Saturday May 19, 2018
By Matt Sepic ·
Former investigator and DHS whistleblower Scott Stillman testifies in front of Senate committee on human services reform finance and policy meeting in St. Paul, Minn. on Tuesday, May 15, 2018. "Minnesota's government programs are being victimized by organized crime," he said. Evan Frost | MPR News
Scott Stillman was the star witness Tuesday at a Senate committee
hearing. He had an alarming story to tell. The state program that
subsidizes Minnesota day care operators was rife with fraud, he said,
and scams were far more widespread than lawmakers realized.
heard it said that day care fraud is $100 million. I've heard the news
media say it's a 50 percent fraud rate. I've had investigators tell me
it's closer to [a] 70 to 80 percent fraud rate," said Stillman, a former
Department of Human Services digital forensics lab supervisor.
Left unsaid during the hearing: Stillman's documented, past problem with false statements.
Stillman and DHS were sued in 2016 for defamation
by Mark Lanterman, an independent Twin Cities forensics fraud
investigator, after Lanterman learned that Stillman was spreading false
rumors about him among local authorities.Lanterman's Computer Forensic Services competed with Stillman's
consulting business, which Stillman ran on the side while working for
"He accused my employees of impersonating police
officers," Lanterman told MPR News. "He indicated that I had been the
target of an investigation by the Hennepin County Sheriff's Office and
that my contract with the sheriff's office had been canceled because of
it, and none of this was true."
Lanterman said the smears started
after he and Stillman worked as opposing experts on a high-profile case
involving Todd Hoffner, the football coach at Minnesota State
University, Mankato who was cleared of child pornography charges in
Even after he was exonerated, the university fired Hoffner over the
alleged misuse of its computers. The university hired Stillman to
examine the machines. Hoffner hired Lanterman. The coach won his job
back after an arbitrator ruled MSU had no cause to fire him.
Lanterman settled his lawsuit, and the state paid him $65,000.
He also received a letter in which Stillman apologized for making false statements. Stillman also admitted using his DHS email account to send those statements.
After the lawsuit, Stillman said the department took away his
supervisory responsibilities, and he resigned shortly thereafter. On
Tuesday, he told the committee he left DHS when warnings he sent his
supervisors went unheeded.
Lanterman believes Stillman is still
disgruntled with DHS and is simply not credible on his allegations of
massive, widespread fraud.
"There is fraud and we should take steps to fight fraud," Lanterman said. "But I also think that we need to vet the messenger."
an interview with MPR News Friday, Stillman declined to discuss the
lawsuit, but praised Lanterman's investigative career and
Mark Lanterman at his office in Minnetonka, Minn., on Thursday, May 17, 2018. Matt Sepic | MPR News
Stillman did not draw a line between his
departure and the lawsuit, but said he felt he had to quit after pushing
back against bosses who wanted him to do more low-level internal human
resources investigations rather than fight fraud.
"Working an HR
[human resources] case where somebody was spending two hours on the
internet versus working a case that involved the safety of kids or the
safety of people on Medicare. That was kind of a no-brainer for me," he
As for his claim that taxpayers are being fleeced to the
tune of $100 million, Stillman said Friday that's an estimate he
received from former DHS colleagues and an extrapolation based on cases
Stillman said he hopes the legislative auditor's office will get to the bottom of it.
don't think anyone knows the full extent of this, and that's why I
asked for an investigation. I think transparency and a review of this is
in everyone's best interest, particularly the children."
The sensational nature of the allegations, however, triggered a wave of anger and outrage among some lawmakers.
9 News, citing unnamed government sources, suggested that up to $100
million in childcare subsidies was being illegally pocketed by operators
of day care providers who were overbilling the state.
station also reported about $100 million had left the Minneapolis-St.
Paul International Airport in suitcases of cash destined for the Middle
East and Somalia and suggesting that some of the cash may have ended up
Stillman was featured in one of those reports.
Fox 9 broadcasts led Republicans to introduce legislation this week
that would impose stiff penalties on anyone who sends
fraudulently-obtained public assistance dollars to countries subject to
travel restrictions. They're also calling for a new state agency to
At a news conference ahead of Tuesday's hearing,
state Rep. Nick Zerwas, R-Elk River, was quick to connect the dots
between child care fraud and international terrorism.
thing for tax dollars to be used to train and educate the next
generation of Minnesotans through child care assistance. But the thought
that we're funding, potentially, the next generation of terrorists with
our tax dollars is reprehensible."
Fraud in the child care business has been on the radar of Twin Cities law enforcement for several years.
In January, a federal judge sentenced Fozia Sheik Ali, 52, to two years in prison and ordered her to pay nearly $1.5 million in restitution.
Prosecutors alleged she overstated the number of kids at her day care and overbilled Minnesota's Child Care Assistance Program.
federal indictment of Ali made no mention of terrorism, and the FBI
wouldn't comment further on any potential connection between daycare
fraud and terrorism. State DHS officials say they have not found
evidence of it in their own fraud investigations.
The agency also says $100 million is not a credible figure because that's half the entire annual budget of the child-care assistance program.
Thursday, Sen. Jim Abeler, R-Anoka, said the effort to target theft
from the Child Care Assistance Program is not about Islamophobia; it's
one of "fraud-o-phobia."
Somali-American leaders are pushing back. At a news conference Friday
morning, Jaylani Hussein of the Council on American Islamic Relations
said the Minnesota GOP is scapegoating Muslims and African immigrants.
legislators stand up here and grandstand on these issues without really
understanding where the problems really lie, they are playing into the
anti-Muslim movement in this country who continue to frame American
Muslims as dangerous to this society."
Hussein says the
much-vilified suitcases full of cash comprise the only legal way Somali
immigrants can get money to relatives suffering from famine, drought,
and poverty in east Africa. Hussein says lawmakers should sit down with
the community, and craft a better solution.
Legislative auditor James Nobles said Friday he's opening an investigation into the child care fraud allegations will go wherever the evidence leads.
the credibility, whatever the agenda of any particular whistleblower
is," he said, "we will look for the facts of whether or not there is
something inappropriate occurring." MPR News reporters Laura Yuen and Martin Moylan contributed to this report.