MINNEAPOLIS (NewsNation) — Nearly 100 Minnesota mayors are warning state leaders of concerns of alleged fraud and rising costs they say are being passed on to taxpayers.
In the letter sent Monday, the mayors pointed to the loss of an $18 billion budget surplus and a projected $3 billion deficit in 2028-2029.
“Our residents deserve better than deficits, economic decline, and policies that push families and businesses away,” the letter reads. “We, as mayors, can only support our cities for so long before the heavy hand of state mandates and financial pressure demands more than our communities can provide. Our state owes it to our citizens to practice responsible fiscal management and to stop taxing our families, seniors, and businesses out of Minnesota.”
NewsNation first reported on the state’s troubled finances in November, when current and former federal sources confirmed funds raised by a Minnesota-based nonprofit during the COVID-19 pandemic never made it to those in need, but rather, some of it wound up in the hands of an al-Qaida-linked terror group, al-Shabbab, in Somalia.
Former nonprofit Feeding Our Future recruited individuals to open more than 200 federal child nutrition program sites throughout Minnesota, claiming to be serving meals to thousands of children a day. The nonprofit, however, created fake attendance rosters and fake invoices, which would eventually be reimbursed by the federal government.
So far, nearly 60 defendants have been convicted in the Feeding Our Future scheme.
Last week, federal prosecutors said half or more of the roughly $18 billion in federal funds that supported 14 Minnesota-run programs since 2018 may have been stolen and described the massive and multilayered fraud schemes as staggering.
While prosecutors typically see fraud manifest as providers overbilling, First Assistant U.S. Attorney Joe Thompson said during a news conference in Minneapolis that companies have been created to provide zero services while submitting claims to Medicaid and pocketing federal funds for international travel, luxury vehicles and lavish lifestyles.
“The magnitude cannot be overstated,” Thompson said. “What we see in Minnesota is not a handful of bad actors committing crimes. It’s staggering, industrial-scale fraud.”
In October, Walz initiated a third-party audit of and paused payments to the 14 high-risk Medicaid programs for 90 days.
NewsNation’s Rich McHugh contributed to this report.