The Money Trails
Posts
How the Minnesota Fraud Exposed Something Much Worse

How the Minnesota Fraud Exposed Something Much Worse

Why the Minnesota fraud is a blueprint for rest of the country

Kartik Vyas & Gen Kimura
February 05, 2026

What’s in This Week’s Issue…

Good morning. While you were watching Minnesota's daycare fraud scandal unfold, you probably thought this was about one corrupt state and some empty buildings.

You missed the bigger story. This isn't about Minnesota. It's about a fraud architecture built into America's safety net programs that turns taxpayer money into a playground for scammers who literally fly from state to state, repeating the exact same schemes.

And the system isn't broken by accident.

So this week…

🏆 The Big Play: How America designed programs that reward fraud at scale
💪 The Power Move: Why this fraud isn’t just about Minnesota
💵 Follow the Money: Why do victims want DOJ to take down the Epstein Files website?

-GEN

🏆 The Big Play

The biggest money power story of the week.

How America Built a System That Rewards Fraud

The Minnesota that eventually ended in 2025

The Minnesota fraud started long before the viral daycare videos. In 2013, a Minneapolis daycare owner named Yasmin Ali was already running the playbook: recruit employees' kids to inflate enrollment numbers, pocket government subsidies meant for working parents, and funnel money through family-run catering businesses.

She walked away with over $4 million. But here's what investigators found that should have set off alarms: she wasn't just committing daycare fraud.

She was simultaneously scamming meal programs. The fraud was connected, feeding into itself, growing across programs.

1. How the Pandemic Created the Perfect Storm

Fraud doesn’t usually explode all at once. It accelerates when a system switches its priority from verification to speed. That switch happened during COVID:

When schools closed, the government expanded child nutrition programs to feed low-income kids directly, paying restaurants and nonprofits to serve meals under the supervision of sponsoring organizations.
One nonprofit called Feeding Our Future approved virtually anyone willing to participate, recruiting over 250 shell meal sites using fake paperwork and invoices.
Between 2019 and 2021, they stole $250 million meant for millions of meals that were never served, with 78 individuals eventually charged.

The money didn't feed hungry children. It bought luxury homes, cars, vacations abroad, and in one extreme case, investigators found a defendant with over $700,000 in cash, a luxury boat, multiple vehicles, property in Nairobi, and an entire resort complex on the Indian Ocean. One operator received a 28-year federal prison sentence.

But the most disturbing detail? At least 26 of the charged individuals held contracts with other Minnesota state agencies. The fraud wasn't isolated. It was networked.

2. When Fraud Becomes Tourism

The housing stabilization services program shows how Minnesota's fraud architecture became a destination:

In 2020, Minnesota launched a Medicaid-funded benefit to help people with disabilities find housing, paying providers to help clients locate apartments.
Two men flew in from Philadelphia, registered LLCs as providers, and used names of low-income residents from homeless shelters to submit fake claims.
They pocketed $3.5 million over 18 months and called themselves "the housing guys," inspiring an entire fraud economy that recruited networks to supply fake clients and paperwork.

The program that was projected to cost $2.5 million a year hit $27 million by 2021, $45 million in 2022, $79 million in 2023, and broke $100 million by 2024. State officials eventually shut it down entirely in mid-2025, acknowledging they couldn't control the large-scale fraud.

Meanwhile, the entire childcare assistance program for the state was overseen by just four investigators. Fraud was caught only after someone filed a complaint or law enforcement stepped in. And when scammers got shut down? They simply created a new LLC the next day and reopened under a different name.

3. The Inside Game

The connections weren't just among scammers. They reached the people assigned to prevent fraud:

In the Feeding Our Future case, employees inside the organization took bribes, helped create shell companies, and pushed fake paperwork through the system.
Some indicted individuals made campaign donations to Minneapolis officials and congressional campaigns, though the money was later returned when connections became clear.
Governor Tim Walz ordered audits of 14 high-risk programs only after the viral daycare videos, then dropped out of the race for reelection weeks later.

The timing speaks for itself. During the pandemic, as the government scrambled to deliver aid, it relaxed rules and removed verification steps. Waivers allowed off-site meal delivery. Key oversight disappeared.

Ultimately, scammers exploited perfect timing in a vulnerable system that handed them everything they needed to commit fraud at scale.

💪 The Power Moves

Playbook for understanding the game of power.

How to Think About Fraud in Modern America

Minnesota’s CCAP funding increased while the number of children covered fell

Systems like this don’t collapse because fraud is exposed. They collapse when the cost of enforcing honesty becomes higher than the cost of looking away.

That’s already happening. Oversight agencies are understaffed, programs are scaling faster than verification and emergency rules, once introduced, rarely disappear. The result is a quiet shift where paperwork replaces proof and speed replaces scrutiny.

Once that happens, fraud stops being risky. So here’s what actually matters:

Stop treating fraud as a moral failure. It is an incentive problem. When systems pay based on claims and can’t audit at the same pace, exploitation becomes the rational move.
Then stop looking for villains. Scammers come last. The architecture comes first. Wherever the structure is copied, the outcome follows.
Finally, understand the real risk. Every time a system rewards speed over verification, it teaches participants that honesty is optional.

The Takeaway:

The Minnesota fraud wasn’t a breakdown. It was a preview.

Systems designed to move money fast can survive fraud for a long time. What they can’t survive is the moment people realize the system no longer distinguishes between truth and paperwork.

When that realization spreads, trust collapses first. And the system follows shortly after.