Vance Takes First Major Action As Fraud Czar With Sights Set On Minnesota

Vice President JD Vance announced on Wednesday that the Trump administration would withhold nearly $260 million in Medicaid funding for the Democrat-controlled Minnesota state government following the state’s massive fraud scandal.

Vance, who was tapped by President Donald Trump to lead the administration’s anti-fraud crackdown during the State of the Union address on Tuesday night, said that Minnesota must prove that it “takes its obligation seriously to be good stewards of the American people’s tax money.” According to Vance, the Trump administration is withholding reimbursements for Medicaid services that Minnesota already paid for out of the state budget.

“What this means is that first of all, the providers on the ground in Minnesota have actually already been paid,” Vance said at a press conference alongside Dr. Mehmet Oz, the administrator for the Centers for Medicare & Medicaid Services. “What we’re doing is we’re stopping the federal payments that will go to the state government until the state government takes its obligations seriously to stop the fraud that’s being perpetrated against the American taxpayer.”

Minnesota state leaders, including Democratic Governor Tim Walz were informed of the Trump administration’s move, according to Oz, who said the federal government will hold the Medicaid payments until Minnesota properly addresses the fraud.

“If Minnesota fails to clean up the systems, the state will rack up $1 billion of deferred payments this year,” Oz said.

Oz assured reporters that the Medicaid funding freeze would not “hurt” Minnesota residents, since the state’s budget has a “rainy-day fund” to cover the lapse in funding.

“If providers and beneficiaries are worried about getting their money and services, please call your governor. These are services the governor has already paid for. We are just not reimbursing the state,” Oz said, adding, “This is not a problem with the people of Minnesota, it’s a problem with the leadership of Minnesota and other states who do not take Medicaid preservation seriously.”

Vance has zeroed in on 14 state programs in Minnesota, which include autism service providers and medical service transports that the administration believes is rife with fraud. The Trump administration is giving Walz 60 days to respond to its letter informing the state government of its freeze on Medicaid funding.

The vice president called out so-called services in Minnesota that have received millions in taxpayer dollars only to make fraudsters rich. Federal prosecutors recently uncovered a massive fraud scheme in Minnesota that has resulted in dozens of convictions so far.

Minnesota’s “Feeding Our Future” program received federal funds and claimed to distribute meals to hungry children during the COVID pandemic but allegedly never did so. The vast majority of those charged in the fraud scheme were of Somali descent.

Vance said on Wednesday that the administration also found that a Minnesota program that was supposed to help kids with autism “has made a number of people rich, not by providing services to needy children, but by allowing fraudsters to take money that ought by right go to American citizens and to American families.”

Dr. Oz said at the White House press conference that the new Trump administration effort would be the “largest anti-fraud effort of its kind” in the history of Centers for Medicare & Medicaid Services. Oz said that a fraud scheme in Minnesota pays mothers around $1,000 to falsely enroll their children as autistic and then Medicaid is billed for millions of dollars in “services that were never rendered.”

“These schemes disproportionately involve immigrant communities,” Oz added. “They’re able to organize efforts, and sometimes they don’t understand what’s going on. And ultimately, it diverts resources away from kids who truly have autism.”

Daycare and learning centers linked to Somali immigrants in the Minneapolis area have also come under scrutiny for suspected fraud after independent journalist Nick Shirley posted a 42-minute video in December that showed him visit numerous daycares that have received state funding, but don’t appear to be serving any children.