Minnesota’s anti-fraud spending has quietly ballooned, leaving taxpayers to pay for failure twice

In the wake of a years-long $250 million welfare fraud scheme, Minnesota taxpayers will now finance a pricey state-level cleanup effort, effectively paying for the failure twice after state officials missed repeated warning signs.

The Feeding Our Future scheme exploited a federally funded children’s nutrition program administered by the Minnesota Department of Education (MDE) during the COVID-19 pandemic, siphoning money meant to provide meals to low-income kids. It now stands as the nation’s largest COVID-19 fraud case.

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An audit from the Minnesota Office of the Legislative Auditor sheds light on how the scheme went unchecked for so long, finding that the MDE’s oversight was “inadequate” and that its failures “created opportunities for fraud.”

The deception was so egregious that flawed applications sailed through, complaints were never investigated and the nonprofit kept expanding despite repeated red flags.

What followed was a taxpayer-funded spending spree – luxury vehicles, overseas cash transfers and real estate transactions that prosecutors say may never be fully recovered.

A large share of the $250 million stolen may be gone for good – a loss Minnesotans will ultimately bear.

MDE Commissioner Willie Jett has placed the blame squarely on those accused and convicted in the scheme.

“What happened with Feeding Our Future was a travesty, a coordinated, brazen abuse of nutrition programs that exist to ensure access to healthy meals for low-income children. The responsibility for this flagrant fraud lies with the indicted and convicted fraudsters,” Jett wrote in a June 2024 letter responding to the auditors’ findings.

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In the wake of the audit exposing the sweeping fraud schemes, Jett outlined a slate of internal reforms.

Jett said the MDE has deployed a broad set of anti-fraud tools, an expansion of oversight that will almost certainly come with additional costs for taxpayers.

The agency has since created an Office of Inspector General, added a General Counsel’s Office, trained staff on updated fraud-reporting policies and hired a firm to conduct financial reviews of certain sponsors, among other steps.

Those new offices – and the scaled-up compliance infrastructure – will require ongoing funding to cover salaries, training and day-to-day operations.

Jett did not specify the cost of these anti-fraud measures and the state has not yet released a price estimate. It is unclear how much of the cost of the overhaul taxpayers will ultimately shoulder.

Meanwhile, Minnesota Gov. Tim Walz signed an executive order in January 2025 that centralized the state’s fraud investigations under the Bureau of Criminal Apprehension, a move slated to cost taxpayers $54 million from 2026 to 2029.

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The proposal would give state agencies stronger investigative powers, expand oversight tools and increase criminal penalties for fraud.

The reforms proposed by Walz and the internal changes underway at the MDE amount to one of the largest anti-fraud overhauls the state has ever attempted. 

But without a price estimate, it remains unclear how much taxpayers will ultimately pay to rebuild the oversight system that allowed the fraud to spread.

And what is clear is that the fallout isn’t over. For Minnesotans, the scandal’s price may only be beginning.