Inspector General at DHS Placed on Paid Leave Following Report of Welfare Fraud

MPR News reported that Carolyn Ham, the Inspector General (IG) at the Department of Human Services (DHS), has been placed on paid leave pending the outcome of a “probe.” The Inspector General’s office is in charge of protecting welfare programs from illegal activity and fraud.

Last week the Office of Legislative Auditor (OLA), released a report that found a “serious rift” between the IG’s office and the DHS investigators tasked with investigating fraud. The report also noted that the IG’s office reported directly to the politically appointed commissioner at DHS and thus, had no independent authority. (The OLA, in a letter to lawmakers, is recommending that these investigations be moved to the Bureau of Criminal Apprehension.)

Lawmakers called for Ham’s resignation last week pointing to widespread fraud in the Child Care Assistance Program (CCAP) noted the OLA report (the details came from a detailed email written by the head investigator.) The OLA and several lawmakers called for the IG’s office to be independent of the DHS commissioner.

MPR spoke to Ham by phone; she claims she is a scapegoat:

“Ham hasn’t been told how long the probe will take. But she also said the audit has left the wrong impression about her management, particularly the way she dealt with a couple of investigators alleging 50 percent fraud by providers in the day care program…Ham said, ‘The reason there was distrust between me and the fraud unit is because I was pushing them on their unsubstantiated beliefs.”’

We will have more details this week on that report: the lead investigator described a 54 percent fraud rate (over $100 million) and a failure of the program to deliver safe and quality care to the children attending the fraud-riddled centers.

Most child care providers with CCAP children are not under scrutiny by DHS investigators; the focus is on larger centers, some of which were or are set up specifically to use the CCAP funds. Those centers often employ parents to care for their own children.

The OLA report also points to federal officials confirming that CCAP and other funds were transferred by wire to East Africa, primarily Somalia, and the Middle East, with concerns that CCAP funds are ending up in the hands of terrorist organizations, calling it “a near certainly.” The wires were sent shortly after the child care center owners received CCAP payment. Federal agents also pointed DHS investigators to “money laundering and tax evasion.” (Those investigations are not conducted by the OLA or DHS; they are federal matters.)

The report details about a dozen recent prosecutions, all of which involved members of the Somali community. Somali leaders from Isaiah and CAIR have nonetheless denounced the OLA report and called on lawmakers to apologize.

The MPR story noted:

Asked about Ham’s suspension, Gov. Tim Walz was guarded in his reaction.

“We take this incredibly seriously,” Walz said. “We are doing our own internal investigations and our goal is to bring accountability to the system and move forward. And at this time that’s about all I can say.”

The OLA is also currently reviewing the administration of the CCAP program, and the controls or lack thereof in place at DHS to determine if “DHS’s oversight of CCAP was adequate to safeguard financial resource of the program.” That report is due in April of 2019.

The OLA report can be found here.