Somali-American child care providers push back on reports of fraud

Somali-American child care providers are criticizing reports of widespread fraud in a state program that helps low-income parents.

Legislative Auditor James Nobles said Friday that he will investigate Minnesota’s Child Care Assistance Program after former Department of Human Services investigator Scott Stillman told a Senate committee last week that fraud may be costing taxpayers upwards of $100 million.

Sadia Wasame carries a sign in protest.
Sadia Wasame carries a sign protesting the allegations of fraud and funding terrorism made in a Fox 9 story inside the Minnesota State Capitol on Monday, May 21, 2018. Evan Frost | MPR News

Somali child-care providers push back against fraud, terrorist allegations

Zainab Hashi welled up with anger at a Senate committee hearing last week as she watched speaker after speaker accuse Somali-owned child-care centers of defrauding the state, and even worse, diverting money meant for poor families to fund terrorist groups overseas.

“Why were we not allowed to testify?” asked Hashi, who is Somali-American and owns a day-care center in Minneapolis and sat near the front row at the hearing. “We are being scapegoated … and vilified for political reasons, and it’s disgusting.”

As a co-founder of Minnesota’s largest association of minority-owned day-care providers, Hashi has spent much of the past three years trying to change public perceptions of their businesses. She started at a difficult time: A series of high-profile criminal prosecutions involving Somali-owned day cares put the industry on the defensive and led to heightened scrutiny from the state. Regulators found incidents of overbilling and that some providers were recruiting parents as employees on the condition that they enroll their children using public subsidies.

Since then, her organization has pushed to shore up quality by educating providers on regulatory compliance and expanding participation in Minnesota’s child-care quality ratings system. It has also attacked the stigma head-on by kicking out owners suspected of fraud. Her group, the Minnesota Minority Childcare Association, even worked with state officials on ways to detect fraud and kickbacks.

Yet Hashi and other Somali day-care owners feel their voices have gone largely ignored in the wake of a recent television news report suggesting rampant fraud in the state’s child-care subsidy program. The widely publicized report alleged that Minnesota refugee families are taking suitcases full of cash to Somalia and Middle Eastern countries where terrorist groups are active.

The report has roiled Somali day-care operators and their family clients across the state, just as many felt they were finally beginning to emerge from a cloud of suspicion. In April 2016, Abdirizak Gayre of Minneapolis and Ibrahim A. Osman of New Hope were charged with an extended fraud against the child-care assistance program. Using secret cameras, investigators found 1,673 incidents in which their day-care center claimed children were in attendance when records showed they were actually absent.

A half-dozen similar cases led to a series of meetings between the state Department of Human Services, which administers the child-subsidy program, and child-care providers who serve Somali children, as well as training sessions to educate providers about licensing rules, background studies laws and fraud.

“There was a shadow over us then, and now that shadow has grown much larger,” said Isaak Geedi, former chairman of the Minnesota Minority Childcare Association.

At First Choice Child Care Center, Zainab Hashi is deeply concerned that Somali child care centers are being wrongly condemned for the actions of a fe Richard Tsong-Taatarii • Star Tribune

Big investment

In 2012, Hashi and several close relatives founded First Choice Child Care Center in Minneapolis, investing their entire savings — more than a quarter-million dollars — to prepare a facility and hire experienced staff, which now cares for about 75 children. As Hashi pointed out, high-quality preschool is crucial for a group of young children who come from homes where English is not the main language spoken.

On a recent afternoon, a group of two dozen preschoolers — some dressed in brightly colored hijabs and floral dresses — marched in unison with their hands placed on each others’ shoulders through their tidy classroom. Moments later, each child was calmly sitting with pencils behind small desks, writing out names for pictured objects.

Hashi, whom many of the children affectionately call “hooyo,” or “mother” in Somali, paced between the desks, checking their progress.

When carts of pizza and fruit cocktail arrived at dinner time, Hashi called out to the children, “Did you all wash your hands?”

“Yes!” the children yelled.

“Are you ready to eat?” she asked.

“Yes!” they yelled, throwing up their hands.

“I have a great passion for this work, so when people say we are stealing from the government, it hurts me right here,” Hashi said, pressing her hand against her heart.

Hashi challenges the idea that Somali day-care owners are enriching themselves through state child-care subsidies. The monthly subsidies, which amount to about $600 per child, do not cover the cost of one-on-one tutoring, meals, the volumes of coursework, and the other learning accessories, including more than three dozen iPads.

“People don’t understand how big of an investment this is,” said Nasro Abshir, 26, daughter of Hashi and a supervisor at the center. “Every cent that we get from [the child-subsidy program] is reinvested directly into the children.”

On Thursday evening, the first day of Ramadan, a group of about 40 Somali-American day-care center owners and their relatives gathered for a hastily arranged meeting at the Abubakar As-Saddique Islamic Center, in south Minneapolis. The focus was the television news report, and the likely backlash by lawmakers and state regulators.

Many challenged the accuracy of the TV report, and complained bitterly of the relentless focus on Somali-owned providers. According to the Department of Human Services, payments on behalf of Somali children account for just 28 percent of the roughly $250 million in annual payments made through the child-care assistance program.

Even so, Hashi and other Somali-American owners have addressed the complaints head on. They urge their members to join the state’s “Parent Aware” ratings system, which gives close scrutiny of classroom quality and school management. Today, about 80 percent of the association’s membership participates in the program, said Geedi.

The group has also been aggressive about alerting the state to fraudulent providers, and kicking out members that are suspected of bilking the state, he said. Since 2016, six providers have been pushed out of the group, Geedi said.

“We’ve come a long way toward establishing uniform standards,” he said. “But there is still a lot of work to be done around building public trust.”

Minnesota cracks down on child care assistance fraud

The Minnesota Department of Human Services (DHS) has gained sweeping new powers to investigate and prosecute child care fraud, following the discovery that some providers are exploiting poor parents and their children to obtain cash assistance from the state.

State investigators say they have uncovered an elaborate pattern of fraud involving the unauthorized billing of Minnesota’s $226 million, state-funded child care subsidy program for poor families. In many cases, child care providers actively recruit low-income parents as employees on the condition that they enroll their children using public subsidies. The schemes, which reach into the millions of dollars, capitalize on poor children and divert taxpayer money away from the intended families, state officials say.

In response, the 2015 Legislature gave the agency a host of new anti-fraud powers. Starting this month, the DHS Office of Inspector General has the authority to recoup payments from child care centers that fail to document that services were actually provided. The law also makes it a criminal offense for child care providers to recruit employees based on eligibility for public benefits or family status.

Already, more than a dozen investigations of child care fraud are underway statewide, and state officials expect to ratchet up enforcement efforts as the new powers go into effect later this summer.

“We hope that providers are going to wake up and notice that it’s not business as usual anymore for billing child care assistance,” said DHS Inspector General Jerry Kerber. “There is a whole new level of accountability.”

Kerber declined to discuss the pending investigations, but said that “significant dollars are involved.” Some of the centers bill the state more than $100,000 per month, he said.

Regulating CCAP

The reforms are designed to close long-standing gaps in the regulation of the state’s publicly funded Child Care Assistance Program, or CCAP, which subsidizes the child care expenses of about 30,000 low-income children per month. Until now, the prosecution and investigation of fraud in the CCAP fell to Minnesota’s 87 individual county prosecutors, who often lacked the staff and resources to pursue complicated fraud cases that spanned multiple counties.

The result was a patchwork of enforcement efforts that enabled child care centers to continue billing for services even when there was little or no documentation showing the children were actually present. In some cases, child care owners would recruit low-income parents as employees and then provide the parents with fictitious pay stubs to ensure eligibility for assistance, DHS officials said.

The result: Money that could have been going to low-income parents — to help them pay for child care while they pursued work or education — was instead diverted to providers perpetrating fraud. As of May, there were 4,336 families on the waiting list for CCAP benefits statewide, including 2,628 families in Hennepin County, state records show. “As one legislator phrased it, we have the greedy getting in line ahead of the needy,” Kerber said.

Under legislation passed this spring, the DHS Office of Inspector General will have the same power as individual counties to terminate payments to child care providers for fraudulent billing. To further discourage fraud, child care centers also will have to report to the state when a child enrolled in CCAP has failed to show up for more than half of the days in a month.

“This statewide approach provides much-needed accountability that has been lacking,” said Rep. Tara Mack, R-Apple Valley, chairwoman of the committee that oversees state child care assistance. “It will free up any money that is being misused to go toward families that truly deserve it.”

Wisconsin crackdown

The regulatory crackdown stems from reports, dating back more than five years, that child care centers across the nation were recruiting poor parents on child care assistance to ensure a flow of public funds for their businesses. The most dramatic reports emerged from Wisconsin, where the Milwaukee Journal Sentinel found that some day care centers were billing for services when the centers were closed or the children were not even present, the newspaper found.

After hearing similar reports in Minnesota, DHS officials in 2012 paid a trip to Wisconsin, which had launched a massive cleanup effort of its child care assistance program, known as Wisconsin Shares. The crackdown included the formation of an anti-fraud task force involving federal, state and local officials.

Kerber, the DHS inspector general, decided to pursue a similar, collaborative approach in Minnesota. In early 2014, with funds granted by the Legislature, Kerber assembled a child care provider investigations unit composed of four investigators, an analyst and two agents contracted from the Minnesota Bureau of Criminal Apprehension. Faced with a serious backlog of fraud reports, the unit focused on large, complicated cases with hundreds of thousands of dollars or more in fraudulent billings, Kerber said.

The effort is already yielding results.

Since last summer, the new anti-fraud unit has played a direct role in closing four child care centers across the state. One group of child care businesses, Deqo Family Centers of St. Paul, allegedly bilked the state of more than $4 million by falsifying records. And in May, the DHS shut down Salama Child Care Center, a Minneapolis day care that had allegedly billed the state for hundreds of hours of services that were never provided.

“The majority of child care providers in this state are great,” Kerber said. “But we are very interested in aggressively putting the fraudulent [ones] out of business.”

Twitter: @chrisserres

Minnesota Ranked 2nd-Worst In U.S. For Racial Equality

MINNEAPOLIS (WCCO) — A new report lists Minnesota among the worst states in America for racial inequality.

The website 24/7 Wall Street listed Minnesota as the second-most unequal state in the country behind Wisconsin.

Neighboring states South Dakota finished third, Illinois was fourth and Iowa was fifth.

The study measured gaps between black and white residents in areas like unemployment, income and homeownership.

It found that black people in Minnesota are ten times more likely to end up in jail or prison than white people.

It also found the median income for a black household is $30,306, but a white household is more than double that number at $66,979.

Race relations experts feel those two statistics are directly connected.

(credit: CBS)

“If [African Americans living near the poverty line] do have employment, it pays a very low wage. You are a renter at best,” said Keith Mayes, associate professor of African American Studies at the University of Minnesota. “And then if you are thoroughly outside of the labor market and participating in the underground economy [selling drugs, sex] then you may end up in jail.”

Racial inequality is no secret in the United States. Earlier this month, the tension connected to it ignited in the streets of Charlottesville, Virginia.

“We look at Charlottesville, and we look at the Tiki torches burning there, but people don’t realize we’re being scorched every day here in America, especially here in Minnesota,” said Minneapolis NAACP President Jason Sole.

He feels his point is validated by 24/7 Wall Street’s study. He says the proof is in his experience living in several of the states that landed in the top five.

“I’m from Chicago. I graduated in Waterloo, Iowa. I’ve been living in Minnesota the last 17 years,” Sole said. “Every place I’ve lived I’ve felt this immense pressure, like this microscope watching your every move and they try and force you to break.”

The study also found that the unemployment rate for black Minnesotans was 8.8 percent, but white Minnesotans was only 3 percent.

The homeownership rate for black people was 21.7 percent, but that number more than triples for white people at 76 percent.

“If I can’t get housing, if I can’t get a job, what do you really want me to do?” Sole said. “Those are the most basic needs we have.”

Mayes feels the results of the study are staggering, but not surprising.

“[The results] should be a cautionary tale about race in the country, that we have a segment of the population that has been forgotten, that has been written off,” Mayes said. “To me [the results] all correlate, or maybe even arguably, there’s a causal link.”

Sole feels fixing the issues starts by holding government entities, such as law enforcement or housing authorities, accountable. And mobilizing is the next step.

“Let’s talk about [the study] with our families. What do these numbers represent? Let’s talk about it in our communities, the churches, the mosques,” Sole said. “Everybody should be looking at that information and saying, ‘Wow, how do we make sense of this? Who had dropped the ball?’”

Minnesota’s achievement gap over recent years has also shown a disparity between white students and minorities.

The latest 2017 numbers from the Minnesota Department of Education found that in grades three through eight and tenth, the amount of white students who met the standard for reading and math was about double that of black students.


Minnesota Ranked 2nd-Worst In U.S. For Racial Equality