CRABBY: New Questions of Possible Fraud in MN.

Summary

Garage Logic: News From the Krabby Coffee Shop

Episode Title: CRABBY: New Questions of Possible Fraud in MN
Date: March 4, 2026
Host(s): Kenny, Jay, with guests Ryan Raiche (investigative reporter, KSTP/Channel 5) and Scott (retired DHS fraud investigator)
Network: Gamut Podcast Network

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Episode Overview

This episode dives into explosive new questions about oversight, transparency, and possible fraud in Minnesota’s Promise Grant program, which set aside $100 million in tax dollars for small businesses impacted by hardship, discrimination, or unrest. The show features a deep-dive interview with KSTP's Ryan Raiche, who’s reported on questionable grant recipients and weak checks against fraud, and a rare on-air appearance by Scott, a retired Department of Human Services fraud investigator. The episode explores why oversight repeatedly fails, how loopholes are exploited, and whether state leaders are avoiding real accountability.

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Key Segments & Themes

1. Small Town Banter and Shifting to Serious Issues (01:33-03:18)

• The show starts with classic “Garage Logic” chatter about rural life, the freedom of living away from city scrutiny, and some comic exchanges about wildlife encounters.
• Shifts mood suddenly to “a busy, busy morning in the world of fraud” as Kenny introduces today’s serious topic of new fraud questions both at the Minnesota capitol and in Washington D.C.

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2. Ryan Raiche’s Investigation into the Promise Grant Program

(05:01-24:40)

Background:

• Ryan Raiche’s Channel 5 story started with simple curiosity about the Minnesota Promise Grants, only to uncover a host of red flags, weak vetting, and substantial lack of transparency regarding who gets state money and for what purpose.

Main Discussion Points

• No Accusations, Just Questions:
  “We want to be clear here. Nobody has been accused of fraud, but the lack of information released makes it very difficult to vet some of the winners.” – Ryan Raiche, (06:43).
• Unusual Awardees:
  • Many awardees are just individual names, not business names, making public accountability difficult.
  • Over 300 were “sole proprietors,” mostly in transportation, where tracking business activity or legitimacy is opaque.
• One Standout Case:
  • BM Vital Home Care received nearly the maximum grant but had its license revoked two years ago (“no working phone number”).
  • Another recipient billed Medicaid for millions shortly before a related program was shut down for fraud.
• Oversight Gap:
  • Senator Champion, who drafted the law, insists the act has “no possibility of fraud” but cannot say how this is assured, especially with sole proprietors.
    “We make sure that there’s no fraud and there’s no possibility of fraud in the Promise Act.” – Senator Champion (09:45).
• DEED’s Role and Pass-Through Accountability:
  • DEED previously did not check fraud records with other agencies, only started under a “new executive order” in response to media questions (11:03).
  • Major nonprofit (NDC) in charge of vetting applications declined interviews; a PR firm only offered “we understand our responsibilities” (11:42).
• Program Scope and Loopholes:
  • Criteria for qualification are broad—structural discrimination, population loss, “aging population”—making most rural or urban businesses eligible.
  • “It’s very easy to check one of those boxes...” – Ryan Raiche, (16:58)
  • Even outstate businesses (e.g., Fergus Falls organic farm, Pelican Rapids pizza joint) received grants intended for unrest-impacted areas.

Notable Quotes

• “The ones where there’s individual names, that’s where it gets a lot harder to vet...that’s why I think the sole proprietorship part of this...raises a lot of questions. The transparency piece is what is making it difficult...” – Ryan Raiche (13:00–14:10)
• “They don’t have to report back on how they use the money. And that’s what some lawmakers are fired up about.” – Ryan Raiche (18:45)
• “I think this is going to have legs. And I think the main takeaway [is] some lawmakers want to make some changes here because there is time to tweak this before they hand out another $70 million.” – Ryan Raiche, (25:43)
• “One sound bite from the state rep…fill out the paperwork and it’s free money. That’s all you got to do.” – Jay (25:20)

Legislative & Political Fallout

• Lawmakers now admit the original 2022 bill was likely under-vetted, with grant programs modeled after loose COVID relief.
• No reporting or documentation is required from recipients.
• $70 million in grants remain to be distributed; efforts to establish new “guardrails” are emerging in the wake of these revelations.
• “Some lawmakers want to make some changes here because there is time to tweak this before they hand out another $70 million.” – Ryan Raiche, (25:43)

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3. Inside DHS: The Anatomy of State Welfare Fraud & Failed Oversight

Guest: Scott, Retired DHS Fraud Investigator
(26:12–55:48)

Investigative Experience (2014–2019)

• Scott helped build DHS’s original in-house fraud unit.
• Focus was on Minnesota’s Child Care Assistance Program (CCAP), not Medicaid.
• Investigations started from tips, “top 100 list” by payout total.

How Fraud Unfolded

• Red flags: Daycare centers with little visible activity, covered windows, many billing records didn’t match actual children observed on hidden cameras.
• “One of the top centers that we investigated received about $3.75 million just in one year.” – Scott (30:11)
• Widespread pattern: Bill for 100 children, only 20–25 show up; employees billing CCAP to care for their own children.

Roadblocks & Systemic Failures

• Shift from prosecution to “administrative” handling—cases rebranded as “overpayments” to avoid criminal charges.
• “We weren’t supposed to refer to it as fraud...so we had to refer to them as overpayments.” – Scott (36:14)
• Investigations increasingly discouraged, especially as they disproportionately involved Somali-owned daycares.
• Activist pressure led to difficult climate for investigation; leadership became distant, less supportive.

Political Interference and Lack of Consequences

• Political pressure likely came down from the Governor’s office in response to bad optics for refugee resettlement headlines.
• “They made it more difficult for us to do our jobs.” – Scott (41:28)
• Recommendations by investigators to prevent fraud (better reporting, oversight, checks) were ignored. Ironically, nearly all now feature in the state’s new “fraud prevention roadmap.”
• County attorneys handled prosecution—uneven, inconsistent, sometimes unfamiliar with welfare fraud, rarely led by the Attorney General.

The Endgame: Did Anyone Pay?

• Only a very small number of prosecutions succeeded, and even then, sentences were light or result inconsistent.
• No evidence DHS has fired anyone responsible for ignoring warnings or failing to act on red flags.

Notable Quotes

• “We were finding widespread fraud being committed...There were so many loopholes. It was easy to commit the fraud once they figured out how to do it.” – Scott, (41:20)
• “[The state] started basically looking at how we investigated the cases...to see if we were racist or biased...At that point it became a little more difficult for us to conduct our investigations.” – Scott (39:00)
• “You find widespread fraud...and at some point they kind of put the brakes on it.” – Jay (41:20)
• “Do you think this is going to go anywhere?...I highly doubt it.” – Scott (54:59)

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4. Glum Humor, New “Big Beautiful Fraud Report,” and Demand for Accountability

(56:45–61:58)

• Hosts mock the state’s new fraud roadmap:
  “I think we should change the title...I’d like to add ‘10 years too late.’ Seriously.” – Kenny (57:03)
• Both whistleblowers (Scott and another, “Agent X”) gave same warnings; only now is the state considering changes.
• Estimated $9 billion in fraud losses (“could have been avoided”) while the state vigorously chases residents for tiny tax underpayments.

Audience Takeaways

• “When you have as broad a net...it’s pretty easy [to commit fraud].” – Jay (25:12)
• They urge more investigation into not just fraudsters, but those who allowed it.
• “At some point...I want somebody to be in jail because of this. More than just the people that got the money.” – Kenny (59:20)
• Despite reporters’ requests, officials—including the Walz administration and DHS—have not disclosed how many, if any, were fired over oversight failures.

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Most Memorable Quotes

• "The fact that he was going to call 911 on you, he was not happy." – Kenny, on Ryan’s attempt to call a grant recipient (21:17)
• "Fill out the paperwork and it’s free money." – Quoting Rep. Nolan West, as highlighted by Jay (25:17)
• "[The government] made it more difficult for us to do our jobs...when it started to look politically bad." – Scott (41:28, 44:07)
• "Do you think this is going to go anywhere?...I highly doubt it." – Scott (54:59)

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Key Timestamps

• 05:01 – Ryan begins discussing his investigation of the Promise Grant program
• 09:45–10:37 – Senator Champion defends the act and claims “no possibility of fraud”
• 13:00–14:10 – The challenge of vetting sole proprietors
• 18:10–19:55 – Lawmakers have doubts about original oversight, $70 million more to be awarded
• 26:12 – Introduction of Scott, retired DHS fraud investigator
• 30:11 – $3.75 million in one year to a single center, and method of fraud discovery
• 36:14 – DHS officially discouraged use of term "fraud"; preferred “overpayments”
• 41:20 – Peak fraud/oversight failures, and shift to reluctance in investigation
• 54:59 – Scott’s bleak outlook: systemic inaction means no one will be held accountable
• 57:03 – Hosts mock the “big beautiful fraud report” as “10 years too late”
• 59:20 – Demand for real accountability (“somebody to go to jail”)
• 63:10 – Jay: attempts to get whistleblower affidavits submitted to Congress

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Conclusions & Takeaways

• Weak Oversight = Big Loopholes: Lax vetting, lack of reporting requirements, and politically motivated avoidance of hard questions allowed for rampant fraud, with little hope of systemic reform.
• Investigators Silenced, Whistleblowers Ignored: Reforms and warnings offered a decade ago are only now being considered, generally after widespread investigative journalism and legislative embarrassment.
• $100 Million at Further Risk: With $70 million in state grants still to be distributed, legislative urgency is finally emerging yet critical oversight and transparency holes remain.
• No Real Consequences for Leadership: Despite billions lost, there is no evidence state leaders or staff—those who ignored or discouraged fraud detection—have faced termination or legal consequences.
• Citizen Frustration: The hosts and guests express deep frustration that ordinary taxpayers are held to strict standards while the system fails to oversee much larger sums.

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For listeners, this episode sheds light on the systemic failures that enable public money to flow out the door with minimal controls and almost no accountability—for either fraudsters, or those who enable the fraud.

Transcript

[Kenny]

This week on we fixed it. You're welcome. We're getting personal about a very beloved company.

[Jay]

I'm the grandson of H.B. reese, and I have no interest in

[Scott]

buying another Reese's product.

[Kenny]

Our guest, Brad Reese, has the world's

[Jay]

attention and he's got ours, too. It's laughable.

[Scott]

I mean, you're paying more for a product that's inferior.

[Kenny]

Of course we're going to try to fix this situation.

[Scott]

Hopefully Hershey will pay attention. Hopefully Hershey will address it.

[Jay]

Go listen to this very special episode

[Kenny]

wherever you get your podcasts. We fixed it. You're welcome.

[Sponsor/Ad Voice]

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[Ryan Raiche]

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[Jay]

Jake Old Hey, Kenny, Is this part where I can talk now?

[Kenny]

All you do is talk. You talk a lot.

[Jay]

I know. Before we get started. Hey, before we get started, I want to pick up on something you talked about yesterday on the phone. Those coyotes.

[Kenny]

Oh, yeah.

[Jay]

Up at your place.

[Kenny]

Yeah.

[Jay]

Yeah. How was that?

[Kenny]

Well, they. They've got a route, so they come into the area every five to seven days. Yeah. So if you're. If you're out there trying to call in a coyote when they're 50 miles away, you're wasting your time.

[Jay]

Yep.

[Kenny]

But they're in the area now, so I thought maybe I'd bring one in. Have you ever heard a wounded rabbit call? Have you ever heard the sound of a rabbit being murdered?

[Jay]

Yeah, I hear it in my yard.

[Kenny]

One of the worst sounds ever. It's really. It's bone chilling.

[Jay]

Yeah. Last summer and owl got one in my yard and it was. It was really.

[Kenny]

And they're depressing.

[Sponsor/Ad Voice]

They're.

[Kenny]

They're one of the few species of animals in the state that are unprotected, which means the DNR wants us to get rid of them year round.

[Jay]

You got to.

[Kenny]

It gives me an excuse to go out and sit outdoors. That's what it. I Just want. I need an excuse to go outside.

[Jay]

I understand. I understand the whole. I understand why you live in the woods. I get it. I live in the woods and I'm real. People are like, how do you like that now? Now that you're retired? I go, I like it even better. Yeah. I don't got anybody coming around me

[Kenny]

except porcupines and bears. I'm. I can literally walk out the front door of this building, and I'm. I'm out there. I'm in. I'm in my prayer.

[Jay]

And the biggest advantage we have that the city folk don't have is we can walk into our yard in our underwear any time of day, and it doesn't matter. Doesn't matter. Nobody questions it. Poor Ryan Ray. She's sitting over here going, is this really what I sign up for?

[Kenny]

A busy, busy morning in the world of fraud. We had our own hearings right here in our capital, talking about fraud. And then the governor and the Ellison are. We're both in Washington getting grilled, and we're going to talk a little bit more about that,

[Jay]

Which is what happens every time.

[Kenny]

It made me want to. It was just gross.

[Jay]

Yeah. It's a lot of theater.

[Kenny]

These people. These people are running our lives, and they're. They're all despicable.

[Jay]

But, you know, I'm old enough to go all the way back to the Watergate hearings. Nothing's much changed in the last 40 to 50 years.

[Ryan Raiche]

Right.

[Jay]

When they have these congressional hearings, it's all. It's a lot of theater posturing and

[Kenny]

yelling and pointing and shouting. Ryan, welcome to News from the Krabby Coffee Shop. We promise we. His debut won't get you fired.

[Jay]

No, not gonna get him fired.

[Ryan Raiche]

Stay away from that.

[Scott]

No, no.

[Jay]

We love you. We want to have you back.

[Ryan Raiche]

Yeah, Happy to do it. You guys have nice, nice facilities up here.

[Jay]

Not bad, right?

[Ryan Raiche]

For a little podcast floor very often. So this is nice.

[Jay]

Kenny. I was walking him down radio row down there. He hadn't been up there in a while.

[Kenny]

Yeah.

[Jay]

He's looking around at the studios going, you know, I'm sure in his head, comparing them downstairs to tv.

[Ryan Raiche]

Like, nice paint and very, very beautiful up here.

[Jay]

Clean.

[Kenny]

In radio. We all got into radio because all we do is goof off. You guys are really serious downstairs in the basement.

[Jay]

I did.

[Ryan Raiche]

I told.

[Jay]

Hey, Ken, it's funny you should say that. We were coming down the hall. I go, it's a lot looser up here, man. Yeah, a little bit more. We actually laugh a lot up here

[Ryan Raiche]

on the floor chuckles as I was walking by.

[Jay]

Yeah, there's a big, the meetings are way different.

[Kenny]

Nothing that say in radio ends up in hr.

[Jay]

That is the truth.

[Kenny]

Should.

[Jay]

It should, but it never does, which is amazing.

[Kenny]

I want to talk about your piece this week, Ryan. Really fascinating about the Minnesota Promise Grant program.

[Jay]

Good reporting.

[Ryan Raiche]

Thank you. Thank you. Yeah, no, we, you know, I started looking into this around Christmas, actually, and then the world fell apart, you know, so they kind of got on the back burner for a little while there. And then we just kept digging and digging and you know, Jay, you just kind of keep going down this.

[Sponsor/Ad Voice]

Yeah.

[Ryan Raiche]

One thing was, and then the vetting process, you know, there was all sorts of questionable things and red flags that we found and we just kept going.

[Jay]

Yeah. And I think it's important to point out and for those who don't know, Ryan Raiche is our guest investigative reporter with Channel 5. Did a nice piece, an interesting piece Monday with some follow up today and really nice piece of enterprise reporting. And I do want to jump right out of the gate and say, Kenny, we're not saying this is fraud Ryan discovered.

[Kenny]

Right.

[Jay]

What Ryan did discover, in my opinion, which is fair to say because it comes across in the story a lot of questions about oversight and how can you be sure there's no fraud as you move forward? Because certainly a lot of questions. And so what we're going to do to set this up for our listeners and those who are on the podcast or, excuse me, the YouTube channel, Gabe's going to play us Ryan's piece from Monday to set this up. And then we're going to find out from Ryan what happened today in the legislative hearing.

[Kenny]

Let's do it, Gabe.

[Jay]

Go, Gabe.

[Gabe]

100 million of your tax dollars has been set aside to help struggling or disadvantaged businesses. The 5 Investigates has uncovered some questionable recipients. And with fraud, waste and abuse, now top of everyone's mind, investigative reporter Ryan Reich is pressing for answers. Ryan, what are you learning?

[Ryan Raiche]

Lindsey it's called the Minnesota Promise Grant. Up to 50 grand up for gr for small businesses. We want to be clear here. Nobody has been accused of fraud, but the lack of information released makes it very difficult to vet some of the winners. For more than 15 years, Shantae Holmes has rode the highs and fought the lows of running all washed up laundry, a cycle she knows all too well.

[Kenny]

The business was struggling because it had just experienced the situation of the George Floyd.

[Ryan Raiche]

Then a lifeline from the Minnesota Promise Grant. She received more than $30,000 from the state's Program designed to help small businesses like hers impacted by racial discrimination, civil unrest and other barriers to funding. Holmes says she used the money to fix her company van. It was vital piece that, you know,

[Jay]

helped me to continue moving through.

[Ryan Raiche]

Holmes is one of more than 650 winners named so far in this nearly 100 million dollar grant program. But 5 Investigates also found some questionable recipients at a time when the public and policymakers are following every cent. Among the winners that stand out, not business names, but more than 300 people who the state says qualify as sole proprietors. Most work in transportation. A detail only revealed after we kept emailing the state for more information. I'm a strong proponent of sole proprietorships. I understand that. But it's a little bit harder then to have that lens onto how is the money going to be used or more importantly, how was it used. I am a reporter with Channel 5 KSTP. I tried tracking down as many recipients that I could find and not everyone was excited to hear from you. You can call 911 if you want. I'm just trying to find out what you're using the funds for. The state gave this housing stabilization company more than $33,000. We found it billed Medicaid nearly $4 million since 2023, including through that housing program the state shut down last fall over fraud by phone. The owner told me when they applied they were under the $750,000 limit. To qualify just have to fill out some paperwork and getting 5gr people would take that deal. It's free money. Just file the paperwork. Then there's BM Vital Home Care. It received nearly the maximum grant, but a quick check online shows the state revoked its license two years ago.

[Scott]

Your call cannot be completed as dialed.

[Gabe]

Please check the number and dial again.

[Ryan Raiche]

And they have no working phone number. I brought our findings to the state senator who drafted the bill. How do you respond to that?

[Senator Champion]

What I say is that if there was a license that was revoked for some reason because there could be a

[Ryan Raiche]

technicality, they said this was a serious issue that affected the. That put in jeopardy the health and safety of the clients in that business.

[Senator Champion]

Well, I don't know about DHS saying that we didn't receive any notice of that. But let me also say this. We make sure that there's no fraud and there's no possibility of fraud in the Promise Act.

[Ryan Raiche]

Champion says he did many site visits himself and says the Department of Employment and Economic Development and its partners perform a laundry list of checks including going over tax forms, checking addresses and Secretary of state filings.

[Senator Champion]

Even when you think in terms of the cherry picking that I think is important for reporters to do that. I think it's important to put context around these things.

[Ryan Raiche]

I'm not sure if cherry picking is the right term and we're going through the list to try to verify.

[Senator Champion]

So I'm not here to, you know, say that, that you're wrong for doing the work that you do. We want you to, because guess what? We know that there's no fraud, but

[Ryan Raiche]

we also know that there are hundreds of businesses receiving grant money that we, the public, know absolutely nothing about. Let me ask you this. Does DEED check with DHS to see if there's been any credible allegations of fraud or stop payment order issued before grant money goes out the door?

[Senator Champion]

I think that's something you have to ask Dee. Right, Because I can go through the list.

[Ryan Raiche]

Well, it's part of your legislation, right?

[Senator Champion]

Well, part of my legislation legislation is for small businesses.

[Ryan Raiche]

I did go to deed, the agency in charge of the oversight here. They ignored my interview request. But in response to that question about whether they first check for allegations of fraud or stop payments, a spokesperson told me this, quote, in the past, staff did not have access to not public data related to fraud investigations and stopped payments being led by other agencies. I followed up today and they learn they are now doing that under a new executive order. Then they previously told me they do spot checks on a percentage of all approved applications. Lindsey.

[Gabe]

All right, so who is actually in charge of picking which businesses get the money?

[Ryan Raiche]

So these are called pass through grants. And here's how it works in the Metro, a nonprofit called the Neighborhood Development center actually does the lion's share of the work here. They too refuse to sit down for an interview. And their hired PR firm did not respond to any of my written questions, but acknowledged that recent events have raised important and legitimate questions. In a statement, NDC said, quote, it understands its role and responsibilities related to these issues. To ensure this important work continues to be done in a way that has impact in financial accountability, we'll continue to track this. There are more rounds to be funded here, so this program's not done.

[Kenny]

Grocery prices, though, continue to squeeze.

[Jay]

Great story.

[Ryan Raiche]

Thank you.

[Jay]

Yeah, great story by Ryan Raiche.

[Ryan Raiche]

Thank you.

[Jay]

The first question I had, Kenny, I was sitting here chatting with Ryan and then you and I have discussed this credit to Senator Champion for sitting down and giving an interview.

[Ryan Raiche]

Yeah, he didn't agree to it at first, but eventually did. And yes, he deserves credit for sitting down.

[Jay]

I think so often now we don't get that very often.

[Ryan Raiche]

And I agree with you.

[Jay]

The one question I had, and Kenny and I talked about this piece, he was really confident when he said there was no fraud. And how certain can he be there's no fraud at this particular time.

[Ryan Raiche]

I think even that morning of the interview he talked to Deed on the phone and I think he felt he received enough confidence from them that all the T's are crossed and I's are dotted. However, we know he didn't visit every single operator and certainly not all the sole proprietors or maybe any of them. The businesses that we all can figure out what the business is, that's easy. The ones where they're the individual names, that's where it gets a lot harder to vet and you know, and to know, you know, you know.

[Jay]

Certainly no.

[Ryan Raiche]

Certainly no. The public database is what I spent hours doing trying to find phone numbers for these people. And they very well may be running a legitimate business. It's just hard to find them. Find them, find them and ask them questions and would you use the money for anything? Which is what we spend so much of our time doing. And that's why I think the sole proprietorship part of this is you scroll through the list and I know I'm getting the social media pings as well. Everyone's fired up over it. And yeah, it raises a lot of questions. The transparency piece is what is making it difficult to verify and say this is what it is.

[Jay]

Yeah. And Kenny, you sent me a message this morning, didn't you? There was something about out of state recipients. Right.

[Kenny]

So this is really confusing for me because I went to the award awardees, the people that have won. And I started just scrolling and I'm seeing a lot of Muslim names, individuals of course, but I keep scrolling and I end up seeing some outstate businesses that shouldn't qualify under the Promise Grant awardees, but they do fall under different financing programs that fall under the Deed umbrella.

[Scott]

Right.

[Ryan Raiche]

Okay.

[Kenny]

So I open up the page on the Employment and Economic development page from the, from Minnesota and I see financing programs and there's the Minnesota Investment Fund, the Minnesota Job Creation Fund, Trade Zone Fund, and on and on and on. One of which is the Promise Grant, right?

[Scott]

Yeah.

[Kenny]

So why. And then in another area, like you say in the story, they provide me a map of eligible businesses that have been affected by these racial issues. Right. And it's all in Minneapolis St. Paul.

[Ryan Raiche]

Yeah. And there are different region, regions of the Promise act.

[Jay]

So.

[Ryan Raiche]

And we focused most of our work on the Twin Cities, because that's where the most of the money's going.

[Jay]

Okay, so it could go statewide.

[Ryan Raiche]

Yeah, it absolutely does. There are my pockets.

[Kenny]

My question is, I found an organic farm in my area up in Fergus falls. They got 30 something, and then there's a pizza joint up in Pelican Rapids. And I'm not criticizing these people, and I'm not saying they don't qualify. I just thought it was surprising that somebody from Pelican rapids qualified for 50K.

[Ryan Raiche]

And I think that's what is difficult and what other people have pointed out, even the legislative auditor who I talked to yesterday, who told me flat out there is so much discretion here on who gets these grants and who qualifies under the letter of the law. Because you can check if you were impacted by civil unrest, if you have faced any type of racial discrimination or other barriers to funding. I mean, that's a very broad set of barriers to criteria.

[Kenny]

I have the paragraph right here on the webpage. This program, through a series of statewide partner organizations, will award grants to eligible businesses in communities that have been adversely affected by structural race, racial discrimination, civil unrest, lack of access to capital, loss of population or an aging population, or lack of regional economic diversification.

[Jay]

So that would take you to outstate Minnesota.

[Ryan Raiche]

Loss of popula, loss of or aging population.

[Jay]

Loss of population.

[Ryan Raiche]

It's just this wide net.

[Jay]

It's really broad.

[Ryan Raiche]

I mean, it's very easy to check one of those boxes, and I think they do give preference. You know, maybe if you hit more of those categories, you get sort of a higher score to perhaps get the funding. But I think it gets to your point of how do so many people qualify? Well, that explains it.

[Jay]

I think it reminded me, too, a little bit of some of the stories I did back in January of 2025 that Kenny and I have talked about on the show before when I was looking at the Childcare Assistance Program. When you talk about trying to find the licensees, the people that hold the license run the daycare, very similar. I couldn't find anyone by phone or knocking on the doors, as I eventually did, to know who was running what and when and how.

[Ryan Raiche]

And those were actual business names, I think. Right?

[Scott]

Correct.

[Jay]

It wasn't sole proprietor.

[Ryan Raiche]

Yeah. So that was the part that, you know, took a lot of time to try to find anyone.

[Jay]

Yeah.

[Ryan Raiche]

And again, we don't. We don't know. I'm not saying that it's fine. We don't know what it is.

[Jay]

It's a question of oversight, for sure,

[Ryan Raiche]

and transparency and Transparency.

[Jay]

And we all know when you have, because state leaders have admitted when you don't have the guardrails, when you don't have the oversight, that's what leads to the fraud. So what you're finding is significant.

[Ryan Raiche]

Yeah. And this leads us to what happened today. So there's a hearing today, a House committee hearing led by Rep. Dave Baker, and it was all very timely since our story just aired. And a lot of the questions were about, like, what's going on here? I mean, was this vetted properly? And what we're finding here and what lawmakers were honing in on is two years ago when this passed, they don't feel, at least the folks on this committee don't feel this was vetted properly with the proper guardrails in place at that time.

[Sponsor/Ad Voice]

At the time.

[Ryan Raiche]

And so Deed is kind of sitting back almost and saying, well, like, this is what we're dealing with. This is what we have here.

[Jay]

This is what you passed.

[Ryan Raiche]

Yeah. And I remember the assistant commissioner, deputy commissioner at Deed saying something like, you know, this was really modeled after one of those relief programs. It's not a reimbursement program, it's not a loan. But that's why, you know, for instance, there's a lot of people hot about, well, why aren't businesses required to report back how they use the money? There is no requirement. They don't have to report back on how they use the money. And that's what some lawmakers are fired up about right now. Indeed. Like, well, it's not in. It's not part of the legislation.

[Jay]

Right. Not part of the law.

[Kenny]

And so this was just round one. They're already prepping for round two, and it was the 650 winners of 100 million. Ryan, where did the 100 million come from?

[Ryan Raiche]

So the overall pot of money is about $100 million. And this is why this story, I think, important, because they could do something now to prevent and maybe put some guardrails up and figure out, okay, where do we need to be born transparent and fine tune this before they hand out another 70 million? I think 70 million is what's left in the further rounds of funding here. So it's still ongoing right now.

[Kenny]

Is it our taxes, though?

[Ryan Raiche]

Oh, yeah. It's all tax dollars.

[Kenny]

It's all Minnesota tax dollars.

[Ryan Raiche]

All Minnesota tax dollars.

[Kenny]

Nothing from the feds.

[Ryan Raiche]

Nothing from the feds.

[Jay]

So general fund.

[Ryan Raiche]

General fund, yeah.

[Kenny]

So the money, I just find it fascinating learning where my money is being spent.

[Jay]

Yeah, right.

[Kenny]

And I've had this discussion many Times on gl, if you're late paying the state or if you miscalculate by $5, the. The state is going to send you threatening emails and threatening letters, and they're coming for your house and your car and your kid and your underpants, and they're going to take everything away until they get that last $5 squeezed out of you.

[Jay]

Yeah. Yeah.

[Kenny]

And so I think it's really interesting, especially going to the awardees and seeing where our taxes are being spent.

[Jay]

The ones that jumped out at me, too, Kenny, were the sole proprietors. Is that fair?

[Ryan Raiche]

You jumped out at me like the woman you saw at the top of our piece, Shantae, who was great, sweet lady, who. And I explained to her, listen, this is what the story is about, but I want to show someone that I can show them what you did and used it properly. And used it properly. And she graciously opened her doors and let us do that. But it's. Those are the easy ones.

[Jay]

Correct.

[Ryan Raiche]

You know, those are the ones where, like, you know, I think there was a brewery that probably everyone has visited and. Okay, I can probably figure out how they're using the money, whether it's payroll or whatever. Yeah, she told me, use it on my van. Exactly. But the ones who. You can't get a working number. Like literal business names.

[Jay]

No numbers.

[Ryan Raiche]

You went through that with.

[Jay]

Same thing.

[Kenny]

And the fact that he was going to call 911 on you, he was not happy.

[Ryan Raiche]

And I don't, you know, maybe it was a language barrier. You didn't understand what I was doing. I was very clear. You know, I'm a reporter. I'm just trying to understand so we can report back how you're using the funding, you know, this taxpayer money that the state qualified and fair questions.

[Jay]

All of it. Yeah.

[Kenny]

I have to admit, Ryan, I have been tempted to call 911 when Kohl's called. Seriously?

[Jay]

Well, you know, it's interesting because you

[Ryan Raiche]

wouldn't be the first. Probably.

[Jay]

I was surprised like Ryan. That's very true. I was the first one. That's almost too close to home. But I. And I've done this with other stories, but the most recent was ccap where I was surprised Kenny and Ryan would back me up on this, that you can have that kind of money going out the door collectively, that kind of money, and yet when you go to try to reach people who are listed with the state as the owners and the operators with addresses and numbers and none of it works and you can't find anybody. And of the Few numbers that do work. You leave messages repeatedly and nobody gets back to you. Then I went to the daycare centers to see if I could find some of these owners, and I couldn't find for days on end, all different hours of the day. That's when you start to say, and then DHS did acknowledge there needs to be better oversight. Yeah. And that's the question.

[Ryan Raiche]

Exactly. And again, that's another example of a legitimate news operation. We can't make loops. Correct. It raises questions. It doesn't prove fraud.

[Jay]

It's not our job to solve the problem. I've tried telling people, Ryan and I, the work we do, and other good reporters, you go out and find stuff like this and you raise the questions. You see where there might be a problem, but you can't prove it because you don't have subpoena power and you can't go get search warrants. Our job is to do what you did, lay it all out. And then it's their job up at the Capitol or wherever it might be, Minneapolis City Council, wherever the story might be.

[Ryan Raiche]

They have to figure it out.

[Jay]

They're the ones who have to figure it out.

[Ryan Raiche]

You know what else? Just with this committee hearing this morning, something that came up was one of the organizations that the way this works is DEED doesn't handle it all. They partner with organizations to take in all these applications. That organization said they flagged about, I think, 50 to 60 applications that they suspected were fraudulent or something was off with them. Not only them, but some of the other outstate organizations that are doing this as well. Up to 50 to 60, that they notice fraudulent tax forms and people trying to steal money. And so that's significant.

[Jay]

Yes.

[Ryan Raiche]

Lawmakers were upset because DEED hasn't done anything with those flagged up. They didn't return. They didn't turn it over to police. We're gonna report on that tonight. They didn't do anything with them.

[Jay]

So that's what you found out at the committee here?

[Ryan Raiche]

That was one of them. Yeah. That was one of the things that we found out. So. And ndc, this organization, they're like, they're touting that as, hey, look, our process does work, okay? You know, so we flagged these. We didn't focus on those in our initial reporting. Obviously, we didn't know about those. We're finding these other things. But this is. I think it's another sort of chapter in. In the reporting here.

[Jay]

Well, he's gonna. Ryan's gonna have this on at what, five and six or six.

[Ryan Raiche]

Six. O'. Clock tonight, six o' clock on Channel 5.

[Jay]

If you miss it, you can always catch it on the app and on YouTube. But I'll be looking forward to seeing that follow up tonight.

[Kenny]

Are we doing a tutorial on how to fraud the state? Because I'm thinking here as you guys

[Jay]

are talking, it feels like something.

[Kenny]

Think about this. All I have to do is become Kenny Olson llc. Right? And my LLC is I'm going to raise one acre of turnips every year and I plan to lose 100% of my investment in those turnips. That means I'm going to qualify for something, right?

[Jay]

Well, let's put it this way. When you have as broad a net in this particular instance as. As you pointed out, you know, we're being absurd, but. Oh, yeah, of course, you know, tongue in cheek, but.

[Kenny]

But how easy is it?

[Jay]

It's pretty. Well, one sound bite from the state rep. I think it was Representative West.

[Ryan Raiche]

Oh, yeah, Nolan West. Yeah, yeah. Like free money or whatever.

[Jay]

He says, fill out the paperwork and it's free money. That's all you got to do. So, yeah, Kenny, for the turnip farm. Yeah, fill out the paperwork.

[Kenny]

I grow turnips every year for the deer anyway. I may as well get $50,000.

[Jay]

I knew you were going with the deer hunting and the turn.

[Kenny]

Yeah, yeah, of course.

[Jay]

He's on Daylight. We're gonna let him go.

[Kenny]

All right, thank you, Ryan.

[Ryan Raiche]

Thanks so much.

[Jay]

And we might have you back. Yeah, absolutely.

[Ryan Raiche]

We're going to keep. I think this is going to have legs. And I think the main takeaway of this hearing today was some lawmakers want to make some changes here because there is time to tweak this before they hand out another 70 million and 50

[Jay]

to 60 that have already been red flagged.

[Ryan Raiche]

Exactly.

[Jay]

That to me, is very, very interesting. Also shows you're going down the right trail.

[Ryan Raiche]

Hope so.

[Jay]

All right, Ryan Ray, six o' clock on Channel 5 tonight. Thanks, guys. Thanks.

[Kenny]

We'll take a quick break and reset and come back with another guest right after this.

[Jay]

Scott's been kind enough to join us. He is a retired, now retired Minnesota dhs, Department of Human Services fraud investigator, prior to that long career in law enforcement. And I had seen Scott's testimony and I really wanted to find him. Took a little time, but I finally found him. He was nice enough to join us for an interview. I think you said to me, scott, you haven't done any media interviews. This is the only one you're doing or the only one you've done. I Mean, because of that quick follow up after the hearing.

[Scott]

Follow up radio after the hearing. But that was it.

[Jay]

Yeah. And so we really appreciate you joining us. And it was interesting. Kenny Scott was brought before the House committee to talk about fraud in Minnesota, and more specifically, who knew what, when did they know it, and what did they know. Right. And his testimony, as you saw, was really, really, really interesting. And I think that's where we kind of wanted to start. Scott was a fraud investigator from 2014 to 2019. I got that right, Scott?

[Scott]

Yes.

[Jay]

Yeah. So in your five years, just let's start there. What did you find in those five years? Kind of boil it down for us and tell us what you found in those five years of investigating what, primarily Medicaid fraud, I'm assuming, right?

[Scott]

No, ours was strictly child care assistance, just CCAP program. That. That was it.

[Jay]

Which I get some Medicaid money, but

[Scott]

yeah, so just a little bit of background. So prior to 2014, DHS did not have an investigative unit for the CCAP program. That all came to light when, towards the end of 2013 or in 2013, there was a investigation into a large daycare operation called DECO operated three daycare centers in the Twin Cities. And that was investigated by Ramsey county and Hennepin county fraud investigators. And so DHS at that point realized they needed to have their own investigative unit. So they created ours. And I was one of the original four investigators that they hired. They hired four retired law enforcement officers that had investigative experience. So when we got in there, that was our sole purpose, was to investigate any fraud occurring within the child care assistance program.

[Jay]

What'd you find?

[Scott]

So that's, of course, ours. During the course of our investigations, you know, we did find overlap within other programs such as Medicaid, medical transportation, home health aides. It all kind of intertwined with ownership and the communities that they serve.

[Kenny]

How do you start a fraud investigation? What's the process?

[Scott]

Well, how we started ours was we went off of tips that were received from the public or from the daycare licensers. You know, they would notice activity or lack of activity that would be common for daycare facilities. And realizing that they get state funds, they would call in tips that, hey, something doesn't seem right here. The other way we investigated them was we created what was called the top 100 list. And that was based off of and generated strictly by the amount of CCAP funds that these centers were receiving. So without knowing who, you know, what the centers were, who ran them, it just generated. And so we started looking at the Centers that were receiving the most money and started digging into the background there. And that was the jump off point for starting the fraud investigation.

[Jay]

How much did you find in terms of estimated dollar amounts that went out the door to fraudsters between 14 and 19 when you were doing this?

[Scott]

Well, I'm not sure the exact amount, but I can tell you that when I first started, one of the top centers that we investigated received about $3.75 million just in one year.

[Jay]

Okay.

[Scott]

Of CCAP funds, that's just one. That was just one center. Correct.

[Jay]

So if you extrapolate that out and you've got dozens and dozens of centers, you could have quite a high number.

[Scott]

It was into several millions of dollars.

[Jay]

Yeah.

[Kenny]

Beyond those numbers, though, how do you prove or how do you become reasonably assured that there's fraud going on here? Are you. Is there surveillance or do you actually knock on doors?

[Scott]

No, there was. There's surveillance. So one of the first things that we would do is we would go out and kind of check out the area, the building. One of the things that we. A common trend that we noticed with the centers were they were in leased buildings in like, industrial areas. They were large facilities, but they would have the windows totally covered, so you really couldn't see anything inside. We would go and we would see very little activity, hardly any cars there. And so we would get a lay of the building. And then our most useful tool was video surveillance. We would actually put covert surveillance cameras up, covering all the doors, entrances and exits. And we would record video for during the hours of operation. And a lot of these centers, they listed their hours of operations from 6am to 11pm at night. And so we would have surveillance on the center that whole time.

[Kenny]

Yeah.

[Scott]

And then we would review that video. And actually, as investigators, we would sit and we would watch hours and hours of video and count the number of kids going in and out of the building. We would log the time they go in, how many. We would try to identify what vehicle they got out of so we could identify the family. We would log what time they left, and then we would match those numbers, what we were seeing. We would request the attendance records and also obtain the billing records. And we would match all of that up and find the. What the discrepancy was. And a lot of times we would see that they would bill for 100 children in one day. And we would count maybe 20 or 25. So we would note all of that in our report.

[Jay]

And I think some of those could have been two, if I'm not Mistaken. Kenny and Scott, you might have had 20 to 25 children. But I think when we did talked on the phone, Scott, you mentioned some were. Maybe a woman would bring a child, but it was their own kid. Right. Is that right?

[Scott]

Right. We found that a lot of the. A lot of the women that worked at the centers were also bringing their children there and receiving CCAP funds for, you know, to watch their children.

[Jay]

Paying themselves to watch their own children.

[Kenny]

Well, it's a great job if you can get it.

[Jay]

So you. As you. You and I talk, Scott, you took this up the ladder and reported it all to, I'm assuming, the oig, the Office of Inspector General at dhs.

[Kenny]

What is that process?

[Jay]

Yeah, the head of dhs. What do you do with it? How high did you take it up?

[Scott]

Well, so of course, we had a supervisor for our unit that oversaw our investigations. We also worked. We also. For a while, we had a one or two BCA agents that were embedded in our unit, and they acted as our. Our sworn law enforcement branch. So for the search warrants and things like that, we worked with them to prepare the criminal complaint. So we had several supervisors that we would run these by and present our cases to, and then we would work with the county attorney's offices to try to get them prosecuted. The Inspector General and Deputy Inspector General for the Waste Fraud and Abuse Unit, who oversaw ours? When I first started there, the Inspector General, Jerry Kerber, he was excellent. He cared. He would come and talk to us, always wanted to know what we had going on him. And then the assistant or the deputy Inspector general, I can't remember her name, but they were great. But then they left, and we got our next inspector General, and she was a little more distant from us, and we as investigators, really didn't interact with her as much as our supervisors did. So where it went from us basically went to the county attorney's office for prosecution. At one point, we started taking up. They wanted us to take them more administratively, which meant that we would present the case to an administrative law judge within DHS and they would handle it, which meant, you know, no. No court. It wasn't public information. There was no penalty other than having to pay back any overpayment, which I got to tell you, that was the. That was the soft term that we were supposed to use. It was. We weren't supposed to refer to it as fraud because, of course, fraud would implicate a crime. So we had to refer to them as overpayments.

[Jay]

You're kidding.

[Kenny]

Wow.

[Scott]

No, that's Who.

[Jay]

Who gave overpay.

[Kenny]

Yeah.

[Jay]

Who gave that directive?

[Scott]

Well, that was just how we were. That's how we were told to phrase it.

[Jay]

Who. Do you remember who told you that

[Scott]

we were that game? Yeah, that was from, like, the administrative law judges going into. Because. Because that's how they had to word it in order to keep it out of criminal. Yeah.

[Jay]

Okay. Okay.

[Scott]

So that they could try to. So that they could try to force the. The repayment of. Got it. Funds.

[Jay]

So this would have been. Which administration would have been Dayton and then part of Dayton.

[Scott]

Yeah, it was. When I first started, it was. Yeah, when I first started, it was Governor Dayton. I left midway through 2019, so I met. I left about midway during Walls's first term.

[Kenny]

Yeah, his first. His first year in office there. So I. I'm still trying to get the flowchart right here. You have a case, you think it involves fraud or overpayment, you bring it to the inspector general, and then the inspector general gives you the okay to bring it to an administrative law judge. Or do I have the flowchart screwed up here?

[Scott]

No, no, we. We were able to. So if we were able to put together a criminal case, which the majority of the ones that I worked when I first started did go to the county attorney's office, whether it was Hennepin County, Ramsey county, or whichever county that the center was in. Sometimes it was Stearns county, sometimes it was Rice County. We would bring that case presented to the county attorney's office. We would do that ourselves. We would meet with the county attorney, go over the evidence, and. And then they would determine whether they were going to prosecute it or not, and then it was handled. Where the inspector general and their decisions came in was after a number of our investigations wound up involving Somali run daycare centers. There was a lot of bad press, I guess, or accusations that we were targeting the Somali community, which, you know, I got to emphasize. I can't emphasize it enough. We were not targeting the Somali community. We didn't base our investigations off of who ran the center, you know, what country they were from or anything. We based it basically off of complaints that we received and the dollar amounts and. But there were activists out there that were claiming that we were unfairly targeting them.

[Kenny]

Sure.

[Scott]

That was when. That was when the atmosphere kind of shifted, and they started basically looking at how we investigated the. The cases, you know, to try to. Try to. Whether they were trying to prove that we were racist or biased or if they were trying to determine whether we weren't But I just know that at that point things kind of shifted and it became a little more difficult for us to conduct our investigations.

[Jay]

Is that where, in your estimation, Scott, the state started to drop the ball? Right, right at that point?

[Scott]

I. Yeah, I think that, I think that that's when they try to keep us from, from conducting the investigations, making a little bit more difficult for us and, you know, questioning our motives, which we were just doing the job that we were hired to do.

[Jay]

Right.

[Scott]

Investigate fraud.

[Jay]

Do you think that came from the governor's office, be it Dayton or Walls? Where do you think that, where do you think that pressure came to try to even almost stop you guys from doing the investigations?

[Scott]

Well, I can only, I can only speculate that it came from the, you know, governor's administration down because with all the activists and one of the things that, you know, Minnesota was really proud of their Somali community and their Somali or the refugee resettlement program and bringing the Somalis into Minnesota. And there was a lot of concern that our investigations targeting the Somali community was going to jeopardize that or put that, you know, put the Somali community in a bad light. Our results would have been the same whether they were Somali daycares, white owned daycares, African American owned daycares. It wouldn't have mattered who ran the daycare centers. The outcome of our investigations would be the same. We were finding widespread fraud being committed within the child care assistance program because of the fact that there were so many loopholes. It was easy to commit the fraud once they figured out how to do it.

[Jay]

So you find widespread fraud with other investigators and at some point they kind of put the brakes on it. That fair to say?

[Scott]

Yeah, they made it more difficult for us to do our jobs.

[Jay]

Yeah. Which if it's more difficult, it's hard enough to prove a criminal case. It's very hard.

[Scott]

Correct.

[Jay]

I mean, you gotta have all the evidence. If you don't have the evidence, it's not as easy as people think. It's not like you see on tv. It takes time and effort and hard work. And it sounds like they were putting up roadblocks just enough to discourage that, if I'm interpreting this correctly.

[Scott]

Well, that and, you know, the biggest thing was they, they hired us to not only, you know, investigate the fraud fraud, but try to find ways to, you know, stop the fraud from happening. And we identified different things, you know, early on that could have helped us with our investigations and also could have made the fraud more difficult to commit. There's no way you're Going to eliminate all fraud. But the harder you make it for the, for the bad actors, they might move on to something else and you know, you'll at least minimize the loss.

[Kenny]

You're offering up tips on how to prevent the fraud and you're being shut down like, well, they didn't want to.

[Scott]

Well, you know, and it's interesting and when I was talking to Jay yesterday, you know, I'm looking at this newly released report from the program Integrity from o'.

[Sponsor/Ad Voice]

Malley.

[Kenny]

The big, bad, beautiful o' Malley fraud report.

[Jay]

Yeah, Big, bad, beautiful fraud report. Yeah, that's what Kenny calls it, Scott. He calls it the big beautiful fraud report.

[Scott]

Well, what's interesting is the ideas that they're coming up with now are the same ideas that we told them 10 years ago.

[Jay]

So you're looking at that 57 page report saying, you're looking at that 57 page Report saying, gee, I said that 10 years ago.

[Kenny]

Yeah. No, you're sitting there going, no shit Sherlock. That's what you're saying. And what's driving me crazy about this, it's driving me crazy is that we can't, there's no way to name names because it was a group think mentality. Sure, maybe a couple of people were talking privately in their cubicle or office or whatever, but it's almost impossible to find a name. You know, it was group think, it was the whole attitude.

[Jay]

I mean, I'm going to take a leap here just from covering news for 40 plus years. My hunch is when guys like Scott are digging up this fraud, Kenny, and it starts to look. They're all on board to begin with. Right?

[Kenny]

Right.

[Jay]

And then when it starts to look politically bad and it's going to affect whoever's in power politically, that's when things get twisted. It's been my experience where all of a sudden you have the governor who's elected, maybe the attorney general who's elected, take your pick. I think the politics gets involved.

[Kenny]

Didn't anybody learn anything from Watergate? No. The COVID up is always equal or worse to the original crime.

[Jay]

100%.

[Kenny]

Always.

[Jay]

I think if I had to guess, I have no evidence to suggest this. Somewhere higher up somebody said to somebody at dhs, pump the brakes on that a little bit. I could be completely wrong. But Scott, your thoughts? I mean.

[Scott]

Well, the thing is that, you know, the idea that, you know, the child care assistance program exists to assist families that truly need the help. The families that are struggling, they're still going to work, but they still, but they need help watching their Kids. And unfortunately you have a group of individuals, and in this case with our centers, it was, you know, Somali individuals who learned this way of committing the fraud. And then they went out and recruited mothers, Somali women who had kids, and basically manipulated them or, you know, talk them into a coming, coming on board with this scheme and basically using them for their financial gain. Now, these moms may have genuinely needed the child care assistance, but they were being manipulated into lining the pockets of the people committing the fraud. You know, and it's not fair to the people that actually need the money, need the assistance when it's, when it's taken that way. And so I feel bad for, you know, the, the families that were used in such a way just because they, because they qualified for child care assistance and they had kids and they were taken advantage of.

[Jay]

Kenny, this is the second whistleblower we've had on. Yeah, and in less than a month we had Agent X on. We had to protect his identity, Scott. So we called him Agent X. Same thing. Fraud investigator, just like yourself, almost saying the same things you're saying, Scott, that we were finding fraud. Millions and millions of dollars of fraud, gave recommendations on how to stop it and nothing ever came of it. And kind of, if I boil it down with you, it sounds like you're saying the same thing. You had some solutions, suggested you were recognizing it, you were prosecuting some, and then all of a sudden they pumped the brakes or somebody told somebody to pump the brakes. And here we are 10, 12 years later with it mushrooming to what it is. Is that fair to say?

[Scott]

Yeah, that exactly it.

[Kenny]

I have so many questions and so many follow up questions. Do you have any indication as to where the money ended up? Was this solely to enrich themselves and buy houses and cars and give family members money, or was it something more nefarious? Do you have any indication at all?

[Scott]

Well, I'll tell you this. When we executed search warrants as part of the investigation, we'd executed search warrants not only at the centers, but also at residences and in vehicles, anywhere where they could have records or laptops or other pieces of evidence or things that could contain evidence. And we never saw lavish lifestyles. Okay, they weren't lit. I mean, some of them were, were nice houses, but they, I wouldn't say they were like very expensive houses. They were expensive cars. So the, the word that we had gotten, and of course nothing really to prove it other than, you know, some information from HSI was that the money was being sent overseas. And at one point we Were learning that. And it was even testified to in the hearings that they were. There were couriers that were actually carrying the money out of the country through the airports and substantial amounts of money. And it was going overseas. It was going to the uae, Dubai, Somalia, you know, other countries, what, you know, what it was going there for? Again, that's all just speculation, but it. It definitely wasn't going where it was supposed to be going.

[Kenny]

One part of that story that drives me crazy regarding the money that supposedly went to Somalia, and people have been saying, well, that helped funded fund terrorism. And then people are also saying, well, you don't know that for sure. But what we do know is that any money. Somalia continues to be very corrupt. Any money that goes there, certain people get their. Their cut. Their cut, their taste. Right? And we don't know where that money, what the final destination is. Another question. I love what Joe Thompson did for the food fraud. And he went after the end users, the abusers, the people that got the money. In your case, was anybody ever prosecuted?

[Scott]

I'm trying to remember back to the cases that, that, that I had worked. And we had several that went actually in front of juries, but again, juries are funny things. And we had several that were where they were acquitted. I do believe we had a couple that actually were successfully prosecuted. But, yeah, it was very. It was difficult. And another part of that was that each case was prosecuted by the county attorney's office in the county where the center was. So you had, you know, prosecutors in Ramsey county that may have been more aggressive in prosecuting than prosecutors in Hennepin County. You have prosecutors in Stearns county that weren't all that familiar with this. And, you know, so you didn't have any consistent prosecution. And so, you know, that was one thing that we had also said before was that, why, if these are state funds, okay, even though they're. They're dispersed through the counties, they're still state funds. Why aren't, they being, you know, prosecuted through the attorney general's office? That way you have just one prosecutor, you know, or prosecutorial person to handle it that way. It's consistent. But it was all done at county levels.

[Jay]

So none of the cases you were affiliated with, Scott, ever were handled, prosecuted by the attorney general, which would have been Keith Ellison, I believe. Right.

[Kenny]

Was he in the teens?

[Jay]

Who was it before Ellison?

[Kenny]

Was it Klobuchar?

[Jay]

No, she was a Hennepin county attorney.

[Kenny]

Oh, that's right.

[Jay]

Well, I can't even remember now who was prior to Ellison. That's how bad I am. It doesn't matter. Regardless, it could have been handled by the attorney general, whomever it was at the time. And it sounds like, Scott, they didn't.

[Kenny]

I'll look it up.

[Jay]

They didn't do it. It's a simple way to put it.

[Scott]

Yeah. They let it all be handled at the county. At the county levels.

[Kenny]

Lori Swanson.

[Jay]

LORI SWANSON, yeah.

[Kenny]

2007-2019, a Democrat.

[Jay]

She was second in command to Mike.

[Kenny]

Mike Hatch.

[Jay]

Yeah.

[Kenny]

And Mike was before her. 99 to 2007.

[Jay]

Yeah. He really wanted her to get it and she got it. I completely forgot that's an age thing. Well, this has been really good, Scott. Thanks. Really appreciate it.

[Scott]

All right, no problem.

[Jay]

I mean, it's got to be frustrating for you, frustrating for you to have recommended this stuff over a dozen years ago and you see where it's at today, right?

[Scott]

Well, well, it's like, it's like I said, when you see the stories that Nick Shirley was putting out and seeing the same activity that was going on 10 years ago, it, you know, nothing changes. In fact, some of the centers that he was showing in his stories were some of the same centers that we same locations that we investigated just under different names.

[Kenny]

Go ahead, Jay, tell them.

[Scott]

Even if you close one down, another one pops up.

[Kenny]

Scott, listen to what Jay's going to tell you.

[Jay]

Well, it's interesting. The centers that Shirley visited were the centers I visited in January of 2025. Now, I don't know if Nick got them from my story or not, but it was quite interesting that he went to the same centers I went to. Essentially, Nick, I had a little different set of rules. I would have had to have hard evidence there was fraud in my hands. Right. I had to do story. Scott, as you saw, where we raised questions about the oversight, which was fair because we don't have subpoena power. We can't go get warrants. Nick took it a step further to say, no kids here, it's fraud. My attorneys would never let me get away with that. But it was interesting. At least three of the centers were the same centers I had visited. So, yeah, it's. And as you know, I went back all the way to 2010, 2011, 2012, doing Medicaid and Medicare fraud. Remember you mentioned Jeff Ballian and I from Channel nine? So for some of us old goats who've been around covering this stuff, it is surprising that 16 years later, 15 years later, it's where it's at now, because we did stories, you did investigations and Nothing much changed.

[Kenny]

I have one more question, Scott, and it's just an opinion question. Your opinion. Do you think this is going to go anywhere? Are Jay and I just wasting our time here? Because we're frankly, we're looking for names. And I love the fact that we're going after the people that benefited from fraud, but I want. I'm more interested in the people that

[Jay]

allowed it to happen after they were warned.

[Kenny]

And I'm just wondering if those people will ever will, you know, have their day in court.

[Jay]

Yeah, fair question.

[Scott]

I highly doubt it. Just I knew back to the year, you know, all my years working there. I just think current climate. No, fair enough.

[Jay]

Fair enough. Really good interview. Thanks, Scott. Appreciate you taking the time.

[Scott]

Yeah, it was worth.

[Jay]

It was worth. It was worth checking, tracking you down with all the different things I had to do to find you. It was worth.

[Kenny]

Scott, you might want to scrub everything. Change your address, get a new phone. Throw that phone you have now in the crick, get a new number.

[Scott]

Promised me.

[Jay]

Yeah, I promise.

[Scott]

Jay promised me that he's losing everything.

[Jay]

Well, I know what it's like to, as I told you as a reporter, to protect your phone and where you are. So you and I are good. Don't worry about that. Don't worry about that.

[Kenny]

Thank you, Scott.

[Scott]

All right, we're talk to you later.

[Kenny]

Quick break and be right back.

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[Kenny]

Jay, I propose the big beautiful fraud report thing. I think we should change the title. The current title is Roadmap to Program Integrity and Fraud Prevention. I would like to add 10 years too late. Seriously.

[Jay]

And you would be inaccurate.

[Kenny]

What the hell. They're only talking about it because we're Forcing their hand.

[Jay]

Yeah. When you have two. We've had now two whistleblowers on saying the exact same thing from the same time period that they warned people this was not anything that was. Things could have been done. I didn't know this, but he said they recommended a bunch of stuff that's in this big, beautiful fraud report, as you call it.

[Kenny]

How can they not implement those things?

[Jay]

I think the politics.

[Kenny]

Well, it says right in the fraud report. It says what led to this.

[Jay]

Yeah, I think politics got in the way.

[Scott]

Yeah.

[Jay]

Just. I mean, what else could it be, right? I mean, I can't prove it, but I mean, what else would slow down those investigations? He basically said they put up roadblocks and made it more difficult for them to do the investigations.

[Kenny]

Unbelievable.

[Jay]

Right, right.

[Sponsor/Ad Voice]

Could have avoided.

[Jay]

Could have avoided $9 billion. An estimated $9 billion going out the window. Yeah.

[Kenny]

I underpaid.

[Jay]

It's incredible, Kenny.

[Kenny]

It's incredible, Jay. I underpaid my taxes by $12 about five years ago. I've got the threatening letters framed. They were going to take everything. $12, Jay.

[Jay]

Tax evader. You. Yeah, yeah, yeah.

[Kenny]

And this is where our money is being spent. And I think that's why Ryan's story was equally important. I want to know.

[Jay]

And what's great about Ryan's is he's in a whole nother area of grants, and this isn't even.

[Kenny]

Yeah, he's just scratched the surface, too.

[Jay]

This is a whole nother program.

[Kenny]

You know what I hope? I hope he doesn't find anything.

[Jay]

It'd be nice, wouldn't it? But I gotta tell you. No. When he said in that hearing today, he said in the hearing today there was testimony that 50 to 60 recipients of that promise grant have already been red flagged.

[Kenny]

So

[Jay]

I've told Ryan, I'll be surprised if there's not something. I'll be surprised if there's no fraud. I'll be surprised.

[Kenny]

Part of me wants to drop all of this and talk about, I don't know, lighting our farts on and then.

[Jay]

But Jay, we can do that anytime you want.

[Kenny]

You know, I think we need to double down. I want names. I want somebody to be in jail because of this. More than just the people that got the money.

[Jay]

It is, it is. You're right. At some point, you know, I wish you're so right, Kenny. I wish I would have thought to bring this up to Ryan. Next time we have Ryan on, we'll have him talk about this. He did a story about a month ago that caught my Attention. I called him and we talked about it over the phone. I should have maybe had him on crabby. He has been asking for months now, well over two months he's been asking the Walz administration and dhs, which is part of the Walz administration, how many people have been fired as a result of this?

[Kenny]

Oh, what a great question.

[Jay]

He's not received an answer.

[Kenny]

Oh, that's an answer right there.

[Jay]

Right. He's not received an answer.

[Kenny]

And then we need to talk to those people.

[Jay]

Then here's what was caught my attention with that is there was another hearing yesterday. Yeah, it was yesterday. Where a state lawmaker actually brought that up. I think he might have referenced Ryan's story and said, can you tell us how many people have been fired? Yeah, he said it to dhs. The lawmaker said DHS was on the hot seat and they didn't have an answer. They said they'd have to get back to him on that one. Now that should be Kenny. So easily. They may not have to get into great detail, but under state law, if you're terminated, if you're fired and you're fired for cause, that becomes public information.

[Kenny]

Those are the people we need to talk to. Because they'll name names. Yes, you would think then you have to. We have to do diligent. We can't be like this kid on the Internet. You're going to have to confirm this through multiple sources.

[Jay]

Got to prove it. And I did ask today, actually.

[Kenny]

We answered to the same lawyers upstairs. Yes. That you guys do downstairs. So don't get me in trouble.

[Jay]

No, Anytime I come, I got to pay my taxes. J. I'm enjoying retirement. I don't want the government after me. What I want to do. Well, whenever we get something like that, of course, I'll run it by Christine Teetz, our attorney that I work with. I had something I was going to tell you. Oh. So the hearing today with Walls and Ellison. Right. Emmer was in that. So I just rifled off an email today to Emmer's office saying, hey, all these whistleblower letters were sent in to the hearing. All these whistleblower bunch of letters from whistleblowers with signed affidavits. So it's kind of like a sworn testimony, if you will, were submitted to the committee. And I said, can we have those whistleblower letters? I've asked for the letters.

[Kenny]

Should that be freedom of information?

[Jay]

I would think if it's submitted a sworn affidavit in a congressional hearing. If not, the names of those people at least the content of those letters. I'm gonna try to find out. I doubt I'll hear back today from Congressman Emmer's office, but I did put in the request right away when I heard there was letters being submitted in different cases.

[Kenny]

Don't our lawyers then file something to find out if it's a Freedom of Information act issue?

[Jay]

Well, if Emmer's office. This is hypothetical. Cause I don't know what's gonna happen. But let's say Emmer's office gets back to me and says, no, that's private. Then the next question you would ask is, okay, can you cite the statute and which chapter of the statute are you using to deny me this request? Deny the request. Then you give it to our attorneys, and they review it. And then they decide to call and say, we don't see it that way. They write a letter back. So there's a little bit of a process. So we have to wait and see what Emmer's office says to us about the public accessibility of those letters. Because wouldn't you love to see the letters from the. I would love to see the letters from the whistleblowers that were submitted to Congress. I want to see those.

[Kenny]

Would they have a reason to be afraid for their safety?

[Jay]

Yeah, I suppose they can't.

[Kenny]

Or just privacy.

[Jay]

Mostly they want privacy. Like trying to get Scott to do the interview. Thank goodness he was familiar with some of my work. And some people that actually reached out to him to get in touch with me after I was trying to find him put in a good word for me because he probably wouldn't have done the interview otherwise because they're just nervous about their private life. They don't want to be.

[Scott]

He.

[Jay]

He didn't even want to tell me where he's living now. He's not living in Minnesota anymore.

[Kenny]

I don't blame him.

[Jay]

Yeah, they're just.

[Kenny]

I'm not telling you. You actually don't know exactly where I live, and you'll never find out.

[Jay]

Oh, I'll find out, you bastard.

[Sponsor/Ad Voice]

I don't know.

[Kenny]

Are we done here? Is there anything else?

[Jay]

No, I think that's.

[Ryan Raiche]

I think that's it.

[Jay]

I think we should give one salute to the first. First Sergeant Amor, who died in Kuwait from Minnesota, from White Bear Lake. So condolences to the family and you, and I'll just keep plugging away, and we'll be back next week, eh?

[Kenny]

And thanks to Gabe, who's running the show now. It's really fun to have Gabe in charge.

[Jay]

Gabe has saved my life two or three times already.

[Kenny]

And thank you to everybody for listening to news from the Krabby Coffee Show.

[Jay]

See you next week.

[Kenny]

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[Gabe]

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[Jay]

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[Kenny]

from the GL audience.

[Jay]

I recommend it to any business looking for new customers. Gilers are pretty awesome.

[Kenny]

You just gotta ask for an introduction.

[Gabe]

You just heard how garagelogic delivers results for our advertising partners. Now it's your turn. Reach our engaged audience of G Ellers and grow your business by contacting account executive mark [e-mail] that's mark.ellisbi.com Put your message where it belongs, right in the ears of listeners who trust garagelogic.