Two months after Abduljabar Hussein and his wife were charged with stealing millions of dollars from a federal meals program, Hussein's Minneapolis daycare center continues to collect public funds aimed at helping low-income families afford child care services.
Hussein's Future Scholars Childcare has collected more than $1.3 million in subsidies from the Minnesota Department of Human Services since 2018, the department acknowledged last week in response to inquiries from the Star Tribune. His wife, Mekfira Hussein, collected another $68,145 in Medicaid money from 2020 to 2022 at Forever Friendship Adult Day Center in St. Paul, DHS said in the statement.
Altogether, DHS has shelled out at least $22 million in the past five years to 11 daycare centers that were owned or managed by 14 people who have been indicted on federal charges of defrauding the meals program, according to a Star Tribune review of secretary of state filings and DHS payment records.
DHS officials said they are reviewing ties to everyone charged in the federal meals probe, but added they can't ban anyone from participating in the department's programs based on unrelated fraud allegations.
The disclosures are raising new questions about the department's diligence at rooting out fraud, which first erupted in 2018 over reports of widespread wrongdoing by daycare owners.
Though some legislators praise the department for addressing weaknesses later identified by the legislative auditor, others say DHS continues to struggle with attacking potential fraud.
Rep. Mary Franson, the leading Republican on the House committee that oversees daycares, said DHS has not moved quickly enough to cut off daycare funds to the alleged meal program fraudsters. She pointed out that the state Department of Education immediately suspended payments to Feeding Our Future and another sponsor in the meals program on Jan. 20, the day federal authorities announced they had executed several search warrants.
Meanwhile, six of the 11 daycares with ties to the meals program continued to receive public daycare assistance in 2022, DHS acknowledged.
DHS officials, including Commissioner Jodi Harpstead and Inspector General Kulani Moti, declined interview requests. DHS oversees state and federally funded daycare programs in Minnesota.
In response to questions from the Star Tribune, DHS said it is "actively evaluating the involvement" in its programs by all 50 people indicted in the meals scandal. Department officials declined to give details about when their investigation started, but said they have not yet cut off any payments or booted any of the 11 centers from programs that provide financial support to daycares.
So far, five of the 50 people charged in the meals case have pleaded guilty to federal criminal charges. Three of those people owned or managed daycares that received millions of dollars in public funding, records and interviews show.
In a written statement, DHS officials said they "cannot take action against a provider's license or public assistance program enrollment based solely on allegations of fraud in a program not overseen by DHS. However, if DHS became aware of fraud allegations against a provider ... we would begin our own investigation."
Attorney Debra Hilstrom, who represents Abduljabar Hussein, said DHS officials have not questioned any of the payments to Future Scholars Childcare or asked her client for any additional records related to his billing requests. She said the $1.3 million his daycare received was "absolutely legitimate."
In the meals fraud case, Abduljabar and Mekfira Hussein were indicted for falsely claiming to feed as many as 5,000 children a day through their nonprofit Shamsia Hopes, obtaining about $8 million in federal funds. The charges allege most of the money was diverted for their personal use, including paying off the mortgage on their Shakopee home.
"My client absolutely asserts that he has done everything he is supposed to be doing and he is going to be defending himself against these other allegations wholeheartedly because he did nothing wrong," Hilstrom said.
Mekfira Hussein's attorney, Jason Steck, said his client denies any wrongdoing.
Federal authorities have not directly linked any of the 11 daycare centers to the alleged meals fraud, but nine of the centers were approved to participate in the federally funded meals program by acting as meal sites with either Feeding Our Future or Partners in Nutrition, state records show.
Partners in Nutrition was terminated from the meals program by MDE after it was linked to $57 million in alleged fraud. Federal authorities accused Feeding Our Future of playing a central role in stealing $250 million from the meals program by recruiting people willing to defraud the program by falsely claiming to serve meals to tens of thousands of children every day.
State licensing records show that six of the 11 centers that received public daycare money have been cited by DHS for failing to track attendance, not providing required services or for violating rules aimed at keeping children and disabled adults safe from harm in recent years.
One of those centers, Liban Child Care, was ordered to repay $11,845 in 2022 after DHS received a unspecified complaint about the center, the department said in response to the newspaper's questions. DHS investigators found that the center overbilled for its services. The daycare closed voluntarily in March, two months after the FBI received court approval to raid the home of its CEO, Sahra Mohamed Nur, records show.
Nur was indicted for falsely claiming to serve meals to as many as 5,000 kids a day at a different site he ran called Academy for Youth Excellence. Nur's company received more than $4 million, even though it served a fraction of the meals claimed, according to the indictment.
Nur has pleaded not guilty. Nur's attorney, A.L. Brown, declined to comment.
One of Nur's accomplices, according to the federal charges, was Abdul Abubakar Ali, who pleaded guilty in October to fabricating paperwork at his St. Paul food distribution site called Youth Inventors Lab. Ali ran an adult daycare center out of the same address until May 2021, records show. University Adult DayCare Center received more than $1.3 million in public assistance, DHS said.
Ali also received $3 million in federal reimbursements after he claimed to serve more than 1.3 million meals to poor children at the site. At a court hearing, Ali admitted that the site actually served no meals.
Ali's attorney, Kevin Gregorius, declined to comment
In another case, Liban Alishire — who prosecutors allege received nearly $1.8 million by defrauding the meals program through JigJiga Business Center and two meal providers — was CEO of a separate company called Lakes Adult Day Care on East Lake Street in Minneapolis, corporate records show.
In January, records show, DHS informed Alishire that Lakes' license was being put on conditional status for two years after inspectors documented 13 violations. In the licensing order, DHS officials noted the "nature, chronicity and severity of these violations."
Among the center's most serious infractions: failing to provide required adult daycare services. Inspectors found participants lying on couches, watching television and "socializing amongst each other" with little interaction with staff for "significant periods of time," records show. Two other participants were sitting in an enclosed fitness room with no supervision.
Adult daycare centers are supposed to offer daily activities to "functionally impaired adults" as a way to keep them out of nursing homes and other institutional settings, according to the order and program rules.
Since 2018, Lakes received nearly $5 million in public funding from DHS, more than any of the 11 centers identified by the Star Tribune.
In a written response to questions, Alishire's attorney, Matthew Forsgren, said that Alishire is no longer an owner of Lakes Adult Day Care (LADC), noting Alishire "divested himself" from the corporation before the indictment against him in the meals case was unsealed in September.
"The reimbursements that LADC has received from DHS have been appropriate and were made on account of the adult day care services that LADC has provided to its clients for the past five years," Forsgren said in the statement.
Forsgren said the daycare center has remedied any "actual deficiencies," but continues to dispute "many of those citations."
State records show that the LADC site was approved for providing federally funded meals through Partners in Nutrition from 2020 to 2022.
"There is no connection between LADC and either Feeding Our Future or the associated cases, and any suggestion to the contrary would be false," Forsgren said,
Forsgren declined to comment on the meals fraud charges. Alishire has pleaded not guilty.
State Sen. Jim Abeler, R-Anoka, who chairs the Senate committee that oversees DHS, said the department should not rush to judgment.
"As I understand it, they are very much scrutinizing those people to see if they did anything wrong," Abeler said. "These things take time. But they don't have two years to do it. They have a few months."
Abeler said the department has made huge strides in dealing with suspected fraud since the Legislative Auditor reviewed its operations in 2019 and found gaping holes in its internal controls.
At the time, DHS employees told the legislative auditor that fraud was pervasive in the child daycare program, with owners collecting as much as $100 million annually by overbilling for services. In 2018, the childcare program paid $254 million to about 4,500 providers.
The legislative auditor was unable to substantiate that level of fraud, but its investigation concluded that daycare owners wrongfully obtained more than the $5 million to $6 million documented by DHS.
"They were totally not doing their job," Abeler said. "But the culture has changed massively in the past five years. ... They have closed the door to that kind of fraud."
In its written response to the newspaper's questions, DHS said that it has taken numerous steps since 2019 to beef up anti-fraud efforts, including using data to flag improper billing requests, enhanced attendance requirements, increased use of video surveillance, a formal system for fraud referrals and more frequent inspections of new providers.
However, the department has not implemented one of the Legislative Auditor's chief recommendations: replacing handwritten sign-in sheets with an electronic attendance system. The auditor noted that most child care fraud involved providers who submitted inflated attendance records to obtain extra money, similar to what federal authorities have documented in the meals program.
In 2019, 22 states required some automated way of collecting attendance, while eight other states were developing those systems, according to the legislative auditor.
DHS said legislators opted against an electronic attendance system after the department released a 2021 report that showed most providers and child care advocates had serious concerns about the new technology, with some calling it "criminalizing and burdensome." Others said the cost of the system, estimated at $18.7 million over four years, was not worth the potential benefit.
"How much are you going to save for that?" Abeler said. "I have other priorities."