A DHS insider blew the whistle on a massive Somali daycare fraud network in 2018, warning of $100 million in stolen taxpayer funds potentially flowing to terrorists, yet Minnesota’s leadership under Tim Walz failed to act decisively on this national security threat.
Whistleblower Exposes Massive Fraud Network
Scott Stillman, a veteran investigator in Minnesota’s Department of Human Services Child Care Assistance Program unit, emerged as a courageous whistleblower in 2018 when he revealed shocking details about systematic fraud. Stillman documented how Somali-owned daycare centers were billing the state for non-existent children, estimating annual losses at $100 million. His most alarming claim involved funds being diverted to Al Shabaab terrorists in Somalia, raising serious national security concerns that demanded immediate federal attention.
Surveillance Reveals Systematic Deception
FOX 9’s undercover investigation provided damning visual evidence supporting Stillman’s claims. Surveillance footage showed daycare centers billing for 30 to 100 percent more children than were actually present. In one egregious example, a facility billed the state for 34 children on a day when the center was empty. This systematic overbilling involved ghost children, kickback schemes, and fraudulent meal reimbursements that exploited Minnesota’s $254 million childcare assistance program designed to help low-income families.
DHS Leadership Failures and Cover-Up Attempts
Despite Stillman’s detailed warnings and FOX 9’s evidence, DHS leadership under Inspector General Kari Ham actively worked to discredit the findings. Ham dismissed the fraud unit’s claims as “unsubstantiated beliefs” and placed Stillman on administrative leave after hiring a $90,000 consulting firm. Acting Commissioner Chuck Johnson acknowledged only 10 active investigations, even as dozens of suspicious operations continued. This bureaucratic resistance demonstrates how government agencies prioritized protecting their reputation over addressing taxpayer theft and potential terrorism funding.
The Legislative Auditor’s 2019 report found $5-6 million in confirmed fraud rather than Stillman’s $100 million estimate, but crucially validated his warnings about inadequate DHS oversight controls.
Multiple prosecutions proved the fraud patterns Stillman identified, including Fozia Ali’s $1.5 million restitution case and Deqo Centers’ $4 million fraud conviction. These cases confirmed that Somali daycare networks were indeed systematically defrauding Minnesota taxpayers through the exact methods Stillman had documented.
Current Federal Crackdown Validates Whistleblower Claims
Recent federal investigations have vindicated Stillman’s original warnings, with 92 people now charged and 60 convictions secured in Minnesota fraud cases. FBI Director Kash Patel has pledged significant federal resources to expand these investigations nationwide. The scope has grown beyond Minnesota, with Washington state now scrutinizing 283 Somali-language daycare centers amid similar fraud patterns. Representative Tom Emmer criticized Walz and former Attorney General Keith Ellison for finding “less than a YouTuber” despite having seven years and vast state resources to investigate.
This massive fraud scandal represents a catastrophic failure of government oversight that allowed millions in taxpayer dollars to disappear while potentially funding foreign terrorism. Stillman’s courage in exposing this network despite institutional pressure exemplifies the importance of protecting whistleblowers who risk their careers to defend American interests against both financial fraud and national security threats.
Sources:
Here’s what to know about Minnesota’s fraud crisis
FOX 9 investigating fraud uncovering Minnesota 2025
Federal fraud investigation Minnesota Seattle Somali community