On January 3, 2025, Governor Tim Walz signed an executive order and proposed legislation aimed at preventing fraud in Minnesota. While this is progress, it comes too late to recover the hundreds of millions lost in the autism centers and Feeding Our Future scandals. Nevertheless, these actions signal recognition that Minnesota has a serious problem. Hopefully, the new oversight measures will serve as a warning to potential fraudsters. After years of state inaction, this may finally deter those seeking to exploit the system. Michelle Griffith reported on the story for the Minnesota Reformer.
The executive order introduces several measures. It establishes a fraud investigation unit within the state’s Bureau of Criminal Apprehension and allocates nine additional staff members to Minnesota Attorney General Keith Ellison’s Medicaid fraud unit. However, there are reasons to approach these efforts with caution.
The Role of Accountability: Lessons from Jamal Osman’s Case
For instance, Attorney General Keith Ellison previously endorsed Jamal Osman for Ward 4 Minneapolis City Council, despite Osman’s wife’s nonprofit being shut down for misappropriating nearly $500,000. The lack of accountability is troubling, as no prominent DFL figures have called for Osman to step down from the city council. This inconsistency raises questions about the commitment to rooting out fraud at all levels of government.
Governor Walz’s Take on the Culture of Trust and Generosity
Governor Walz reflected on the issue of state fraud, stating:
“I think it’s probably a culture of generosity. I think it’s a culture of being a little too trusting on this.”
It would seem that Jamal Osman fostered a similar “culture of generosity and trust” in his own household, which perhaps explains why he failed to recognize the fraud his wife was committing.
According to journalist Michelle Griffith:
“Walz is also proposing making kickbacks a state crime, in an attempt to deter state employees from conspiring with bad actors for profit.”
This proposal raises obvious questions: Why isn’t accepting kickbacks already a state crime? Are employees currently allowed to accept them without consequences?
Empowering the Office of the Legislative Auditor
The prevalence of fraud highlights the value of divided government. When one party controls both the creation and enforcement of laws, the risk of fraud and self-dealing increases. Some have suggested that fraud investigators need greater independence and that the Office of the Legislative Auditor (OLA) should be given more enforcement authority. The OLA, established in 1973 following a private-sector study, was originally tasked with financial audits. Mismanagement of funds by legislatures and staff is not a new problem. What is new is the Walz administration’s acknowledgment that the problem has grown so egregious it can no longer be ignored.
One aspect of Walz’s proposal is to use artificial intelligence (AI) to review payments and invoices to identify likely fraud. This could be a valuable tool. However, accountability should also be built into programs from the outset.
Addressing High-Risk Medicaid Facilities
For instance, the recuperative care centers approved by the legislature in the last session allow individuals with no prior experience to open 24/7 medical facilities and bill Medicaid for the care of homeless individuals discharged from hospitals. Two such facilities have received zoning approval from the Minneapolis City Council—one on Lake Street and another on Nicollet Avenue. It doesn’t take AI to see that these centers are at high risk for fraud.
Building Accountability into Public Programs from the Start
Now that Walz has prioritized fraud prevention, the legislature should revisit the regulations for these centers and establish more rigorous operational standards. Adhering to Generally Accepted Accounting Principles in programs that accept public funds must be integrated from the beginning; it cannot be an afterthought.
Thanks for your thoughts on this, Terry.
The issue here is emblematic of a broader problem we have in government; not just in MN, but nationally – The implicit belief that if “doing some thing” is bad, and we “pass a law to make doing that thing illegal”, “that thing” simply goes away. Because we have passed a law…!
Once one starts to think in these terms, one sees it in all sorts of existing laws, and new bills. proposed city ordinances, etc. The issue you write about here is a prime example – there isn’t really any debate over the illegality of all sorts of individual acts related to these scandals… but the laws we have “against” those criminal acts didn’t (all by themselves) stop those crimes from happening. So the default move (by some) is “We need more LAWS against this!!”
The true answer is we need to be willing to expend effort, and spend money, to investigate wrongdoing, and to always, always prosecute wrongdoing. There are too many laws for which we are not willing to expend that effort, and those laws are not worth the paper they are written on. We should frequently consider repealing laws that we are not willing, for whatever reason, to enforce. And we should accept no excuses from office-holders who fail at enforcing the laws that remain.
P.s. please let there be a reasonable alternative for governor next time we get to vote. I don’t really care if it’s Democrat , Republican , or filling the blank.
Should have been done 4 years ago .
Except from a Strib piece from 11/2024
“Attorney General Keith Ellison announced Friday that he’s reached a settlement that will shut down a nonprofit run by Minneapolis City Council Member Jamal Osman’s wife, Ilo Amba.
Under the agreement, Urban Advantage Services must dissolve and transfer its assets to other charitable organizations.
The attorney general sued the nonprofit last year, alleging Amba created a “sham” charity to enrich herself and her family by exploiting a federal program meant to feed hungry children during the COVID-19 pandemic. He called it a “scheme that the federal government has described as ‘an egregious plot to steal public funds meant to care for children.’”
Key phrase in this Strib piece…” and her family.”
Thanks for highlighting. It still seems shocking to me.