Minneapolis daycare raided as part of massive fraud investigation

MINNEAPOLIS (KMSP) - Parents dropping off their kids at the Baraka Child Care Center in Minneapolis Wednesday were greeted by some unfamiliar faces: fraud investigators from the Minnesota Department of Human Services.

One mother told Fox 9 they were asking if anyone knew of anything "shady" happening at the center.

Agents from the Minnesota Bureau of Criminal Apprehension and the Secret Service also took part in this raid. Armed with a search warrant, they confiscated cell phones, computers, and documents, as part of what's being called an ongoing investigation of child care funding fraud.

The state currently has ten centers under investigation suspected of stealing millions in public subsidies meant for low-income families to pay their child care. Multiple government sources tell the Fox 9 investigators the problem is rampant and may be costing Minnesota taxpayers as much as a $100 million a year.

"It's just widespread and it's national,” said Steve Hanson, a Special Agent from the Office of Inspector General, U.S. Health and Human Services. “It's multi state."

The U.S. Department of Health and Human Services is also cracking down on the problem. It reports that nationally, in 2015, more than $300 million in improper payments went to daycare providers. Typically, the way this scam works is the fraudsters overbill the government by inflating attendance records.

“Due to the sheer volume, whether you add three children on to a sign-in sheet, and you're one of 80,000 providers, you know the chances of someone proactively finding you as a fraudster are probably small,” said Hanson.

A check of state enforcement records shows the Minneapolis center targeted in this latest raid was cited last month for lacking documentation that one of its teachers was qualified for the job. Last year, the center was ordered to pay a fine for not doing background checks on some employees.

Fox 9 tried contacting the owner of the daycare for comment, but he has not returned our calls. This is the second center that's been raided by the state in the past five months and more are expected.