Child care fraud update: Inspector general fires back after being put on leave; Walz adds oversight funds

March 23-- Mar. 23--The Minnesota official at the center of questions about how the state investigates child care fraud fired back Friday after being put on leave earlier in the week.

"This controversy has become a political distraction, and I am eager for the truth to come to light," Carolyn Ham, inspector general for the Department of Human Services, said in a statement Friday. "The results of this investigation will show that there was no failure of leadership on my part."

Ham hasn't been accused of any wrongdoing, but her leadership has been questioned after a nonpartisan watchdog released a report last week that found "pervasive" fraud in a state-administered child care program. The report by the Office of the Legislative Auditor singled Ham out in detailing a rift within the ranks of those responsible for rooting out fraud. Some Republicans seized on the report and called for Ham's ouster, and the administration of Gov. Tim Walz appears to have responded by placing Ham on leave while it looks into the matter further.

The issue is laced with questions of Islamophobia, cultural bias and political correctness.

THE FRAUD REPORT

Last week, the Legislative Auditor released a report that examined fraud within the Child Care Assistance Program, a federal program administered by the state that subsidizes child care costs for low-income families. The report painted a picture of a team of 14 fraud investigators -- many who are former cops -- who seemed on a different page than their boss, Ham, who oversees some 250 total employees charged with oversight of human service programs.

The report noted that fraud investigators felt they had a good relationship with Ham's predecessor but that none of them had any interaction with Ham, who was appointed in 2017. In fact, some of the investigators felt Ham was trying to undermine them when they raised alarms about the possible extent of the fraud.

The Legislative Auditor also looked into allegations that fraud from some child care centers run by Somali immigrants might be funding Islamic terrorists -- a charge that many Democrats and leaders in the Somali community said smacked of Islamophobia. Legislative Auditor investigators could not establish that link. Nor could they rule it out, but some Democrats and leaders of the Somali and Muslim communities have said the report refutes the terrorist narrative, an arguably sensational implication of a TV report from last year.

This much did percolate through the findings: The fraud unit had been and continues to scrutinize Somali child care centers, apparently based on tips of wrongdoing.

Following the release of the report, House Republicans called for Ham to be fired, while Human Services Commissioner Tony Lourey cast a focus on reforming investigations to ensure they were "data-driven" and reduced the potential for "implicit bias."

HAM PUT ON LEAVE

On Tuesday, a Human Services spokeswoman confirmed that Ham had been put on leave following a complaint but offered scant details, arguing state personnel laws limit what can be said publicly about an employee under an active inquiry.

State laws require officials to acknowledge the existence of a complaint against a public employee, but the details of the complaint are not disclosed unless a worker is disciplined.

Ham answers directly up the chain to the commissioner of human services and ultimately the governor, although the Legislative Auditor report recommended Ham's office and its workers be granted increased independence. A fuller set of recommendations is expected to be given in April.

MORE FROM HAM'S STATEMENT

Additional comments from Ham's statement -- her first public remarks since the Legislative Auditor report was released:

She will be vindicated: "I am very disappointed by the recent allegations questioning my leadership as Inspector General. These allegations are completely without merit. I am confident that the upcoming investigation will vindicate not only me, but the hundreds of dedicated OIG employees whose hard work has been called into question."

It's a distraction from finding fraud: "Unfortunately, with all the political maneuvering, what has been lost is the much-needed focus on solving the difficult challenge of child care fraud in Minnesota."

She expects to get her job back: "I look forward to returning to the critical work of safeguarding our most vulnerable citizens and eliminating fraud in the great state of Minnesota."

WALZ ADDS MORE FUNDS

Walz is proposing to add more money toward the overall oversight effort, which includes inspectors and others in addition to the fraud investigators.

In a revised budget proposal released Friday, Walz added $2.1 million in oversight funds to the inspector general's office over the next two years. That money would pay for 10 additional employees, including license inspectors and a pair of workers who will analyze data in an attempt to flag likely fraud.

RACIAL BIAS?

What no one has been outwardly saying -- but what has been simmering under the surface -- is whether Ham or Lourey don't trust their own investigators because they believe they are racially or culturally biased. Or, on the flip side: do investigators believe their suspicions about Somali centers are being overlooked out of political correctness?

Walz was asked about that Friday.

"I certainly don't have any evidence to suggest that (the investigators have bias)," he said. "I think the concern was that we were depending on, basically, a tip, and the potential there could be that that was the case. But I certainly don't believe that about our investigators."

Another dynamic surfaced Wednesday, when eight minority Democratic House members, including two Muslims, sent a letter to Lourey saying they were "deeply disturbed and outraged" by Ham being placed on leave. The one-page letter seemed to direct its ire at Fox 9, which aired the original TV report raising the specter of terrorism, but the letter then pointed the finger at Lourey, saying "your department owes the people and lawmakers an explanation and an apology."

@RepHassan @RepSamanthaVang @RepFueLee @mohamudnoor @KaohlyVangHer @aishasgomez @AliceMann4House @TouXiongMN53A and I sent a clear message that there is no tolerance for hate and fearmongering based on racist dog whistles and abject lies. We demand accountability. #mnleg pic.twitter.com/SwG7FzjPjw

-- Jay Xiong (@RepJayXiong) March 22, 2019

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