Hacker News

The Swanson memo memorializes the consensus of his investigatory group and, put to question by OLA and legislators, they stick with that story:

Page 14 of PDF:

[The OLA] did not find evidence to substantiate Stillman’s allegation that there is $100 million in CCAP fraud annually. We did, on the other hand, find that the state’s CCAP fraud investigators generally agree with Stillman’s opinions about the level of CCAP fraud, as well as why it is so pervasive.

(Stillman is a line level investigator who gave a media statement which was explosive. Swanson, who authored in the internal memo, was his manager.)

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). These officials pointedly refuse to put any number on fraud other than the number incident to convictions.

Moreover: you should be very clearly correct if you accuse someone of citing a document as making claims it does not say. That is a serious accusation. BAM's citation of this piece is "the state’s own investigators believed that, over the past several years, greater than fifty percent of all reimbursements to daycare centers were fraudulent." This is _absolutely true_ and _is in the report as claimed_.

Or get a proper kindergarten run by the government. Radical idea, I know

I don't think that's in evidence. Institutionalized and ideologically-driven apathy towards the fraud, sure, but that's not uncommon (see: the defense industry; the finance industry).

Its hilarious how short human memory is. To me Minnesota just seems like a replay of Tammany Hall in NYC

There are tons of these out there.

In late 2024 there was the whole "Infinite money glitch" tiktok trend that was just check fraud.

https://www.bbc.com/news/articles/c4gzp7y8e7vo

Here's a rap video, the entirety of which bragging about fraud against the government:

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.)

Hmm, you completely lost me at "little green men". What/who is this referring to? Extraterrestrials?

According to OP, there is substantial evidence indicating about 50% of the daycares are scams. I've seen Nick Shirley's video, I don't think he demonstrated any concrete about any of the sites he visited (he's not a very good investigator), but if the 50% number is correct... well, the broken clock was probably right at least a couple of times that day.

The report to the government about a more than 50% fraud rate was from six years ago. The Minnesota government was not serious about dealing with problem. Most businesses would not last that long with a 50% customer fraud rate.

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.

> What is the issue? That these investigations should have been more prominently featured in the mainstream news?

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.

This article isn't vague at all. It references various sources, and uses precise language (if you can recognize it) to convey its message. Yes, innocent until proven guilty, but the fact that the government has "lesser" educated Fraud analysts, chooses to ask for reimbursement of overbilling, and many more nuanced topics talked about in the article is not vague.

> [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...

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.

I've called the phenomenon of private corporations refusing service the "Maoists in the Risk Department" in the past.

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".

Fair enough. But the reason that "the right" is not letting go of the story is:

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.

(My reading is that Patrick falls squarely in the "center-right" here, fwiw. Then again, it can be hard to decode his exact subtext from under all the polite circumlocutions. Reading his stuff is something of an acquired skill and/or taste.)

> The fraud is in fact being investigated, people are being charged and convicted.

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.

Rather than stating, without data, that Democratic Party alignment led to flagging of the story here on HN, one can look at the numerous overt statements by some of the most active users. These users claim they spend significant time flagging all political stories not tied to computing or science.

These statements are trivially found using https://hn.algolia.com.

None of this has anything to do with what he wrote, which is about the largest fraud scheme in the history of the midwest. Fraud is part of BAM's beat.

Notably there's no smoking gun proof for any of the claims, and equivalent stuff on the other side is dismissed as whataboutism. Clinton Foundation? Never heard of that Pokémon.

No? He dunks on Shirley. His point is that professional investigators found and documented much worse things.

I don't think anything in the article, or in Patrick's general work, makes strong claims about a trend. Fraud may be getting worse as you say, but that is not his beat. He tends to depict fraud as eternal, and wants to shed light on it as a technical problem to solve.

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.