New York Republicans call for independent fraud investigation following Minnesota revelations

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HHS ‘still waiting’ for proof, receipts from Minnesota amid rampant fraud

HHS Deputy Secretary Jim O’Neill discusses the agency’s pause on all child care payments to Minnesota amid a widespread daycare fraud scandal on ‘The Story.’

Republican state senators in New York on Friday wrote a letter to Gov. Kathy Hochul urging her to launch an independent investigation into possible fraud involving government programs in response to similar allegations in Minnesota.

"We write to you concerning disturbing reports of widespread fraud involving taxpayer dollars in the state of Minnesota, including schemes that reportedly involved sham daycare centers and other illegitimate entities," the letter, signed by 12 Republican state senators, said.

The letter added that the "revelations" in Minnesota "raise serious concerns about the vulnerability of publicly funded programs to abuse."

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Republican state senators in New York on Friday wrote a letter to Gov. Kathy Hochul urging her to launch an independent investigation into possible fraud involving government programs following similar allegations in Minnesota. (Adam Gray/Getty Images)

The senators urged Hochul to "immediately retain an independent private professional services firm to conduct a comprehensive audit of comparable programs in New York State."

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The letter said that the audit was necessary "to ensure that public funds are being distributed solely to legitimate organizations and eligible individuals and to identify and address any instances of fraud, waste or abuse."

"Given that New York administers comparable programs involving billions of taxpayer dollars it is imperative that proactive measures be taken to ensure similar abuses are not occurring here," the letter said.

The Small Business Administration announced the suspension of nearly 7,000 Minnesota borrowers after identifying hundreds of millions of dollars in suspected pandemic loan fraud this week.  (Bill Clark/CQ-Roll Call, Inc via Getty Images)

The senators noted $68 million in Medicaid fraud that the U.S. Department of Justice said it uncovered at a Brooklyn operator of social adult daycare centers in July. 

"At a time when resources are strained, it is essential that available funds are protected and directed exclusively to those who truly need assistance," they added.  

The senator said that with reports that Hochul’s office plans to advance a proposal for universal pre-kindergarten in the next legislative session, "ensuring these programs are efficient, transparent and free from fraud should be a shared priority for all New Yorkers." 

The Small Business Administration announced Thursday that it had suspended 6,900 Minnesota borrowers after uncovering what it says is widespread suspected fraud in the state.

SBA Administrator Kelly Loeffler sent a letter Tuesday to Minnesota Gov. Tim Walz on Dec. 23, telling him that her agency will "halt" more than $5.5 million in annual support to resource partners in the state "until further notice." 

"I am notifying you that effective immediately and until further notice, the SBA is halting the disbursement of federal funds to SBA resource partners operating in the state of Minnesota, totaling over $5.5 million in annual support," Loeffler wrote.

The SBA said that at least $2.5 million in PPP and EIDL funds issued during the pandemic era were connected to a Somali fraud scheme based in Minneapolis.

Loeffler told Walz that $430 million in PPP funds tied to roughly 13,000 loans were flagged as potentially fraudulent but were still funded anyway, including some that were forgiven during the Biden administration.

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"The volume and concentration of potential fraud is staggering, matched in its egregiousness only by your response to those who attempted to stop it," she wrote.

Hochul's office told Fox News Digital in response to the letter: "This is a rich political stunt coming from the lawmaker who spent months fighting the Governor’s efforts to route out waste, fraud and abuse in the state’s Medicaid program," referencing GOP State Sen. Robert Ortt. "Instead of suggesting we spend taxpayer dollars to do the jobs of the State Comptroller and State Inspector General, the Minority Leader should focus on supporting the many longstanding initiatives that the Governor has advanced to stop fraud and protect taxpayers."