Lessons from the Somali fraud in Minnesota.
The Somali fraud in Minnesota had one thing in common beyond the national origin and religion of the perpetrators. The only reason the fraud was possible in the first place is that the state government had outsourced welfare state functions to ‘non-profit’ community groups.
And the non-profits proved to be very profitable for the Somali scammers running them.
The growth of nonprofits has played a major role in the rise of government spending and also fraud. The nonprofit sector now accounts for nearly 1 in 10 jobs and $3.5 trillion in spending.
A survey found “two-thirds of nonprofit organizations report receiving some kind of government grant or contract” with “more than 100,000 nonprofits reporting government grants” to the IRS.
Over 1 out of 3 nonprofits get over 25% of their funding from the government and 1 in 5 get more than 50% of their money from the government. 60% to 80% of non-profits that receive government funds report they would be unable to cover their expenses without taxpayer money.
In Minnesota, the epicenter of Somali fraud, 75% of nonprofits received government funding.
Where did Somalis in the state get the idea to commit massive social welfare fraud? The Somali settler population arrived in America as refugees and saw up close how refugee resettlers, often Catholic and Lutheran, liberal community groups and the rest of the nonprofit sector cashed in.
These welfare groups hired Somalis to act as ‘liaisons’ to their community and provided them with a close up view of how government grants were obtained and money was spent. All they needed were ‘warm bodies’ to act as clients in need of aid. And the Somalis had those.
The Somali ex-refugees decided to cut in on a piece of the action by demanding their own ‘culturally sensitive’ meal, autism and other programming through their own community groups. After running up millions in charges with hardly any pushback, they escalated their fraud to the tens and then hundreds of millions of dollars leading to a fraud count rising into the billions.
Somali fraudsters were just taking advantage of a welfare system in which federal, state and local money was directed to grants for social welfare non-profit groups. Gov. Tim Walz and fellow officials in other states were able to vastly increase state spending on social welfare because most of the money was going to third parties, like the Somali meal providers, autism clinics and homeless advocates, who could get organizations up and running in months.
(And that was especially easy when some of the organizations didn’t actually do anything.)
In the last fiscal year, Minnesota was supposed to have a $17 billion surplus, instead the ‘surplus’ turned into a $6 billion hole because it was used to approve a gargantuan $72 billion budget. Welfare spending grew by 42% in 20 years. Health and Human Services spending, the political piggybank that was raided by the Somali fraudsters, went from a quarter of the budget to around a third. Per person welfare spending rose to around $35,000 per person.
The Minnesota Department of Human Services or the Minnesota Department of Education could not have grown that fast on their own, but what they were really doing wasn’t offering new programs announced by Walz, but managing disbursements to politically connected nonprofits, like the ones involved in the scam, which were able to threaten their personnel with the wrath of Attorney General Keith X. Ellison and other local and state officials if they objected to anything.
While Gov. Tim Walz and other officials claimed that they were implementing ‘programs’, what they were actually doing was building political piggy banks for their allies. Fraud was baked in because the real purpose of outsourcing what were supposed to be government programs to third parties was to subsidize the ‘community groups’ that turn out voters for their campaigns.
The nationwide networks of community groups are really a voter outreach and turnout operation for the Democratic Party funded with taxpayer money. For an example of how that worked, consider the role that one single non-profit played in the political careers of Kamala Harris, the former vice president, and Gov. Gavin Newsom, a likely presidential candidate. --->READ MORE HERE
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