talking about welfare fraud in
Mississippi, which involved the participation of a world-famous
Hall of Fame NFL quarterback.
This is true whether we're talking about fraud in the
context of it being perpetrated by large multinational defense
companies in the context of multibillion dollar contract they
have with the Defense Department.
The point here is that fraud and the abuse of taxpayer
dollars are not related to any particular geographic,
demographic, or other boundary or characteristic.
Why do these things happen so much? Mostly, they are caused
by deep structural flaws, gaps, and weaknesses in our system of
government.
They're also driven by recalcitrance and resistance to
change on the part of Federal agencies.
To put it shortly, fraud is a systemic problem, and it
requires systemic solutions. What are these solutions? I'm
pleased to share a few of them with you today.
We must first look at watchdogs, critical sources of
information, and practitioners of oversight from within the
Federal Government itself.
I'm specifically talking about inspectors general, the
Government Accountability Office, and whistleblowers. Rather
than attacking, firing, undermining and intimidating these
individuals and entities as this administration and its allies
have done, we must strengthen, preserve, and protect them.
We must enact reforms to make sure that IGs and GAO can
perform their duties effectively and independently, and we must
add additional safeguards to make sure that whistleblowers can
blow the whistle without fear of reprisal, or retaliation.
We must also take a long, hard look at the architecture
currently in place for how we track, monitor, analyze, and
assess Federal funding.
To put it bluntly, that architecture is broken. Key
resources like USAspending.gov are in desperate need of
overhaul and modernization.
We need to enhance and improve the quantity, quality,
timeliness, and integrity of the data and information we
collect on Federal funding.
We need to promote more accountability, transparency, and
compliance mechanism within the chain of spending for Federal
funding.
If we don't do this, we will never have a good grasp on
where funding is going, where it's ending up, who is being
helped by it, who is being missed by it, and what the ultimate
impact is.
Last, we must enact robust reforms and vigorous enforcement
to crack down on corruption, cronyism, and conflicts of
interest, which turbo charge waste, fraud, and abuse in the
Federal Government.
The Presidential Pardon is an acute example of this, with
each of the last two administrations using the pardon power
inappropriately to pardon convicted fraudsters.
We must also promote reforms to crack down on the revolving
door between agencies and industries, and to head off pay-to-
play politics, all which distort and corrupt decisions like the
award of Federal contracts.
The takeaway here is simple. Focusing on individual
salacious, scandalous examples of fraud is akin to looking at
the symptoms and not looking at the disease or the root causes
of the disease.
The Project on Government Oversight stands ready, willing
and able to work with anyone here who wants to work on root
causes and systemic solutions, so that we can actually get our
hands around waste, fraud, abuse, and corruption in the Federal
Government.
Thank you for having me here today, and I look forward to
answering your questions.
[The prepared statement of Mr. Hedtler-Gaudette follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Biggs. Thank you, Mr. Hedtler-Gaudette, and I forgot to
mention. When you have about 10 seconds left, I will just tip
that so you will, so everybody will know that as well.
Mr. Shirley, you're recognized for your opening statement.
STATEMENT OF NICK SHIRLEY
Mr. Shirley. Awesome. I'm here today to speak on behalf of
all hard-working, law-abiding taxpaying citizens here inside of
the United States.
I've helped bring to light widespread fraud that's
happening inside our Nation, and we the people, have had enough
of our hard-earned money going toward fraudsters as if it's no
big deal.
As I speak here, I want to ask everyone a question. How
much do we trust when we pay our taxes, it's going to benefit
our Nation?
People erupted during the Boston Tea Party over just a few
percentages as they believed they were being taxed without
representation. Nowadays, we have the representation, but do we
trust our representatives?
My name is Nick Shirley, and I made a 41-minute video that
I posted on platforms like X and YouTube. My video received
over 100 million views, and it created instance change within
our government.
As the Federal Government launched investigations in
departments such as Health and Human Services, froze over $185
million in childcare funding, until businesses can prove they
are legitimate businesses.
I actually became aware of the fraud that was happening in
Minnesota in June 2025, as I was there for a separate video and
Minnesotans started reaching to me asking if I was making a
video on the fraud.
I said well, what fraud? This lady, she was a real estate
agent and she says well, I'm having a hard time selling my
properties because people are curious about these assisted
livings that are popping up next door to some of the houses
that we're buying, or the home healthcare clinics that are
popping up. We don't know who is next to these houses that
we're trying to sell.
I said well, I'm not going to come and make a video if I
don't have any proof. Therefore, I left Minnesota, and I
continued to look for fraud in the best way I could.
As I was getting my own information, a man by the name of
David reached out to me and he said hey, I have been
investigating this fraud for years now.
I have been driving by these childcare centers. I have
never seen a single child, and I have received information from
the State of Minnesota as to how much money these places are
receiving.
I said great, let me come to Minnesota and we'll make this
video about potential fraud that was taking place inside of
Minnesota.
We go to a daycare and I'm instantly surprised by what we
see. We arrived, and it was an industrialized building, and
there was two daycares registered at that daycare--at that
building.
The first thing I noticed is all the windows are blacked
out, and there's no footprints in the snow of any children.
There are no playgrounds, or anything that would make it look
like it was a childcare.
Above me a sign read, open 7 a.m. to 10 p.m., but there is
nobody there. The doorbell did not even work.
Then, we continued to go to other daycares and we noticed
the same pattern. No children, blacked out windows, and one
daycare, a learning center, spelled ``Quality Learing Center,''
instead of ``Quality Learning Center.''
They had received $1.9 million, yet with that $1.9 million,
they could not even spell learning right on their sign.
Government Walz has said he's been fighting fraud in
Minnesota since 2019, and said the buck stops with him.
However, how long would it take for you to notice $1 million
being--leaving your bank account and not knowing where it's
going? That's essentially what had been happening in Minnesota
for years as billions of dollars have been misplaced.
Meanwhile, while people like Governor Tim Walz call people
like me a White supremacist delusional conspiracy theorist, he
actually decided to drop out of reelection because I believe,
of how deep and extensive this fraud is.
Thank you very much. Since my reporting, the HHS department
froze over $185 million and to this day, not a single business
has been able to prove proof of legitimacy.
How fast would you be proving that you are a legitimate
business if you have children to actually feed and to take care
of? You'd be sending that paperwork instantly.
I made this video to document the widespread fraud that has
been taking place as I truly believe all fraud is bad. People
like me, my generation, we're sick of seeing tax dollars go
toward fraud.
We just want to have the same opportunities that our
fathers and our grandparents had, and when you see people
making millions of dollars by committing fraud, it upsets
everybody from all age demographics.
I hope today we can have a good conversation, and we can
all agree that fraud is bad, and that fraud is fraud, and I
wish the best for our country, and that's what needs to be
happening is to crack down on all forms of fraud.
Thank you for having me and God bless the USA.
[The prepared statement of Mr. Shirley follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Biggs. Thank you, Mr. Shirley. Now, I recognize Ms.
Larson for your five minute opening statement.
STATEMENT OF JENNIFER LARSON
Ms. Larson. Chair, Ranking Member, and the Members of the
Committee, thank you for allowing me to speak today on this
issue.
My name is Jennifer Larson, I am the Founder and CEO of
Holland Center in Minnesota. I have been an autism provider for
over 20 years and started the organization for my son.
I built Holland Center because families with children like
mine, were desperate for help. Desperate for services and
stability; desperate for somewhere they could trust their child
would be supported and helped.
Not sent home on a bad day; not babysat in a classroom and
forgotten. We serve the children that don't succeed in public
school settings.
What started as a small program grew over two decades into
four locations that families rely on not just for therapy, but
for hope, routine, and survival.
This work is a labor of love for me. Just like me, there
are providers all over the State laboring with love to help
these children.
In this week, Holland and other programs all over Minnesota
are collapsing. Not because we committed fraud, but because a
crime ring was allowed to operate inside Minnesota's service
system, and the government's clumsy response is now destroying
legitimate long-standing providers, and devastating families
that we serve.
Families come to Holland; they do not have a backstop.
Their children often receive 30 or more hours of therapy a
week. These are not an extravagance; these are medically
necessary.
These children learn to communicate, regulate their
emotions, reduce dangerous behaviors, and function in daily
life.
For many parents, therapy determines if they can work.
Consistent staff and therapy prevent severe behaviors and
regression. Structured care keeps children and their siblings
safe.
When services disappear, families do not just simply
adjust. They face a crisis. For more than two decades, Holland
has served hundreds of children year after year, employed
hundreds of clinicians and staff.
Operated under yearly on sight audits, inspections, and
documentation oversight. Delivered real services to real
children every day.
We have always complied with everything the system
required.
Yet, within the last month, the State has withheld over
$400,000 in Medicaid funds for my own program, and that number
grows every single day.
I had to infuse my personal funds to survive these weeks,
but I can't do that any longer without payment.
Let me be clear. We are a fee-for-service industry. When we
can't pay our staff, we lose our staff and children lose care.
Families do not lose appointments; they lose the people
they trust. What happened in Minnesota had nothing to do with
the ethnical, longstanding autism providers.
What happened was organized criminal networks that
exploited autism services by opening fake centers, billing for
children that did not exist, billing for services never
delivered, and stealing millions of taxpayer dollars in the
process.
These are not minor compliance issues. They are criminal
enterprises. Families trusted that the government was
protecting the integrity of the system. It failed.
Now, instead of doing the obvious thing and targeting
criminal actors, the response has been to freeze everyone's
payments.
That decision does not punish the criminals; it punishes
innocent children and families.
As Medicaid payments are delayed due to prepayment review
by an insurance company that is in the business of denying
claims, providers are reducing hours, cutting staff, and
starting to close.
Families are scrambling for alternatives that don't exist.
Children are regressing; parents are leaving jobs to care for
their disabled children.
Autism therapy cannot be paused without consequences. Loss
of services can erase years of progress in weeks, and abrupt
disruption of services can cause life-long consequences in
these children.
This is not abstract harm. It is daily trauma for families
already carrying an extraordinary burden.
The simple solution to the problem is to send the criminals
to jail and allow trusted providers with decades of clean
audits and verified ownership structures to continue providing
prescribed, ethical therapy, and go back to paying them what
we've earned, and resume paying them on time.
I built Holland for 20 years. Families built their lives
around the care that we provide. All of that is risk of
destruction today.
Not by fraud, but by clumsy government response that failed
to distinguish between criminals and caregivers. It treats
children with disabilities--
Mr. Biggs. The gentlelady will suspend. We've got a
photographer there. We allow photographers in here, but not
between the panel--the witnesses and the Members. You will
please move. Photographer, please move.
Ms. Larson. OK, thank you.
Mr. Biggs. Like, right now.
Ms. Larson. OK, we are sorry.
Mr. Biggs. We will--
Ms. Larson. All of that is at the risk of destruction--
sorry, can I continue?
Mr. Biggs. Yes, please continue.
Ms. Larson. Not by fraud, but by the clumsy government
response that fails to distinguish between criminals and
caregivers. It treats children with disabilities as acceptable
collateral damage. Fraud must be stopped and criminals
prosecuted.
I'm a taxpayer, and I live in Minnesota. This is
disgusting. Families and children should never pay the price
for government failure. Thank you.
[The prepared statement of Ms. Larson follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Biggs. We will now proceed under the five-minute rule
with questions. The Chair recognizes the gentleman from
Wisconsin, Mr. Tiffany, for five minutes.
Mr. Tiffany. Thank you, Mr. Chair. Besides the work Mr.
Shirley has done, I want to recognize Power Line, who has done
yeoman's work, exposing this over the last decade as to what
has happened.
I just want to say, Ms. Larson, I live in Northern
Wisconsin. There is an autism school that was started in my
community.
Where did we visit when we wanted to start that a decade
ago? We came to Minnesota where you have been leaders in having
good autism programs.
I think about the tremendous fraud that has gone on in
nutrition programs, housing programs, but is there anything
more heinous than abusing an autism program?
Ms. Larson. I can't imagine. It's so hard to believe that
people are faking that children have autism and stealing money
from the government.
When I'm sitting here with my 25-year-old nonspeaker, and
now children like my son aren't going to have services because
they stole money from the government and faked these things.
It's just, it is like I said, ``disgusting.''
Mr. Tiffany. With what's going on right now, what are the
families that you're serving, what are they saying?
Ms. Larson. They're scared.
Mr. Tiffany. What are they doing?
Ms. Larson. Everybody's scared. There are centers or
programs that have already shutdown. Staff are leaving. This
week, I asked my staff who will take unpaid leave because we
can't keep going like this.
Like I said, I'm $400,000 plus in debt now, and I'm not
assured these are going to get paid back. I went to a bank, and
they wouldn't back the receivable because they said that's not
a receivable. If it's prepayment review, you may not get it.
Mr. Tiffany. Ms. Larson, none of this would have happened
if fraud has not occurred, is that accurate?
Ms. Larson. Yes.
Mr. Tiffany. Mr. Dexter, could something been done about
this earlier?
Mr. Dexter. Yes. As I stated in my opening testimony, in
the years that I worked there, we identified how fraud was
occurring, the loopholes that existed. We brought--
Mr. Tiffany. What were some of the warning signs, Mr.
Dexter?
Mr. Dexter. Well, the fact that part of our job was to go
and collect attendance records. We would find attendance
records that were either incomplete or nonexistent.
Obviously, there were times we found them to be fabricated
because they were given to us way later. The same with billing
records.
They were allowed 30 days after the end of the billing
period to submit billing records. They were not immediately
available to us. It kind of allowed overpayments or double
payments to be overlooked.
We had the attendance record issue. We had the fact that
there was no way to verify who was signing the children in and
out. No way to verify what times those children were signed in
and out.
Mr. Tiffany. Could I do a followup here? In Wisconsin, we
learned this month that Ibrahima Diop, a Minneapolis school
finance boss, placed on leave for failing to submit required
financial paperwork with the Minneapolis School District and
for signing questionable contracts linked to the Somali fraud
scandal, was hired by the Milwaukee Public School System as a
deputy superintendent at a salary of $240,000 a year.
Do you think it wise, might that be a warning sign that
this person was involved, may have been involved with fraud in
Minneapolis? Shouldn't they be concerned in Wisconsin that this
is going--that they're hiring someone like that?
Mr. Dexter. Well, if somebody that they hired has a past
history and practice of doing that type of stuff, I would be
very leery of it occurring again, or that being the basis that
they're hired.
Mr. Tiffany. Governor Evers refused to open the books and
is blocking Federal audits of our food stamp and Medicaid
programs, and he also vetoed four auditor positions in a recent
budget. Do you think that is also a warning sign?
Mr. Dexter. Yes, if it's preventing--
Mr. Tiffany. Or ill advised? Would that be a better way to
pose the question?
Mr. Dexter. Yes, if it prevents the oversight and the
ability to audit and look at the records to make sure it can
have a check-and-balance system, that would be very unwise
because again, that allows fraud to occur.
Mr. Tiffany. Because Mr. Shirley, what is happening in
Minnesota, it could be happening throughout the United States,
isn't that correct?
Mr. Shirley. Correct.
Mr. Tiffany. If there's one thing we've learned or
``leared'' as said in Minneapolis, isn't it possible that this
is happening everywhere?
Mr. Shirley. Yes, I believe it is.
Mr. Tiffany. Mr. Chair, I yield back.
Mr. Biggs. The gentleman yields. I now recognize the
Ranking Member of the whole Committee, Mr. Raskin, for his five
minutes of question.
Mr. Raskin. Thank you very much, Mr. Chair. I thank all the
witnesses for your excellent testimony. Mr. Hedtler-Gaudette,
administration is systematically undermined government
oversight.
The President has fired more than a dozen inspectors
general, not for any cause but seemingly just in retaliation
for doing their jobs and to block unwanted investigations.
President Trump has defunded the Counsel of Inspectors
General on Integrity and Efficiency. He's removed independent
leadership at the Office of Special Council and the Office of
Government Ethics. Blockading whistleblowers and numerous
investigations.
What is your assessment, Mr. Hedtler-Gaudette, of the Trump
Administration's apparent systematic opposition to internal
oversight mechanisms in the Federal Government?
Mr. Hedtler-Gaudette. Thank you, Ranking Member Raskin. My
assessment is that the last year or so has been one of the most
antioversight and antiaccountability periods that I have
witnessed in our Federal Government.
The things you laid out as well as others, are the sort of
proof in the pudding there. Speaking of things that should be
giving us pause and raising red flags, that should all be
giving us serious pause and raising serious red flags about how
seriously people who claim to take oversight and accountability
fraud, how seriously do they actually take it?
Mr. Raskin. There's been a lot of attention given to Donald
Trump's extraordinary use of pardon power, as in the pardon of
violent insurrectionists and cop beaters.
There's also been a forgiveness of a billion and a half
dollars in restitutionary fines that various people had to pay.
A lot of them are fraudsters. The DOJ in Trump's first
term, brought bank fraud and tax evasion charges against
reality TV stars Todd and Julie Chrisley.
They were convicted in 2022. They owed more than $22
million in restitution to taxpayers and to their victims. Then,
Trump suddenly, inexplicably pardoned them and forgave all the
money that they were supposed to be paying back to their
victims.
Todd Chrisley bragged publicly about his get out of jail
free card, jubilantly exclaiming the Feds got F'd.
Let me give you one other example. Trump on April 23rd,
issued a pardon for Paul Walczak, a former nursing home
executive who pleaded guilty to multiple tax crimes.
What he was doing was taking millions of dollars from the
nurses, orderlies, and doctors who worked for him at his
facilities, took more than $10 million that way.
Instead of giving it to the IRS for their taxes, he used
the money to buy a $2 million yacht, and to pay for high-end
jet travel, and to go shopping at Bergdorf-Goodman and Cartier.
Well, he was sentenced to 18 months in prison for stealing
his tax, his employees' tax withholdings, and he was ordered to
pay his employees back $4.4 million for the money he looted
from their accounts.
He was going to have to pay that back, but then he got his
mom to go do a glitzy fund-raising dinner for Donald Trump at
Mar-a-Lago.
She paid $1 million for her ticket. Then, right after Trump
was inaugurated in his second term, Walczak petitioned for a
Presidential Pardon arguing that he was the victim of political
retaliation because they were Trump supporters.
What do you know, President Trump issued a complete pardon
with forgiveness of all the financial fines and restitution,
that Mr. Walczak was going to have to pay back to his workers,
the nurses, doctors, and orderlies.
That was forgiven. That was $4 million taken away from the
victims of a fraud and given back to the perpetrator of the
fraud.
OK, now if we had all day, we could go on all day with this
because that's how their pay-to-play pardon system works.
What does this do to our efforts to root out fraud and
corruption systematically in the government, in crimes, and in
different industries?
Mr. Hedtler-Gaudette. I think it provides a perverse
incentive structure. I opened my statement by saying that we
all have an obligation and a responsibility to do what we can
to prevent fraud and to hold perpetrators of fraud accountable.
That last bit, holding a perpetrator of fraud accountable
perhaps via conviction, doesn't mean much if all one needs to
do is contribute to the right super PAC, or attend the right
fund raiser and suddenly that accountability and that
conviction is wiped away, including the financial restitution
you mentioned.
Those kinds of actions are at direct cross purposes with
any effort to promote a broader, more systemic approach to
rooting out waste, fraud, and abuse.
Mr. Biggs. The gentleman's time is expired.
Mr. Raskin. Thank you very much, and I yield back.
Mr. Biggs. The Chair recognizes the Chair of the Full
Committee, Mr. Jordan.
Chair Jordan. Thank you, Mr. Chair. Mr. Dexter, let me make
sure we get this right. You get tips and complaints.
Whistleblowers or others come to you and tell you something is
not right at these childcare centers in your State that are
getting all kinds of taxpayer money. Is that right? That's how
it started?
Mr. Dexter. That is correct.
Chair Jordan. Then, you go and do your work? You have got
28 years' experience investigating things and specifically in
the crime and financial fraud area, is that right?
Mr. Dexter. That is correct.
Chair Jordan. You go out and find these childcare centers,
there aren't any kids. No kids are there. There are some, but
it is like you don't see the playground. You don't see any kids
at a place where they are supposed to be helping children.
Then, you also find out most of them are run by Somali
individuals. Is that accurate?
Mr. Dexter. That is correct.
Chair Jordan. Then you make some recommendations. You said
here is what we should do. I think you put this on page 2 of
your testimony. You said there are some basic things you should
do. You said they didn't have a biometric attendance system.
They should do that. They should have electronic submission
requirements. They need security cameras. You made some
recommendations.
Mr. Dexter. Yes.
Chair Jordan. Then what happened?
Mr. Dexter. Nothing.
Chair Jordan. They ignored your recommendations. It didn't
stop there, did it? They ignored your recommendations. They
called you a racist, right?
Mr. Dexter. Correct.
Chair Jordan. Typical Left. I always say the Left. Well,
the Left will tell a lie. Big media will report it. You tell
the truth. They call you a racist. Exactly what happened here.
They ignore your recommendations. They call you a racist,
but it even got worse than that if you can imagine. They
started investigating you, is that right?
Mr. Dexter. Yes, we were interviewed by an outside firm for
a report given to the Office of Legislative Auditor.
Chair Jordan. What did that report look like? What did they
say? Did they call you a--what did the report say?
Mr. Dexter. The report basically questioned our
investigative tactics, looked at how our unit was managed.
Chair Jordan. Even though you had 28 years' experience in
this particular area, tips and whistleblowers came to you, even
though that was a whole catalyst for doing it?
Mr. Dexter. Correct.
Chair Jordan. Yes. OK. The end result is what? The end
result is Ms. Larson, who is actually helping people, she
suffers and the people she helps suffer. Isn't that right, Ms.
Larson? Not to mention the fact that taxpayers are getting
ripped off, but the people who do good work, who actually help
people, you suffer.
Ms. Larson. The disabled are paying for the money stolen.
Chair Jordan. Yes. Why do you think all this is the case?
All of this brings to me that this seems to be a typical
pattern.
In the end, you have got to ask why. When you point out
what is going on, you have good people doing good work who
suffer. The taxpayers are getting ripped off. Someone has got
to ask, well, why did they take the--not follow your
recommendations, call you a racist? Investigate you instead of
just fixing the problem. Why did they do that? What could be
the answer? Does anyone want to hazard a--Mr. Shirley, do you
want to hazard a guess why that is the case?
Mr. Shirley. Well, they simply use that as a deflection
technique to make you not want to speak out against the fraud.
Chair Jordan. Yes, it seems to me it is politics. Do you
think it is politics, Mr. Dexter?
Mr. Dexter. Yes, I do.
Chair Jordan. Yes, the people at the top, well, don't want
to do this. We don't want to be called racist. In fact, we
found that out a week ago in a hearing where we were looking at
this Feeding Our Future Program.
We found out they actually shut that program off for a
while. They said time out. Something is not right here. They
found the same kind of things you found, Mr. Dexter. They said
we are going to stop payment and then it was restarted. The
reason it restarted is because they threatened a racial
discrimination lawsuit against the authorities there in
Minnesota.
OK. Forget about the fact that if we do this, we restart
the money, we are going to hurt good people like Ms. Larson and
the people she helps and rip off the taxpayers. We are going to
do it all for politics.
We also found, interestingly enough, the Attorney General
of Minnesota was at a meeting with the key folks in this
particular program and then they found out a couple weeks later
they start sending him campaign contributions. It is politics.
It is politics driving it all.
That is why it is appropriate we are investigating here at
the Congressional level. That is why it is appropriate that the
Department of Justice has put in place a specific individual to
focus on this not only in Minnesota but around the country.
I talk too much. Anyone else wants to--I will give Mr.
Shirley and Ms. Larson a chance to say anything you want. If
not, I will yield 28 seconds to our Chair. I will 20 seconds,
the remaining of my time to the Chair.
Mr. Biggs. Mr. Hedtler-Gaudette, would it surprise you that
Joe Biden issued pardons to someone named Crundwell, who had
the largest municipal fraud in the country's history and had a
restitution amount of $53.7 million that was never paid on the
commutation. Would that surprise you, sir?
Mr. Hedtler-Gaudette. That would not surprise me. Actually,
in my written statement, I outlined how pardons under the last
administration, the Biden Administration, they also fall under
the same pattern of pardoning convicted fraudsters. I am in
agreement with you there.
Mr. Biggs. Thank you. Without objection--that time has
expired. Without objection, Mr. Cline will be permitted to
participate in today's hearing for the purpose of questioning
the witness if a Member yields in time for that purpose.
Now, we are going to go to Mr. Moore from Alabama.
Mr. Moore. Thank you, Mr. Chair. All this talk about
pardons and the ultimate shyster, one of them was Hunter Biden.
He got pardoned after Joe promised he wasn't going to do that
on the way out. Anyway, that is another pardon for another day.
Ms. Larson, I am impressed with your son. I honestly
thought he was your attorney when you guys were sitting there.
Were there early warning signs that could have been acted on
that could have prevented the fraud schemes from growing to the
scale that we see now?
Ms. Larson. I would say yes. Looking back, the Somali
community in Minnesota has a high prevalence of autism. I know
that because I serve a lot of minorities in my centers. When
these centers started popping up, I thought good for them. I
took care of my son. We have had a waiting list for five years.
I thought it was a positive.
Then, it just started to go and go to where now it is 400
plus of these. I had started--and I didn't Nick Shirley it--
that is a verb now, and go out and see because obviously, I am
busy and that is not what I have time for.
There were a lot of early warning signs. If anyone was
actually paying attention--
Mr. Moore. They would have caught it.
Ms. Larson. Oh, 100 percent.
Mr. Moore. How long have you been in business, 20 years, is
that--
Ms. Larson. Over 20 years.
Mr. Moore. You went through a number of audits every year,
right?
Ms. Larson. Every year, onsite.
Mr. Moore. How is it that these groups are getting away
with it and you are under the thumb of the government auditing
you every year. Why do you think that is?
Ms. Larson. Either there is a double standard, and they
don't, for whatever reason, have the same expectations that we
do or they are just--
Mr. Moore. Chair was on to something, maybe it is politics.
Ms. Larson. Yes.
Mr. Moore. Mr. Shirley, now I guess investigative
journalist now known as Right-wing social media influencer, so
can you confirm how many daycare centers you personally visited
in Minnesota during your investigation?
Mr. Shirley. During that first video, we went to around
seven.
Mr. Moore. How did you select those facilities? I know you
said earlier, ``footprints in the snow.'' How is it that you
identified those facilities to go to initially?
Mr. Shirley. The man, David, in the video, he had the
daycares with the CCAP funding. We just simply drove around
Minnesota and around the Minneapolis area.
Mr. Moore. It took a lot of courage to do that I would
imagine, probably more so now than what it was when you
initially did it. A hundred million views you said?
Mr. Shirley. Yes, over 140 million views on that.
Mr. Moore. What was Mr. David's background? How did you
contact him? How did he call you or did you reach out?
Mr. Shirley. He is simply--he is just a man in Minnesota
who has a passion for his city. He had been seeing fraud taking
place for years. Out of the all the thousands of messages I get
on Instagram and other platforms, I just happened to read his.
He provided me the information. I gave him a phone call.
Mr. Moore. Then from there, just went to those different
facilities. What was probably the most interesting thing as you
were doing this. I saw the video. We watched it. I believe
there were a number of facilities like in the same building.
Mr. Shirley. Yes. In one building there was, I believe,
three daycares, and there were no children. They were all
receiving CCAP funding for separate daycares.
There was one daycare we went to that one day it was closed
by the government, and then that same day it was reopened
underneath another name. They both received CCAP funding.
Mr. Moore. I bet, Ms. Larson, they weren't getting audited
yearly like you were.
Ms. Larson. I would guess not.
Mr. Moore. How many daycares are there in Minneapolis that
we think are fraudulent right now, Mr. Shirley? Any idea? Are
there an amount of money, total? Do you got any idea on that?
Mr. Shirley. Well, they froze over $185 million and not a
single business has been able to prove that they are a
legitimate business yet.
Mr. Moore. The $185 million for sure that we know.
Mr. Dexter, I have got a question for you. What common
patterns or warning signs usually indicate that the provider of
the program may be committing fraud?
As you were doing your investigations in 28 years of
experience, what are some of the indicators that you see that
should be a telltale sign or a red flag that there is fraud
there?
Mr. Dexter. Well, one of the immediate signs that we saw
that when we went out to look first at the location where that
was located. A lot of times they were located in commercial
areas. I am not talking like strip malls or anything like that.
I am talking about industrial areas where you wouldn't
typically find a childcare center.
We would notice that there was no play area. If there was
any play equipment, it was bare minimum. Now, there was an
exception that if there was a playground area within a very
short walking distance, that would count. A lot of times we
didn't see that.
The most glaring thing was that when we watched the
centers, we would sit and watch it for a couple of days before
we even put up surveillance cameras, we would watch. We would
see little to no children present. If anything, there would be
a few kids.
Mr. Moore. As you began to blow the whistle, the
investigator became--
Mr. Biggs. The gentleman's time has expired.
Mr. Moore. I yield back, Mr. Chair.
Mr. Biggs. Thank you. The Chair recognizes the Ranking
Member, Ms. McBath.
Ms. McBath. Thank you, Mr. Chair. When he began his second
term, President Trump broke from historic norms and fired 17
inspectors general, people who serve as critical watch dogs and
prevent waste, fraud, and abuse.
A Federal judge held that these firing were illegal, but
also held that she could not reinstate these people due to
their important roles. As a result, the President has been able
to appoint acting inspectors general who have themselves been
removed after information to Congress that Trump officials are
not cooperating with investigations.
Mr. Hedtler-Gaudette, how do these frequent firings affect
the ability of the inspector general offices to prevent and
investigate fraud?
Mr. Hedtler-Gaudette. They fundamentally undermine it, and
they also create a real chilling effect for the inspector
generals who are left. The incentive to do something that could
upset the powers that be, suddenly becomes a bit of a risky
proposition. Between completely undermining them and the
chilling effect, you are really dampening and damaging the
ability to do real oversight.
Ms. McBath. Thank you. How does the politicization of
inspector general appointments affect the morale and
effectiveness of career investigative staff that are within
these offices?
Mr. Hedtler-Gaudette. It also has a severely negative
effect on morale and efficacy within the offices.
Ms. McBath. I believe we can and should do more to prevent
fraud and improve oversight so that all our government efforts
are doing the most that they can to help the American people.
When the Judiciary Committee marked up the Republican's
partisan big ugly spending bill, I offered an amendment that
would dedicate half of one percent of funding to be used for
oversight, fraud improvement, and prevention. My Republican
colleagues, they opposed the amendment.
Mr. Hedtler-Gaudette, in your opening statement, you spoke
on steps that Congress could take to ensure robust, nonpartisan
oversight. The Project on Government Oversight recently
published an article, ``7 Ways Congress Should Sharpen Its
Oversight in 2026.'' Can you pass him this?
Mr. Biggs. Without objection.
Ms. McBath. Thank you. Thank you. Is there anything else
that you want to highlight from those recommendations?
Mr. Hedtler-Gaudette. Sure, yes. I just want to pause to
note that Congress really is the indispensable actor when it
comes to doing oversight. They are supposed to be a somewhat
adversarial relationship between the branches, and Congress is
supposed to be the primary adversary when it comes to--there
are two branches in conducting oversight. That is predicated at
Congress taking that oversight duty seriously irrespective of
who is in charge of the other two branches.
There is a political will issue there with oversight but
also there are some mechanical issues. Congress could do a
better job of holding hearings that are a bit more bipartisan,
a bit more focused on the facts as opposed to the sizzle of a
given anecdote or scandal. Really trying to get at root causes
and really trying to take hard, deep looks at the underlying
structural reasons why things like fraud happen.
It is not as sexy. It is not going to get you as many views
on social media. It is going to actually ideally lead to long-
term, sustainable, durable reforms that can really crack down
on the problem.
Ms. McBath. Thank you. The short-lived DOGE office was
supposed to cut fraud. Mr. Hedtler-Gaudette, what did it
actually do, and how did its actions actually affect everyday
Americans?
Mr. Hedtler-Gaudette. DOGE was a complete failure. Even on
its own terms, the primary progenitor of DOGE claimed that he
was going to find $2 trillion. Then, he moved that down to $1
trillion in waste, fraud, and abuse cutting spending. In 2025,
we actually spent more money than we spent in 2024.
At the opening of this Fiscal Year in October, we ran the
largest opening month budget deficit ever run before at $285
billion. We have hollowed out the key functions of a bunch of
agencies. Any claim that DOGE was effective either on cutting
spending, promoting effectiveness, or efficiency are just flat
out undermined and undercut by the facts.
Ms. McBath. Mr. Hedtler-Gaudette, because you have done
investigations yourself, did you do any followup on Mr.
Shirley's video?
Mr. Hedtler-Gaudette. Personally, I took a look at what had
been done to try and backstop what Mr. Shirley indicated in his
video by a professional journalist at CBS and by professional
oversight practitioners like the inspector general in
Minnesota. As it turns out, they had a difficult time
substantiating what Mr. Shirley was claiming to be true in his
video. In fact, they found countervailing evidence, including
having been provided security footage by one of those daycares
of children being dropped off the very day that Mr. Shirley was
supposedly there.
In my view, I would have to err on side of believing the
professional journalist at CBS and the professional oversight
practitioners at the inspector general's office.
Ms. McBath. Thank you. I am out of time. I yield.
Mr. Biggs. The Chair recognizes the gentlelady from
Florida, Ms. Lee.
Ms. Lee. Thank you, Mr. Chair. On that note, it is
important that we return to a discussion of how these
investigations were conducted and the type of evidence that led
to the discovery of this massive fraud.
One thing that is clear based on the testimony today is
that this is not just a Minnesota problem. This is a warning
sign for every State that is administering large scale programs
using taxpayer dollars. We need to get to the bottom of how to
identify this type of fraud and prevent it from continuing to
occur.
Mr. Dexter, I would like to go back to your testimony, both
of which you have shared with us already about your extensive
background investigating and analyzing program fraud, and the
methods that you used to identify the theft of taxpayer dollars
in this particular type of case.
In your written testimony, you mentioned that case
selection and investigations were begun in part by looking at
funding data. I am interested in how your office would use
things like funding data, use statistics, and other information
and evidence to begin to develop these cases.
Mr. Dexter. Well, it wasn't hard to find the funding
amounts. We looked at the centers that received CCAP funds and
then we listed them out. We had what was originally referred to
as the top 100 list. It was based off of the centers receiving
the most CCAP funding. That was generated through the billing
process and the people that administer the funds.
Ms. Lee. When you looked at that list, did it turn out that
there were certain facilities that were outliers in some way,
either because they were receiving a larger amounts of funding
based on student population that appeared typical or because of
where they were located. Tell us how you identified which
facilities warranted further review?
Mr. Dexter. Well, when we started looking at the centers
that were receiving the most funds, the investigators were each
assigned cases, were assigned centers, and when we first
started looking into what the billing pattern was or what the
billing amount was, how many children were being billed at
these centers. We would have centers that were billing for 120
plus children and looking at the different days and times,
establishing a pattern that just was outside the realm of a
typical daycare center.
Ms. Lee. In other words, you used objective data and
evidence as the foundation to proceed further with your
investigations?
Mr. Dexter. Yes, to start the investigation, that's what we
would begin with.
Ms. Lee. In your experience, wouldn't you also say that
this is the typical method, or a typical method, for beginning
and analyzing a potential fraud case of any nature in any
community?
Mr. Dexter. Yes, because to do the investigation, you first
have to find out if it warrants an investigation and to what
extent that investigation would be.
Ms. Lee. Now, isn't it also correct--you mentioned in your
testimony systemic weaknesses that allowed the large scale
fraud even after you had developed substantial evidence that
there was, in fact, fraud occurring. There were institutional
and systemic barriers that prevented you from successfully
moving these cases through prosecution and indeed in your
testimony you note that in 2019, you chose to retire because
the process had become so constrained that meaningful work was
no longer possible.
Tell us about the barriers and ultimately that profound
frustration that led you to retire.
Mr. Dexter. When we were originally hired--when this unit
was originally created and we were hired, the understanding was
that our job was going to be to investigate fraud and stop it.
As we proceeded through with that, it wasn't by our doing that
it turned out that the centers we investigated were
predominantly Somali.
Once that was kind of brought out to light, the roadblocks
that were put in front of us, being called racist, being called
before these boards to be investigated, and basically it wound
up turning us into auditors. We wound up just simply reviewing
attendance records and matching them up with billing. There
really wasn't a lot of substantial investigation anymore, and
most of our cases wound up going before administrative hearings
rather than criminal.
Ms. Lee. Which in the end, allowed this pattern of conduct
to continue to occur, did it not?
Mr. Dexter. Yes.
Ms. Lee. Thank you, Mr. Chair. I yield back.
Mr. Biggs. The gentlelady yields. The Chair recognizes now
the gentleman from North Carolina, Mr. Knott.
Mr. Knott. Thank you, Mr. Chair. To my colleague from
Florida, thank you for that line of questioning. I am going to
pick up where she left off.
In regard to the testimony that we have heard today, the
other side of the aisle makes us believe or wants us to believe
that the fraud has been effectively stopped. That they
aggressively pursued it, they prosecuted it, and it is under
control. Is that your interpretation of where we are, Mr.
Dexter?
Mr. Dexter. I believe fraud is still going on. I don't
think anything has changed from what I have seen with Mr.
Shirley's videos. I am seeing in his videos the exact same
things that we were seeing back from 2014-2019 when I worked
there.
Mr. Knott. It is astounding to me when I was looking at
some of the footage, the evidence, there was almost a sense of
we are owed this money that we are stealing. How dare you
investigate us? Did you ever encounter that type of attitude
when you were performing these investigations?
Mr. Dexter. There was an underlying attitude like that,
that we were taking away their money and that it wasn't fair to
them.
Mr. Knott. Your investigations, sir, was the fraud as
obvious as it seems to me that it appeared in the videos and
the other evidence that I reviewed?
Mr. Dexter. Yes, as a matter of fact when we would go out
to do our investigations, one of the things that we would have
to do, or I would have to do, is we would scout out a location
for our surveillance cameras that allowed us a direct line of
sight to the centers, all their accesses.
A lot of that, because of the location where we were in
these industrial commercial areas, it meant we had to go to the
businesses and ask them permission. The No. 1 comment they
made, was ``oh, you mean that daycare center over there where
there are no children?'' Everyone else saw it.
Mr. Knott. In regard to your investigation, sir, I am
assuming that you did not just investigate daycare fraud. What
other types of fraud did you investigate?
Mr. Dexter. No, our function was strictly childcare fraud.
Mr. Knott. OK.
Mr. Dexter. Some of that overlapped into--even though we
didn't investigate it, a lot of it was also tied into the
medical transportation.
Mr. Knott. Did you ever investigate single entities that
were appearing as though they were committing fraud in multiple
avenues?
Mr. Dexter. I'm sorry. Can you say that--
Mr. Knott. Was there one facility that was a daycare. It
was also associated with medical transport. Were there people
who were double-dipping in the fraud in your investigations?
Mr. Dexter. Not that we saw as far as different
organizations, but there was where one daycare center owner
owned multiple daycare centers. What we saw was more within the
daycare center.
Mr. Knott. Yes. Ms. Larson, thank you for being here. I
echo my colleague's sentiment from Alabama. Your son is very
impressive. What is his name?
Ms. Larson. His name is Caden.
Mr. Knott. Caden, thank you for being here today. You look
sharp. You are doing great. Let me just talk to you about these
various audits that you were subjected to. How rigorous were
they?
Ms. Larson. Very. They would be there for hours. They would
come in and say I want to see these files for these kids on
this date at this time.
Mr. Knott. Was there anyway that you could have tricked
them, concealed it? If you had not had any children there,
would it have been possible?
Ms. Larson. Absolutely not.
Mr. Knott. In regard to the services that you have rendered
first, thank you.
Ms. Larson. Thank you.
Mr. Knott. Then, in terms of the budgets that you require,
how does it make you feel when you hear firsthand accounts that
hundreds of millions of dollars had been taken out of the
country in suitcases to hostile nations?
Ms. Larson. I can't even respond the way I feel about that.
I will say it is still happening. To the question you--there
are only two autism centers that have actually been shut down
of all these that are going on.
Mr. Knott. Yes.
Ms. Larson. What they are doing is this prepayment review
and putting us through this AI system at Optum to look for
suspicious claims, which is why we are being--our funds are
being held. It is not going to work.
Mr. Knott. Yes.
Ms. Larson. I am going to tell you it is not going to work.
They just need to do what Nick did. Go and see that there are
no kids there. Go and check it out.
Mr. Knott. What Mr. Dexter did. Data driven review without
any preconceptions, without any prejudices and then holding the
fraudsters to account. When he did that, he was called a
racist.
Ms. Larson. Yes.
Mr. Knott. It is astounding. It is astounding. You said
that you helped many patients, diverse patients.
Ms. Larson. Yes.
Mr. Knott. How have those patients been harmed by this
administration in Minnesota, the Walz Administration?
Ms. Larson. They are all being harmed if I shut down next
week.
Mr. Knott. Is that what you are up against?
Ms. Larson. Well, I haven't gotten paid now. The last date
of service was December 5th. I am over $400,000 in debt. My
payroll is $250,000 every two weeks. We get paid every two
weeks. On Sunday night I will know if I get any money. I
haven't been paid a dime. All my claims had been held.
I am preparing to--apparently, Minnesota, too, I can't just
pause services. If I pause my services, then DHS can say, I am
sorry you have lost your license to serve the kids through this
program. I don't know what they think we are supposed to do.
Mr. Knott. Unbelievable.
Ms. Larson. Yes.
Mr. Knott. Well, again, thank you for being here. I
appreciate all the testimony. Sorry I didn't get to everybody
else. There are a lot of questions. Chair, I yield back.
Ms. Larson. Thank you.
Mr. Biggs. The gentleman yields. I recognize the gentleman
from California, Mr. Kiley.
Mr. Kiley. Thank you, Mr. Chair. Mr. Shirley, thank you for
your testimony today and the work that you have done.
Americans hear these numbers of the fraud that we have,
whether it is $10,000, $10 million, or $10 billion, sometimes
the numbers, you almost become desensitized to it. The way that
your video was able to show people the fraud in real life
actually happening opened a lot of eyes, and this helped to
catalyze a level of scrutiny that we really should have had
before.
You mentioned in your testimony that you think what you
discovered in Minnesota that this is not isolated to that State
but likely exists in other parts of the country as well,
correct?
Mr. Shirley. Correct.
Mr. Kiley. What makes you think that?
Mr. Shirley. Well, now you are seeing, since I posted that
video, lots of other people have started to go to other
locations, for instance in Ohio, in Maine, or in California. We
are also seeing similar fraud taking place in other daycares,
for instance, in a lot of other locations.
Mr. Kiley. I have a particular interest in California,
being from that State. We know there has been a lot of fraud.
There was $32.6 billion that has been confirmed in unemployment
insurance fraud. There are $1.2 million fraudulent community
college applications.
Have you gotten any sense or have you seen any signs there
that is similar to what aroused your suspicions in Minnesota?
Mr. Shirley. Yes, the fraud in California might even be
worse than the fraud in Minnesota.
Mr. Kiley. What makes you say that?
Mr. Shirley. Well, $24 billion is missing for homelessness.
They have been trying to build this train for years, yet there
is hardly anything to prove for that, buyers.
Mr. Kiley. Yes, those are good points. You looked at--let's
run through a couple of those. Because I mentioned the areas
where we have confirmed fraud, but then you also have these
areas where you have so much spending and then we look at the
result from that spending and there is nothing.
The $24 billion in homelessness, and yet the homeless
population went up, and a State audit found that they couldn't
even figure out where the money went or what the outcomes
linked about spending were. Is that something that is kind of a
red flag for you?
Mr. Shirley. Yes, it is a major red flag, and you don't
even have to be smart to know that it's a red flag.
Mr. Kiley. Well, unfortunately, our State legislators
haven't managed to figure that out or at least the Governor
hasn't. What are you saying about him?
Mr. Shirley. They are not smart. It is so obvious. That is
what we saw in Minnesota is how complicit the government has
been in enabling this fraud to happen.
Quality Learning Center had over 90 violations and yet they
continued to give that daycare $1.9 million.
Mr. Kiley. Yes, that is a great point, that the political
accountability just hasn't been there and that is what enables
it to continue.
Then, you mentioned the high-speed rail as well. There has
been about $18 billion spent so far. No track has been laid and
not a single passenger has ridden the train. When you spend $18
billion on a train and there is no train, does that raise
suspicions for you?
Mr. Shirley. Yes.
Mr. Kiley. You think that might be something worth looking
at?
Mr. Shirley. For sure.
Mr. Kiley. We also had a $650 million 911 service that they
scrapped after six years so absolutely no value from it. Maybe
that is another example where there might at least be
questions.
Mr. Shirley. I think you have got a lot in California.
Mr. Kiley. All right. Well, we will look forward to seeing
what you find. We are certainly trying to use whatever tools we
have here to bring more accountability to California as well.
Mr. Dexter, I wanted to also ask you a couple of questions
about your work. Because you have extensive experience on the
law enforcement side trying to detect fraud. That is actually
how in California we discovered the EDD fraud and the
unemployment fraud, it wasn't the State suddenly figuring it
out. It was district attorneys who came together and
investigated and, in fact, pointed to the fact that the State
had let this happen and failed to heed their warnings and
hadn't taken basic fraud detection steps.
Is this something that you encounter? What kind of internal
controls make it so fraud is more difficult and what type of
lack of internal controls makes it so that fraud is easier?
Mr. Kiley. I would say the biggest thing was the fact that
when we tried to investigate this, once we started bringing
cases forward and it showed that the number of centers that we
investigated were Somali, the biggest roadblock was the fact
that they didn't want to follow through on these cases. They
shut down investigations. They made us, in light of the report
from this outside management firm, we spent nearly a year
pulled away from our investigations because one of the things
they determined was that when our unit started, we didn't have
a proper case management system for recording and keeping track
of the tips.
As investigators, we instead had to spend nearly a year
entering past complaints made to DHS into a newly created
database. We couldn't do our investigations because of that.
They kept us from doing our work basically.
Mr. Dexter. Yes, the States that make fraud detection a
priority have less fraud than those that actively contravene
efforts like yours.
Thank you, Mr. Chair. I yield back.
Mr. Biggs. Thank you. The gentleman's time has expired. I
recognize the Ranking Member Ms. McBath for some UCs.
Ms. McBath. Thank you, Mr. Chair. I would like to ask
unanimous consent to enter into the record an article,
``Republicans Claims of Fraud Are a Pretext for Unpopular and
Drastic Medicaid Cuts.''
Mr. Biggs. Without objection.
Ms. McBath. Thank you.
Mr. Raskin. Mr. Chair. Oh, I am going to have some UC.
Mr. Biggs. Yup, please go ahead.
Mr. Raskin. Actually, forgive me. I have a handful of them
here, Mr. Chair.
First, a letter dated October 21, 2025, from Representative
Bennie Thompson to Robert F. Kennedy, Jr., regarding the
decision to rescind the $101 million penalty imposed on
Mississippi.
A press release dated September 17, 2025, titled,
``Governor Walz Issued Executive Order Directing State Agencies
to Take Additional Steps to Combat Fraud.''
An Executive Order 2501 titled, ``Preventing Fraud and
Establishing the Financial Crimes and Fraud Section of the
Department of Public Safety,'' signed by Governor Tim Walz on
January 3, 2025.
An article dated December 2, 2025, titled, ``Trump Calls
Somali Immigrants Garbage as U.S. Reportedly Targets Minnesota
Community.''
An article dated January 9, 2026, titled, ``Five States Sue
Administration for Withholding Billions in Social Safety Net
Funds.''
An article dated January 10, 2026, titled, ``Behind the
Somali Daycare Panic is a Mother-and-Son Duo Angling to Become
Top MAGA Influencers.''
An article dated December 31, 2025, titled, ``Right-Wing
YouTuber behind Viral Minnesota Fraud Video has Long Anti-
Immigrant History.''
An article dated January 11, 2026, titled, ``Fact Check,
What is Really Happening with Child Care Fraud in Minnesota.''
Finally, an article dated January 13, 2026, titled, ``The
Trump Administration Says It's Cracking Down OnFraud. It Gave A
Red State A Pass.''
Thank you, Mr. Chair.
Mr. Biggs. Without objection. The Chair recognizes Ms.
McBath again for another UC.
Ms. McBath. Thank you, Mr. Chair. I ask unanimous consent
to enter into the record an article titled, ``Trump's Child
Care Fund Freezing in Five States Could Cost Families $400
million,'' by Julie Kashen of The Century Foundation.
Mr. Biggs. Without objection. I recognize myself for a
series of UCs.
From Fox News, ``Biden Clemency for Convicted Fraudsters
Met with Outrage, Slap in Face.''
From CNN, ``Victim Shocked After Biden Grants Clemency to
Kids for Cash Judge and $54 Million Embezzler.''
From Axios, ``Biden Sets Presidential Record on Pardons and
Clemency.''
Also, ``Minnesota Daycare Expose Journalist Strikes Again
and in Part 2 Names the Hub of the Fraud Wheel.''
An article, ``Seventy-eighth Defendants Charged in Feeding
our Future Fraud Scheme,'' from the U.S. Attorney's Office,
District of Minnesota.
An article, ``Suitcases Filled with Millions in Cash Flew
Out of Minnesota Airport, Ex-TSA Agent Connects Dots Years
Later,'' from MSN.
From U.S. Department of Health and Human Services, ``HHS
Freezes Childcare and Family Assistance Grants in Five States
for Fraud Concerns.''
From the U.S. Attorney's Office, District of Minnesota,
``Six Additional Defendants Charged, One Defendant Pleads
Guilty in Ongoing Fraud Schemes.''
This is from the local Fox News in Minneapolis, ``Through
the Years, a Decade of Investigating Fraud in Minnesota.''
From the U.S. Department of Homeland Security release,
``ICE Continues Arresting Worst of the Worst in Sanctuary
Minneapolis, Including Pedophiles, Gang Members and Drug
Traffickers.''
From MSN, ``TSA Flags Suspicious Cash Outflow at
Minneapolis-St. Paul Airport.''
From MSN, ``Foreign ATM, Somalia Cash Exodus from
Minneapolis Exponentially Larger than Other Major U.S.
Airports.''
From Breitbart, ``SBA Cutting Off Grants to Minnesota Over
Reports of Somali Fraud.''
An article, ``Vance praises YouTuber Nick Shirley reporting
on Minnesota fraud.''
An article, ``Walz and Omar using ICE Operations to
Distract from Fraud Scandal.''
From Just the News, in ``Somali Fraud Scandal Republicans
Probe Evidence of a Blue State Election Scheme.''
From the New York Post, ``Ringleader of $250 million
Minnesota Welfare Fraud Scandal Ordered by Judge to Forfeit
Porsche and Luxury Goods.''
From LifeZette.com, ``TSA Whistleblower, Somalis Regularly
Flew Out with Suitcases Stuffed with Millions in Cash.''
From Fox News, ``Minnesota Welfare Fraud Targets Somali
Hawala Money Transfers.''
From the Star News Network, ``Feds Probe Hundreds of
Millions in Suspected Somali Cash and Luggage Leaving
Minneapolis Airport.''
From USCIS, ``USCIS Announces Results of Operation Twin
Shield, a Large Scale Immigration Fraud Investigation.''
From PBS, ``Noem Says Homeland Security is Investigating
Fraud in Minneapolis.''
From Cornell Law, this is the 18 U.S.C. Section 666,
``Theft or Bribery Concerning Programs Receiving Federal
Funds.''
Also, same source, 18 U.S.C. Section 641, ``Public Money,
Property or Records.''
Also from same source, 18 U.S.C. 1001, ``Statements or
Entries Generally.''
Without objection. I now recognize myself for my five
minutes of questioning.
I have read all your statements. I do thank you, Mr.
Hedtler-Gaudette, for your recommendations. Mr. Dexter also had
some recommendations. I think those are prescient. I think
those are important.
I also have to bring some additional information about this
just because it is in my nature. I got to do it.
Mr. Hedtler-Gaudette, you have been talking about the IGs
because you were asked about the IGs. Do you know how many
cases, for instance, criminal cases, are being investigated,
say, by the Department of Homeland Security IG right now?
Mr. Hedtler-Gaudette. I don't know the number off the top
of my head, no.
Mr. Biggs. Would it surprise you there were 650 ongoing
cases with 200 of those being COVID related?
Mr. Hedtler-Gaudette. That would not surprise me, no.
Mr. Biggs. Do you know how many audits they have going
right now?
Mr. Hedtler-Gaudette. No.
Mr. Biggs. They have 60 audits going on right now with
another 20 investigations going.
That sounds to me like the IG there, at least, and DHS is
not being chilled because of the appointment of temporary IGs.
Am I wrong on that or am I misconstruing that?
Mr. Hedtler-Gaudette. One thing about the DHS IG, Mr.
Joseph Cuffari, is he was actually appointed under the first
Trump Administration. He has remained ever since. We actually
at the Project on Government Oversight have long recommended
that Mr. Cuffari be fired because he has had a long and
demonstrated track record of slow walking investigations at
DHS, particularly when it comes to abuse of force and other
issues with DHS agents.
Mr. Biggs. The Oversight Committee for the IGs didn't
adhere to that recommendation. Anyway, I felt that point needed
to be made.
Additionally, Mr. Dexter, you looked at some of the same
kind of physical evidence that Mr. Shirley looked at with
regard to physical presence at the various daycare facilities
that you were examining between 2014-2019, is that true?
Mr. Dexter. Yes.
Mr. Biggs. You saw basically the same kind of physical
evidence that Mr. Shirley exposed?
Mr. Dexter. That is correct.
Mr. Biggs. You also looked at funding data, and you also
had whistleblowers.
Mr. Dexter. Yes.
Mr. Biggs. I find it interesting that somehow local news,
which reported the fraud, other local news reporters reported
on the fraud, credibly agree with the findings of Mr. Shirley.
Is that what you have seen as well, Mr. Dexter?
Mr. Dexter. Yes, Fox 9 News in Minneapolis, they followed a
lot of our cases and did stories on them.
Mr. Biggs. The very notion of trying to discredit Mr.
Shirley because he had a lot of views or that some CBS reporter
disagreed with and said they couldn't find the evidence
actually in my mind discredits the CBS reporter. Because I
appreciate the Ranking Member cited the Arizona fraud, which I
also constantly cite. It is a massive fraud in Arizona. Not
just the $2.5 billion, but there is an essential--another
additional allegation of about $7 billion per year fraud in
Arizona.
There needs to be a change there. We need to get a handle
on this not just in Minnesota, but nationwide because, as we
have seen in Ms. Larson's case, those who are conducting
themselves according to the law, delivering services, are the
ones that also get punished. If you are a fraudster, somehow
you are able to keep on going.
The fraud hasn't stopped. Mr. Shirley have you seen any
evidence--you said twice today that $185 million of recipients,
not one of them has been able to demonstrate that they are a
legitimate business.
Mr. Shirley. No. In fact, they are actually actively suing
the HHS to prevent handing over any information.
Mr. Biggs. They don't even want to give the information
that would be required of an audit, that would be required from
a separate, independent investigation. They want a court to
intervene and enjoin and prevent them from having to respond to
this kind of investigation. Is that correct, Mr. Shirley?
Mr. Shirley. That is correct.
Mr. Biggs. This is the thing. I listened to the panelists.
Everybody on the panel--I think everybody up here--we all want
to stop the fraud. The bottom line is it is so infused with
politicization that it is preventing us from just sitting down
there and saying, OK, we have got a symptom in Minnesota, and
we are going to fix it. The symptom being exposed is critical
because then it actually motivates people to try to get to the
root cause.
I am out of time, and we have no other Members here. I just
want to thank each one of you, Mr. Dexter, Mr. Hedtler-
Gaudette, Mr. Shirley, and Ms. Larson for being here and giving
us your testimony. I really appreciate it.
I would encourage my colleagues to be better stewards and
have better oversight because otherwise Mr. Shirley's
generation is going to be paying through the wazoo, which right
now means $40 trillion in national debt.
Thank you all. I appreciate it. We are adjourned.
[Whereupon, at 11:56 a.m., the Subcommittee was adjourned.]
All materials submitted for the record by Members of the
Subcommittee on Crime and Federal Government Surveillance can
be found at: https://docs.house.gov/Committee/Calendar/ByEvent
.aspx?EventID=118871.
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