Taxpayer-Funded Childcare Fraud Scheme Appears to Fund Terrorists

Somali soldiers patrol near the site where Al Shebab militants carried out a suicide attack / Gatty Images
May 15, 2018

Millions of taxpayer dollars appear to be going to support terrorists in the Middle East and Africa by using childcare centers as fronts, according to an investigation in Minnesota.

Local Fox affiliate Fox 9 KMSP tracked the flow of the money and found it was going to parts of the world that raised serious red flags.

The investigation revealed suitcases with millions of dollars, an estimated $100 million in 2017 alone, have been taken through Minneapolis-Saint Paul International Airport and to destinations in the Middle East and Africa, including parts of Somalia controlled by the Al-Qaeda-affiliated terrorist group al-Shabaab.

The funds have originally come from daycare centers that receive funding from the government for child care benefits. However, the daycare centers in many cases are not actually watching children, with video footage from outside one center showing a mother taking children in, only to leave minutes later. The center billed the government as though the children were there all day. Another video appears to show a payment from a man to a mother as a cut for her assistance with the scheme.

The money appears to be moved by "hawalas," people who carry out the transfer of money to people from the United States to places where there is no formal banking system. After the money is brought out of the country, it is often brought to relatives. Glen Kerns, a retired Seattle Police detective and former member of the FBI’s joint terrorism task force, said at least some of the money is going to al-Shabaab and other terrorist groups.

"I talked to a couple of sources who had lived in that region and I said, 'If money is going to this Hawala do you think it is going to al-Shabaab?'" Kerns said. "And he said, ‘Oh definitely, that area is controlled by al-Shabaab, and they control the Hawala there.’"

A number of daycare centers in Minnesota are currently under investigation or being considered suspicious. In previous daycare fraud schemes in Minnesota, funds used to be transferred out of the United States electronically, but authorities cracked down on the practice.

Money may legally be carried out of the country in luggage, but it must be declared on government forms.

In response to the Fox 9 investigation, the Minnesota State Senate scheduled a hearing to take up the matter Tuesday.