The "50% fraud" claim? It comes from one investigator (Swanson) using what the OLA explicitly calls "a higher level view, a view that does not require the kind of proof needed in a criminal or administrative proceeding." His methodology? If kids are poorly supervised, "running from room to room while adult employees spend hours in hallways chatting".... he counts the entire payment as fraud. That's not "billing for phantom children" it's "I don't like how this daycare is run."
The OLA's actual finding: "We did not find evidence to substantiate the allegation that the level of CCAP fraud in Minnesota is $100 million annually." Proven fraud over several years was $5-6 million.
Terrorism? "We were unable to substantiate the allegation that individuals in Minnesota sent CCAP fraud money to a foreign country where a terrorist organization obtained and used the money." They checked with the U.S. Attorney's Office.. none of Minnesota's terrorism cases involved CCAP money.
McKenzie writes "beyond intellectually serious dispute" about claims the primary source he cites explicitly could not substantiate.
Meanwhile the president is posting videos of the Obamas as apes and calling Somalis "garbage", having federal prosecutors throwing out arbitrary $9 billion estimates in press conferences.
See for yourself: https://www.auditor.leg.state.mn.us/sreview/ccap.pdf
I do mention that other officials only agreed to characterize as fraud fraud which had resulted in convictions. We now, years later, have nine figures just from the convictions (and guilty pleas).
> As a fraud investigator, you are allowed and encouraged to read Facebook at work.
I tend to believe this, but it would be a lot more compelling with links to a case where Facebook/TikTok posts were useful evidence.
In late 2024 there was the whole "Infinite money glitch" tiktok trend that was just check fraud.
https://www.youtube.com/watch?v=K0ck7hTsug8
"I just been swipin' for EDD
Go to the bank, get a stack at least
This ** here better than sellin' Ps
I made some racks that I couldn't believe
Ten cards, that's two-hunnid large"
(For context, "EDD" is California’s Employment Development Department.)
https://legalclarity.org/using-rap-lyrics-as-evidence-in-cri...
https://en.wikipedia.org/wiki/Russian_occupation_of_Crimea
I guess it's now being used as pejorative against groups of vaguely military style. Like the DHS agents conducting Metro Surge.
Leaving this to the conclusion does the piece a disservice. One can quibble (and it would be good to here) the extent to which the government isn't pursuing the sorts of fraud discussed, but this as a thesis makes clearer the argument throughout for earlier and more aggressive pursuit.
I've also never heard of this report before this year as someone quite attuned to what happens in Minnesota.
One document contributor contends, notably, that if "adult “employees” spend hours in hallways chatting with other adults [...] the entire amount paid to that provider in a given year is the fraud amount."
I'll leave the assessment of that definition to readers. https://www.auditor.leg.state.mn.us/sreview/ccap.pdf
> And I think journalism and civil society should do some genuine soul-searching on how we knew—knew—the state of that pond, but didn’t consider it particularly important or newsworthy until someone started fishing on camera.
In... the same section where he cites all of the evidence the government has put together against the fraudsters. What is the issue? That these investigations should have been more prominently featured in the mainstream news? Would that have helped or hurt investigations?
> Of course, as the New York Times very carefully wordsmithed recently:
>> Minnesota officials said in early January that the state conducted compliance checks at nine child-care centers after Mr. Shirley posted his video and found them “operating as expected,” although it had “ongoing investigations” at four of them. One of the centers, which Mr. Shirley singled out because it misspelled the word “Learning” on its sign, has since voluntarily closed.
> An inattentive reader might conclude from this paragraph that the Times disputes Shirley’s reporting.
The New York Times is literally quoting what the Minnesota officials said. What were they supposed to do, add on "but a kid on YouTube says differently"?
I don't think the serious response to Nick Shirley's "journalism" is that there was no fraud; rather, it's that he came into the situation with a thinly veiled agenda and fed his audience exactly what they wanted to hear. Did his video make it more or less likely that we'll be able to investigate and resolve the fraud situation in MN? I guess that depends on how serious you think the laughably corrupt Trump administration is, but the fact that they seized on this as an excuse to send in 3000 ICE agents is not exactly promising.
Yes, there were some investigations and convictions, but nothing to on a scale that would deal with problem, nor any systematic change to a level paying huge amounts of money to scammers.
But if you read the cited source of how Swanson came up with that number he said it wasn't just for over-billing (claiming more kids than the places actually had).
Instead, by his estimation, the employees working are not actually working because 'children are unsupervised, running from room to room while adult “employees” spend hours in hallways chatting with other adults' and so all of the funds to those providers are fraudulent. [1]
I think it's pretty easy to criticize the logic for that 50% fraud rate number without requiring criminal convictions.
[1] https://www.auditor.leg.state.mn.us/sreview/ccap.pdf#page=16
There was active prosecution ongoing literally right up until Shirly's video. That's taking the matter seriously.
[1] https://en.wikipedia.org/wiki/2020s_Minnesota_fraud_scandals
Oh yeah, the prosecution was sooo active that all the daycares listed as operational and receiving funding, had no kids in them, had blacked out or boarded up windows, misspelled signs, and if you went in to ask for enrollment 3 angry men would come out shouting at you. How many legit daycares have you seen that look like that?
Nick did a day worth of shooting, didn't follow up, and didn't check basic things like hours of operation.
Shirley gets acknowledged to have "poor epistemic standards" (which is an almost euphemistic way of describing his approach) but Patrick goes on to say that "the journalism develops one bit of evidence...." and even appears to insinuate the NYT erred in reporting it in the context of the Minnesota government's response that the state's own compliance checks had found them open shortly afterwards but that some of them were under investigation.
There's an interesting point to be made that detailed, bipartisan evidence collected by suitably qualified officials that some daycenters were closed at times they were claimed to be open gets less attention than a YouTuber with an agenda rocking up at nurseries at what may or may not have been their opening times, but that's not how it's actually expressed. Rather it seems to be arguing for face value judgements of his video and against journalists that felt compelled to point out that whilst evidence of daycare fraud by Somalis in Minnesota definitely existed, Shirley's videos probably shouldn't be considered part of it.
I see they pulled out the ol'reliable 'This wasn't "real journalism" so everyone please ignore it!'.
Of course so called journalists in the legacy mainstream media(all owned by billionaires with political connections) would be compelled to say that, because people like Nick SHirley are a threat to their business and their jobs(see recent WA Post layoffs), so their only defence to save face on how this happened under their noses while they failed to report on it, when investigating and reporting stuff like this is their literal job, is to slander those indie journos like Nick SHirley who exposed their incompetence and threaten their multi billion dollar media empire who wishes to retain the monopoly on what's considered "the truth" and what's "real journalism".
The usual cope to this is 'but the "real journalists" already reported once about the fraud six years ago, what more do you want?'. And my answer to that would be Oh, so the fraud was knowingly going on for six years already and the authorities still hadn't done anything about it?! After how many years of ongoing fraud is it just incompetence, complacency and accessory to crime? This isn't even a partisan issue, it's literally your tax money being stolen by scammers while politicians and the mainstream media looked the other way.
Of all the things that threaten the future of mainstream reporting, YouTubers running round Ohio for an hour trying to find people who think Haitians are eatinng the local pets isn't one of them.
How does one wandering around with a camera affect the fact that the daycares had blacked out or boarded up windows, misspelled signs, and if you went in to ask for enrollment then 3 angry men would come out shouting at you?
Do you even hear yourself? Are they Schrodinger's daycares? Do they become compliant the moment you stop filming them?
How does having a camera impact the daycare having a misspelled sign and boarded up windows?
No I'm not, you just don't like the answer. But at least you've edited to remove the "3 guys yelling at you" portion as I think even you can see how that might be a reasonable thing to do to a creep going around you business filming everything.
> daycare having a misspelled sign and boarded up windows?
The answer to this question is simple, a poor one. And I suspect that a daycare that primarily gets it's funds from people using government welfare likely isn't rolling in the dough. Broken windows are expensive to fix, boards are cheap. A misspelled sign is embarrassing but again could easily be something that the owner of the facilities just wasn't assed to pay to replace and properly fix.
My spouse worked for years in that sort of daycare which is why it's unsurprising to me that a daycare in that state exists. She, for example, did a full summer in Utah without AC while the kids were fed baloney sandwiches every day. Her's wasn't a daycare committing fraud, it was just an owner that was cutting costs at every corner to make sure their own personal wealth wasn't impacted.
A shitty daycare isn't an indicator of fraud. It's an indicator that the state has low regulation standards for daycares. Lots of states have that, and a lot of these places end up staying in operation because states decide that keeping open an F grade daycare is cheap and better for the community vs closing it because it's crap quality. They certainly don't often want to take control of such a business and they know a competently ran one isn't likely to replace it if it is shutdown.
Was your spouse also one of the all-male crews that those totally-not-a-scam MN daycares typically have?
How many legit daycares have you ever seen where the staff is all men? And aggressive men at that. Just think about it for 3 seconds.
Men can work at daycares but also we have no clue what those guys relationship to the business was.
Just think about it for 3 seconds.
No mate, YOU are going offtopic. I never said men CAN'T work daycares, I asked you "How many legit daycares have you ever seen where the staff is ALL-MEN?". This is the n'th time in this thread you misread what I say, to the point I can confidently say you're intentionally doing this in bad faith to derail the conversation, which is why this will be my last reply to you.
> also we have no clue what those guys relationship to the business was.
Except they also interviewed MN citizens who live in the area who also said they never saw any kids or women at that daycare with the misspelled "Learing" sign.
How many more points on the graph that form a line do you need to admit that it's an obvious scam?
>I suspect because you don't like a reasonable answer that doesn't fit your fraud narrative.
I just look at the evidence and use critical thinking to judge. You're the one not bringing any evidence to support your not-a-scam narrative and intentionally misreading my questions to give bad faith offtopic answers.
>Just think about it for 3 seconds.
Parroting someone is flattering but not a sign of good arguing skills.
FTA:
> So-called “pay-and-chase”, where we put the burden on the government to disallow payments for violations retrospectively, has been enormously expensive and ineffective. Civil liability bounces off of exists-only-to-defraud LLC. Criminal prosecutions, among the most expensive kinds of intervention the government is capable of doing short of kinetic war, result in only a ~20% reduction in fraudulent behavior. Rearchitecting the process to require prior authorization resulted in an “immediate and permanent” 68% reduction. (I commend to you this research on Medicare fraud regarding dialysis transport. And yes, the team did some interesting work to distinguish fraudulent from legitimate usage of the program. Non-emergency transport for dialysis specifically had exploded in reimbursements—see Figure 1— not because American kidneys suddenly got worse but because fraudsters adversarially targeted an identified weakness in Medicare.)
It's annoying that we're talking about this in these terms, because the article is about public services fraud, and it's mostly technical, and it's an interesting subject. We shouldn't have to debate Tim Walz to engage with it.
Second: I think one of the points Patrick misses is that fraud did indisputably occur, but that doesn't mean we need to treat Shirley as a neutral observer who simply cares about fiscal responsibility. (If I'm wrong, I eagerly away his next video on red state fraud.)
Important points throughout the article include: relatively little prosecution or enforcement occurred despite the awareness of rampant fraud; officials were naive to the common wisdom in fraud-prevention circles that people committing fraud in the past correlates strongly with the same individuals committing fraud in the future; "pay-and-chase" policies don't preempt funding flows to individuals suspected of fraud until it's established and feel the need to account for every fraudulent dollar instead of just blacklisting known bad actors the way that actual financial institutions do. FTA in particular, all emphasis FTA:
> For example, the primary evidence of a child attending a day-care was a handwritten sign-in sheet of minimal probative value. Prosecutors referred to them as “almost comical” and “useless.” They were routinely fraudulently filled out by a 17 year old “signing” for dozens of parents sequentially in the same handwriting, excepting cases where they were simply empty.
> To refute this “evidence”, the state forced itself to do weeks of stakeouts, producing hundreds of hours of video recording, after which it laboriously reconstructed exact counts of children seen entering/exiting a facility, compared it with the billing records, and then invoiced the centers only for proven overbilling.
> On general industry knowledge, if you are selected for examination in e.g. your credit card processing account, and your submission of evidence is “Oh yeah, those transactions are ones we customarily paperwork with a 17 year old committing obvious fraud”, your account will be swiftly closed. The financial institution doesn’t have to reach a conclusion about every dollar which has ever flowed through your account. What actual purpose would there be in shutting the barn door after the horse has left? The only interesting question is what you’ll be doing tomorrow, and clearly what you intend to do tomorrow is fraud.
Moving on,
> I don't think the serious response to Nick Shirley's "journalism" is that there was no fraud; rather, it's that he came into the situation with a thinly veiled agenda and fed his audience exactly what they wanted to hear.
My take is that there's no good reason to suspect that, except for holding an opposed thinly veiled agenda. And there is no serious dispute of the fact that billions of dollars of fraud occurred.
> Did his video make it more or less likely that we'll be able to investigate and resolve the fraud situation in MN?
It clearly made it more likely, as demonstrated by federal senate hearings that have extensively referenced the video (I've seen a segment where a senator literally had a prop photo of the "Quality Learing Center").
> the fact that they seized on this as an excuse to send in 3000 ICE agents is not exactly promising.
Your premise is that a YouTube video published Dec 26, 2025 somehow motivated a federal law enforcement action that commenced on Dec 4, 2025. Also, this claim conflates ICE with CBP. Also, per Wikipedia, out of thousands of arrests, only 23 have been of Somalis; and it's been abundantly clear in all the press functions that the targets have overwhelmingly been Hispanic — because they're overwhelmingly represented among illegal immigrants in the US, including in MN.
What it lacks is any concrete suggestion as to what should change, beyond some vague allusions that perhaps racial/ethnic profiling should make a comeback.
The real problem here though is that the entire article ignores the duty[1] the government owes its citizens.
It's "fine"[2] if stripe or visa or whoever flips a coin and if it's tails they decide this person isn't allowed to be a customer of their company. The company loses any profit they might have made and life goes on.
It's considerably more problematic when the government refuses to serve a citizen (or even worse, levies an accusation).
There's some famous quotes about how many innocent people are appropriate to harm in the pursuit of the guilty but I'll leave those up to the reader.
[1] duty feels like too weak of a word here. Obligation? Requirement? The only reason the government even exists is to benefit the citizens.
[2] it becomes rapidly less fine when the company essentially has a monopoly over a system requires to participate in modern life, but that's a different topic...
>"Responsible actors in civil society have a mandate to aggressively detect and interdict fraud. If they do not, they cede the field to irresponsible demagogues. They will not be careful in their conclusions. They will not be gentle in their proposals. They will not carefully weigh consequences upon the innocent. But they will be telling a truth that the great and the good are not.
The public will believe them, because the public believes its lying eyes."
"If you don't do <fascist thing> now, the real fascists will take over!"
From this piece, it seems like the state auditor detected some fraud, but there was little follow-up from either the state or 'responsible journalists', so the sensationalists came in with a (predictably) extreme take, after which everyone started slinging mud. The sensationalism could have been forestalled by better auditing by the state, or journalism by large-scale media. I am not sure what part of this is fascist.
is fascistic, because being aggressive hurts those that want to do it right but are not trusted. an aspect of fascism is to not trust its own people.
So again, now what? Are they supposed to hire more investigators? Work harder? Require less evidence? What part of the system is supposed to change and how?
That's the real thing here. Concentrated power is scary-- whether it's the federal government, Visa/Mastercard, Google, etc.
At least power concentrated under the control of a government might be held accountable to the people. With private, concentrated power: fat chance.
If that leads to bad outcomes, then government is a next best choice.
(Of course, all the special cases, natural monopoly, etc etc etc-- government has a role in addressing the bad outcomes associated with those).
The reason why risk departments all inevitably reinvent Maoism is because the only effective enforcement mechanism they have is to refuse service. Fraudsters are fundamentally illegible to businesses of this size. And as the article stated, recidivism rates in fraud are high enough that someone caught doing fraud should never be given the time of day ever again. So the easiest strategy is to pick some heuristics that catch recidivist fraudsters and keep them a jealously guarded secret.
This calculus falls apart for the government. If someone rips the government off, they can arrest them, compel the production of documents from every third party they've interacted with, and throw them in jail where they won't be able to rip anyone else off for decades. Obviously, if we gave the Risk Department Maoists these same permissions, we'd be living under tyranny.
Well, more tyranny than we already live under.
But at the same time, the fact that we have these legal powers makes Risk Maoism largely obsolete. We don't need to repeatedly reinvestigate the same people for the same crime "just in case".
Right now we have either some form of fine, and while this can be incredibly painful, usually is not, then we go straight to like multiyear prison sentences, with perhaps a few suspended sentences in between there.
I dunno, maybe a world where "you did a small bank fraud so now you have some kind of antifraud system attached to you" is genuinely worse than the one we live in now, but the idea of being able to target more specific aspects of someone rather than just prison/not prison seems interesting.
I guess we have stuff like "not allowed to use a computer for 5 years" (thanks hackers movie!), dunno how effective or practical that is.
1. The fraud is in fact being investigated, people are being charged and convicted. Despite this, rightwing media institutions are acting as if fraud is being ignored and maybe even covered up and encouraged because
2. This is just another example of the decades long project by those who have lots of money and don't want to see it go to takes to paint social programs as a money-pipe from good hardworking people to fraud and waste.
1. The fraud was not in fact being investigated seriously enough until this kid, even while lacking the basics of journalism as Patrick describes here, forced the issue.
2. This is just another example of the decades long trend where more and more bad patterns and outcomes can persist for far too long because the normal checks are fended off with spurious accusations of racism.
There's some variation on how "the right" would handle (2). The center-right wants to shore up our culture of color-blindness to patch these vulnerabilities. The far-right wants to do away with egalitarianism altogether, and just go back to plain old racism. If we can't figure out the former, we might well end up with the latter.
And as explained in TFA, this is inefficient and ineffective even in theory:
> So-called “pay-and-chase”, where we put the burden on the government to disallow payments for violations retrospectively, has been enormously expensive and ineffective. Civil liability bounces off of exists-only-to-defraud LLC. Criminal prosecutions, among the most expensive kinds of intervention the government is capable of doing short of kinetic war, result in only a ~20% reduction in fraudulent behavior. Rearchitecting the process to require prior authorization resulted in an “immediate and permanent” 68% reduction.
> Despite this, rightwing media institutions are acting as if fraud is being ignored and maybe even covered up and encouraged because
Which is a reasonable characterization of the situation given the scale of the fraud and the fact that it's still going on, in such a blatant manner.
We're talking about total fraud on the order of $10b, and some significant fraction of that money has presumably been sent back to Somalia. We're talking here about amounts that would represent a significant percentage of Somalia's entire GDP (https://en.wikipedia.org/wiki/Somalia#Economy).
> This is just another example of the decades long project by those who have lots of money and don't want to see it go to takes to paint social programs as a money-pipe from good hardworking people to fraud and waste.
"The left" clearly has a vested interest in that not happening; therefore, it is also in their interest to take appropriate actions against fraud as they might learn about from the financial industry.
There is literally nothing wrong with stating this, we ought not be political about this. There may also be conservatives being elevated from Fraud as well, all of it should be routed.
At this point it definitely warrants deep investigations, not more articles trying to destroy a 23 year old that went viral.
The politicization of the issue means that Democratic Party aligned people continually flag any reference to the scam on HN though. If anyone else said that someone broke in and stole all the records from a daycare days after it was accused of fraud it would be considered a bald-faced lie but because of the political alignment (this is VP candidate Walz’s state) everyone is forced to pretend there’s no scam.
¹ Paradoxically the one honest juror who reported the bribe was removed from the case. No others reported any bribe which obviously must mean they received none.
These statements are trivially found using https://hn.algolia.com.
Or one could assume a vast conspiracy to explain the phenomenon.
1. Executive steals congressionally-appropriated money and uses them for their own purposes
2. Presidential pardons are for sale
3. Naked bribery of the executive via ballrooms, crypto, chunks of gold etc
4. Open market manipulation via tariff pump and dump schemes.
5. Endless personal profiteering, including things like using the military to steal foreign assets and deposit them in personal bank accounts.
Any of them far more interesting and immensely consequential to the future of the country, but of course, none of this is to be found on Patio's blog. People like him are an essential pillar of any authoritarian dictatorship - like the mainstream media's endless passive-voice sane-washing of Trumps statements and actions, his job is to use his existing credibility to give credence to lies, half truths and distractions. After reading his blog, readers can rest easy knowing that Trumps actions in MN are perfectly fine and justified.
This is essentially gish-gallop or Banon's flood but for an audience that thinks itself sophisticated. As long as you are only focused on discussing the minutia of carefully selected technical materials, you won't have to focus on anything else going on.
That being said, it was a fairly interesting article about fraud in general, but if this is the only fraud article he wrote, why is that? There's lots of public frauds going on right now, is he going to write about them next?
A critical part of media literacy is not just evaluating a piece of work at face value, but considering who wrote it, why they wrote it, why they wrote it now, what they didn't write etc. The article itself is actually not really interesting, but why this person wrote this article now is interesting.
Also, there are real dangers to blackpilling about fraud. "Everybody is doing it" is exactly what one says before doing fraud oneself. In reality, there are a lot of people out there doing the right thing every day.
Does Patrick want to address the fact that this happened during school break and that Nick Shirley didn't prove much of anything?
What if this article is just the rationalist version of the Nick Shirley hit piece?
It's very annoying that I feel like I have to say this but: I'm a committed Democrat, and I feel like my anti-Trump anti-racism bona fides, including on this site, are quite solid. The Minnesota thing happened. We can debate the scale, but it happened.
Yes, fraud is bad. I agreed before I read the article.
I've learned (from the article) that there was apparently some fraud in Minnesota, some of which was successfully prosecuted and, possibly, some that wasn't.
If pressed, I would say the take away from the article is that the fraud investigators should have been more willing to use race/ethnicity and accept a lower standard of evidence before taking action.
Is there something I'm missing?
Democrats have rationalized much worse things than this, for example the ethnic cleansing (genocide) in Gaza. So with all due respect frankly I'm not at all assuaged by your caveat.
Minor point: I'm pretty sure that HN comments cannot be deleted/edited after about an hour. Very different from most web forums in this regard, and worth keeping in mind when digging into past discussions! Maybe the rules are different for a superuser like tptacek here with lots of karma, but I doubt it.
Correct me if I'm wrong.