Whistleblower Describes How Minnesota’s Democrat ‘Leadership’ Let Childcare Fraud Flourish [WATCH]

A retired law enforcement investigator told lawmakers that fraud within Minnesota’s Child Care Assistance Program went unchecked for years due to systemic weaknesses and political interference, despite extensive evidence uncovered by investigators assigned to the program.

Scott Dexter, a former criminal and financial fraud investigator, detailed his experience working inside the Minnesota Department of Human Services during testimony describing how the state’s Office of Inspector General investigated abuse of the Child Care Assistance Program, commonly referred to as CCAP.

Dexter said the investigative unit was created specifically to identify fraud in the publicly funded program, which distributes millions of taxpayer dollars each year.

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“My name is Scott Dexter. I’m a retired law enforcement investigator with 28 years of experience, most of it spent conducting criminal and financial fraud investigations with experience in surveillance operations,” Dexter said.

“In 2013 after retiring from law enforcement, I joined the Minnesota Department of Human Services as part of a newly created investigative unit within the Office of Inspector General.”

According to Dexter, the unit was staffed entirely by former law enforcement professionals and tasked with investigating fraud based on objective criteria.

“Our mission was straightforward, identify and investigate fraud within the childcare assistance program known as c cap,” he said.

“Our cases were not selected based on the name of the center, the owner or the community it served, they were selected based solely on tips, complaints and the amount of c cap funding being paid out.”

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Dexter said investigators prioritized the highest-funded childcare centers, many of which had been flagged by public tip lines or licensing inspectors.

“The highest funded centers were reviewed first,” he said, noting inspectors had observed activity “inconsistent with a legitimate daycare operation.”

What investigators found raised serious concerns.

“Many of these centers operated out of commercial spaces with Windows totally covered, no visible play areas and very few children ever present,” Dexter said.

Through surveillance and records analysis, investigators uncovered widespread irregularities.

“We repeatedly documented patterns of over billing, non existent attendance, and in some cases, children being signed in for hours they were never actually at the center.”

Dexter outlined a detailed investigative process that included surveillance, data analysis, and coordination with law enforcement partners.

“We collected licensing and billing data, installed covert surveillance cameras, reviewed hours of video, identified parents and employees, and calculated estimated overpayments based on actual attendance,” he said.

Completed cases were then referred to the Minnesota Bureau of Criminal Apprehension for further action, including search warrants and arrests.

As investigations expanded, Dexter said a pattern emerged regarding ownership of the highest-funded centers.

“Many of the centers repeat receiving the highest levels of c cap funding were owned and operated by Smalley,” he said.

Dexter stressed that ownership demographics were not a factor in case selection but later became the basis for allegations against the investigative unit.

“We were labeled as racially biased, despite the fact that our case selection was driven entirely by funding data,” he said.

Following those accusations, an outside review was launched, and new restrictions were imposed.

Investigators were required to undergo panel reviews before proceeding with cases and were reassigned to enter years of complaints into a new database.

“These changes significantly hindered our ability to do our jobs,” Dexter said, adding that the data-entry process alone took nearly a year.

Dexter ultimately left DHS in 2019. “I chose to retire because the investigative process had been become so constrained, the meaningful work was no longer possible,” he said.

He also described information uncovered through cooperation with federal agencies, including Homeland Security and the IRS.

“We learned that millions of dollars in cash from the Somali community was being flown out of the Minneapolis St Paul airport by Smalley couriers,” Dexter said.

“At one point, nearly $70 million dollars had been documented leaving the country halfway through a single year.”

Dexter said investigators were unable to prove the funds were fraudulently obtained but believed the evidence warranted deeper investigation. He added that some federal cases were never opened due to political sensitivity concerns.

Dexter identified multiple vulnerabilities in CCAP, including handwritten attendance records, delayed billing submissions, and the absence of biometric systems or security cameras.

“Centers were allowed to bill for the full authorized hours, even when children were present for only minutes,” he said.

He concluded by emphasizing that his testimony was not directed at any community.

“The purpose of my testimony is not to cast blame on any community,” Dexter said.

“It is to highlight systemic weaknesses that allowed large scale fraud to occur and to emphasize the need for stronger safeguards, better oversight and investigative processes that are allowed to function without political interference.”

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