Minnesota lawmakers propose 100% tax on stolen state money

Added: 2026-05-04

[00:00:00]high-risk programs for fraud since 2018.

[00:00:04]Uh so currently we're seeing the allegations of nine billion dollars in fraud in 14 state Medicaid programs in Minnesota. Over 300 million as I mentioned stolen in the feeding our future program. Over hundred million dollars in the last 10 years in CCAP fraud. Minnesota has become, ladies and gentlemen, a fraud destination for government fraud. Uh we have coined the term fraud tourism. The state of Minnesota has sadly sadly those are realities of where we are today. Also sadly most of the money stolen from hardworking Minnesota taxpayers will never be recovered.

[00:00:49]So far, only $66 million of the $300 million, that's 22% known to be stolen in the Feeding Our Future program has been recovered. Much of the money has been laundered, many times, multiple times using shell companies to hide the money. Just a few examples of where the arrest of the money went. hund uh $1 million luxury mansion in Plymouth. A foreign textile foreign textile and trading company investment Mediterranean coastal property in Atlanta, Turkey, Brooklyn Park Bar.

[00:01:28]Bought a beach resort in the Maldives.

[00:01:30]Maldees, how do you I don't even know where it is. Maldees. It's apparently it's not it's not in North America. A Porsche, a Tesla, newly built apartment complex in Kenya, gold jewelry from Dubai, a resort in Kenya, commercial property in Lakeville, aircraft in Kenya, and aircraft.

[00:01:53]One crook even laundered the money.

[00:01:56]Little levity here, ladies and gentlemen, even laundered the money.

[00:01:59]$20,000 through the purchase of a laundromat.

[00:02:06]The two questions I get asked most when I talk to people in my district, they say, "Drazz, what are we going to do with all the fraud and how are you going to get our money back?"

[00:02:16]Motans just have no confidence in Twin Cities judges to hold these fraudsters fully accountable. Ask Judge West, who let two convicted fraudsters run free.

[00:02:28]Convicted fraudsters ran free after they stole 7.2 2 million of the people's money. We have little faith in the ability for the governor or the attorney general to act on it. As a matter of fact, those two politicians uh were here and supervised the fraud that we've seen.

[00:02:47]We need to take the taxpayers money back. We need to create a much stronger deterrent for the thievery of taxpayers money in our state.

[00:02:56]This bill we are talking about today is one way to do what the people are asking us to do to make the taxpayers whole and get our stolen taxpayer money back. Our bill creates a brand new 100% tax on any money obtained through government fraud.

[00:03:14]If you stole money from the state, you owe every dollar back to Minnesota as a tax on top of any criminal penalties or restitution you already paid. If you are convicted of a fraud crime by a state or federal court, if the Department of Revenue determines you have committed fraud, if you receive a payment from a fraudster as an accomplice, you will reimburse the taxpayers for your crimes.

[00:03:42]We will use this to finally give motans a relief they have been begging for. The proceeds will be deposited in a tax relief account to be used only for income and/or property tax relief for motans.

[00:03:55]The people earned this money the old-fashioned way through hard work.

[00:04:00]They deserve it back.

[00:04:04]And I'll turn it over to Representative Anderson.

[00:04:09]>> Thanks, Senator Juscowski. Um, I want to start out this uh this bill 4950 uh when we uh first uh got the jackets. Uh I gave it around to some folks on the tax committee and I started talking to Democrats. Uh as you may know, I'm on the fraud committee and uh most of the Democrats on the fraud committee have signed on to this bill. In fact, there are 11 Democrats in the House that have signed on to the bill and the bill is full. We have 35 authors. I'm going to be cloning this bill. Uh, and I believe we'll have another 35 authors because people, no matter what what party you are, no matter what part of the state you represent, people are angry about the fraud. They are angry about the dollars that have flown out the door.

[00:05:00]Uh, they are angry uh about, frankly, uh, services that are are probably going to be cut.

[00:05:09]uh because the dollars are going to fraudsters or have been going to fraudsters.

[00:05:14]People are angry about the taxes that they're paying and all the the 10 billion dollars uh that we've taxes were raised over the last couple years. Uh they're angry about that when they see all these dollars going to fraud. Today is tax day. It's April 15th and people are writing checks if they haven't already uh to the state and to the feds.

[00:05:37]And imagine, you know, how you feel, how we all feel about writing taxes or writing checks when we know that that the state is lo has lost $9 billion to fraud.

[00:05:50]Uh we, Senator Daskcowski and I uh are talking with the Department of Revenue about this. This is serious bill. This is not a messaging bill. This is very serious. And we're talking to the Department of Revenue about, you know, what what's going to be the easiest way for them to implement this. Uh we have a hearing in taxes on the 30th. So this bill already has a hearing. Uh it will I'm sure go out be passed out of taxes because there are many Democrat uh and Republican members on the tax committee that are authors on this bill. So it'll move forward. Uh it may take the to be uh there may be an amendment to make it more of a uh uh just in talking to the department of revenue to to make it more of a an addition to income. Uh so it's more like you know like you didn't pay your taxes on the dollars that you that were fraudulent. Um because we want this to work without without uh having the department of revenue have to you know do anything new. Um, and so that will evolve over the next week uh before we hit our our our uh our tax committee and I hit our hearing. But our goal is to pass this because the people in Minnesota, they want their money back and it's our job as legislators to do everything we can uh to make that happen. So that's what this bill is about and uh we'll take questions. So thanks bipartisan. Where are the Democrats?

[00:07:20]>> Well, I don't know. I tried to get them to come. They were all invited. So, uh, Elen said he has health until 2:45. I said, "Well, this leave." [laughter] So, uh, but I would encourage you to, uh, to ask any of them, uh, to talk to any of them that are on the bill. There are 11 Democrats on the bill, >> especially in the House.

[00:07:40]>> In the House, yes. Senator Rest is in the uh is on the bill in the Senate. Uh, and I know that Representative Dascowski is talking to other Do you want to Yeah, Democrats.

[00:07:52]>> Yeah, we only have five slots on the bill in the Senate, so we filled it up rather quickly. I've talked to some other Democrats that are interested in signing on. I may do a clone as well.

[00:08:00]So, um, if we can get some momentum, and I think we can. We've got a hearing and scheduled in the House and hopefully we can get one in the Senate as well and get this bill moving.

[00:08:10]>> When's your >> uh the Senate?

[00:08:13]>> Oh, no, we don't have one yet.

[00:08:16]>> Right.

[00:08:16]>> The bill was just dropped last week. Uh the tax bills have to start in the house as you know. So uh we do have a hearing on the 30th. Are >> you aware of any other states doing anything like this?

[00:08:28]>> Uh no I'm not. Unfortunately uh at least from a public perspective the the fraud problem in Minnesota is is >> many other states that have this problem.

[00:08:38]>> Right. Yeah.

[00:08:40]>> To this extent.

[00:08:41]>> Talk about this. I guess how it relates to as I understand DHS even separate from criminal investigations can do some clawback of some money and then certainly there is a recovery in some of the criminal cases um but there's only so much that I think prosecutors can recover in terms of some of the stolen funds. So how would that impact the calculation and then are you seeing this as kind of like a a search charge on top of what taking back as much as you can?

[00:09:12]answer.

[00:09:13]>> Yeah. Um, so we have people who have received kickbacks and bribes in these fraud schemes.

[00:09:22]I'm not aware of any of them that have been convicted so far. I'm not any aware of any of them that have been indicted so far. I'm guessing they're probably on the lower part of the food chain of the kind of the criminal um pursuit around this. Um, and they may never be held accountable. Who knows? uh depending on what law enforcement can and does do. Uh but the bill doesn't care what the criminal side does and the people of Minnesota want their money back. They want all of it back and this is an effort to take it back. Um we don't have anything in the bill to say if you had to pay restitution for your crime that the Department of Revenue is going to stop chasing you. Um the bill as it's written now says uh the department of revenue will go after 100% of the fraud.

[00:10:14]So we of course we've got of course of course we've got Go ahead.

[00:10:19]>> Um you know wouldn't the criminal investigations impact this? Right?

[00:10:23]Because how else would the Department of Revenue know if it's fraud or not?

[00:10:27]>> Yeah. Well, they would know from the criminal from the criminal investigations for sure, but they would also learn from some of their data analytics and some of their IRS sharing data and some of the other things that they have access to um which is, you know, outside of the normal criminal network.

[00:10:45]>> CMS at all some of this is coming from the federal government originating like would they want any share of the tax?

[00:10:56]I don't think we're going to give it to them belongs to the people of Minnesota.

[00:11:00]Uh well, you know, the bills and back to your question, the bill's going to receive some hearings. So, this is the first draft of the bill. It very likely will change as it goes forward. Maybe that's something that's a consideration.

[00:11:11]Maybe somebody will want to consider, you know, if you had so much restitution, then that gets removed or something. I don't know. Um that wouldn't be my intent, but who knows what the product will be down the road.

[00:11:23]>> Kind of following up on Caroline's question. You've got to use round numbers somebody who stole $10 million and they're ordered to pay restitution of eight and you've got this you know gap of $2 million. Do you know how big kind of that gap is in the universe of fraud that we're seeing in Minnesota?

[00:11:41]Like how much is not getting recovered through criminal investigation?

[00:11:44]>> As I mentioned in uh feeding our future out of the 300 million that was stolen so far 66 has been retrieved so far. So 22%.

[00:11:56]>> Is there concern that it would be hard to practically um implement this? Not I mean I know Anderson talked about maybe not adding too much for the department of revenue but you know these are people who are fraudsters who are good at hiding their money who you know you can only get 66 million back and the 300 million some of it is unreoverable. So like to get a real sense of like how much you're taxing here I guess is my question. Yeah, >> good night. So, the the way the bill is drafted, if you read it, it's for people who have been convicted of fraud. So, I just want to point that out. So, that was to your earlier question. Um, you know, I guess, you know, the thing that comes to my mind is, okay, they're paying restitution of 20% or something.

[00:12:40]That's what the courts charge. It's the other 80%. That would or well, it's a whole the whole 100%, but those are the dollar. So, how does how does the fraudster pay that back? this is a tax and they essentially won't pay they either have to pay their tax or they're going to have the you know this is going to get garnished or they're going to go after assets they're going to go after all sorts of things or they're going to end up in bankruptcy. I mean that's essentially what would happen right? Um but that's okay. That's okay because we have to do everything we can uh you know to get every dollar back that we can for the citizens of the state. Regarding the CMS thing, this is a separate thing. You know, they the the this is a state tax.

[00:13:32]This is essentially a state penalty on people who have stolen money from the citizens of Minnesota. Whether that's Medicaid dollars that came from the feds, it's still, you know, motans still pay right into Medicaid and we know Medicaid has issues with funding. You know, there's, you know, could be going belly up and this is probably a big part of the reason. So, so it's still motans paying these taxes.

[00:13:56]>> Money that's recovered when it comes in is it coming into the department of revenue as an income tax? Could it be a dedicated fund that's >> Yeah. So we we so right now it's it creates a new tax. Um so you remember remember before new income tax. Well, it's an excise tax. It's a type of income tax. But you remember before we had any legalization of marijuana in this in the state, there was still a tax on marijuana even though it wasn't legal and you weren't supposed to be doing. So this is somewhat analogous to that. um you're not supposed to be doing this is a crime and if it happens uh there would be a tax on it. Now the department has said they would like to maybe turn it into a penalty. It would be easier to administer. So that's what Senator Anderson are going to be meeting with the department on on how to make it so it works best for them from an administration standpoint. We don't want it to cost them all kinds of extra resources and stuff. Back to the the federal question >> back to that and just general fund or would there be any thought of dedicating Well, right now we right now we create a and certainly as a bill proceeds that'll be discussion. Where does the money go?

[00:15:09]You mean um >> rebate when you say it goes back to >> Well, we we put in a tax relief fund right now. The bill creates a tax relief fund and puts it all in there. And so, you know, that might be some of the discussion about the federal stuff because uh Feeding Our Future was federal money, too. Um and half of the Medicaid money is federal money, half of it state. So some of that's a discussion, deliberation maybe that needs to happen in committee with a bill. Uh but this is a first effort at uh at bringing forward a bill that is a novel idea that uh motans are begging for. Do >> you have time? You talk about being a novel idea. It's got to go through the house.

[00:15:51]>> Patty's pory.

[00:15:52]>> No.

[00:15:54]Um yes, as I say, why isn't everything anything getting done yet? Well, I mean, back the, you know, nothing is getting done yet, right? Or nothing's completed.

[00:16:04]So, there's been a lot of hearings. We have a hearing in the tax committee.

[00:16:07]That's the only place this needs to go.

[00:16:10]Um, regarding the fund that it sets up, it doesn't say where those dollars would go. And that's something that, um, you know, could be decided by, you know, through committee or could be decided by a future legislature, frankly. And frankly from my perspective, you know, it doesn't matter so much to me as long as it goes to motans. Um, as long as we get the money back. Um, so, uh, and that doesn't have to be a part of the legislation, but this can be a standalone tax bill. It doesn't even need to be part of an omnibus tax bill.

[00:16:42]Uh, and it can, you know, tax bills start in the House and we can pass this and send it over to the Senate.

[00:16:48]>> How do you ask, this is the only increase that Republicans are >> Yep. [laughter] [gasps] >> Yeah.

[00:16:59]>> How do you adjudicate like somebody who has benefited from a fraud scheme but hasn't been convicted? I mean I before you could garnish their wages, there has to be some kind of due process so that they can say no, I didn't actually benefit from this fraud scheme. How do you kind of how does that process work?

[00:17:16]Um that's something that um actually someone did bring up to me um and another legislator, Democrat legislator actually they were trying to figure that out and benefit in the sense of if you work for a company that did you know that was fraud jump but you weren't aware of that you know when you had wages. So um those folks are not going to be convicted of fraud. So someone who's a line item employer. So, we need to make that very clear and as we are going through this, you know, next week and a half because it's a short bill, you know, we need to make sure they're not caught up in it. We're not trying to catch up, you know, someone that may have worked for a company, didn't know what they were doing. It's really the the owner of the company, an individual who defrauds like the food, you know, the SNAP thing that's been in the press in the last couple days, you know, that's an individual, right? So, yeah.

[00:18:04]So, that's what we're targeting. Let me let me explain that too. So in the bill in addition to convictions we do include the ability of u the commissioner. So it says if an or individual organization that the commissioner has determined to be obtained by fraud. So um you know when we remember you're talking about the department of revenue and taxes here. They don't have the police come forward and say that uh you owe taxes because you got this income over here.

[00:18:33]That's the department of revenue using their methods to ascertain that you have that revenue. Uh there is a mechanism in the bill for appeal that you could appeal through the normal tax court process. That's in the bill as well. So um it's it's beyond the scope of just convictions at least the way it's written, but of course that'll be discussed as it moves forward as well.

[00:18:54]>> Caroline about Republicans supporting taxes.

[00:18:58]I haven't use this against you.

[00:19:01]>> I haven't voted for a tax increase in 19 years.

[00:19:05]>> In 19 years. I've never put my name on a tax increase bill and this is the first one.

[00:19:11]>> But have you guys honestly talked about it heading into campaign season running again that you won't use it against each other?

[00:19:17]>> Well, yeah. I mean I I don't know. I have we haven't got that far yet, but certainly that's part of the discussion.

[00:19:24]Can I just say um you know at there are some very conservative legislators on this bill very okay including the guys that had the ethics complaint a bunch of them were on here right the thing early today which I missed because in taxes I wanted to watch it but um so I don't think that's a fear for any of us so if we can tax fraudsters 100% to get the money back for our citizens uh I We are united no matter what part of the political spectrum we're on in doing that. So, >> there he is. I need Representative Elkins, [laughter] please. They said, "Where's your de Where's the Democrat?" And I said, "Well, we get one maybe." [laughter] >> We had I know I know everybody Yeah.

[00:20:17]Representative Elkins is uh on the fraud committee. Um, and so I've been working with them for the last two years. And uh, I don't know if you want to just say something quick on the bill. We just talked about it quick and >> I thought it was a really clever idea.

[00:20:30]>> Yeah. Thank you.

[00:20:31]>> It's a really clever idea. It's kind of like that old drug tax that we had on on illegal drugs. So, who knows if it'll ever get enforced, but it can't hurt anything. And I thought it was a really clever idea.

[00:20:42]>> Yeah.

[00:20:46]>> Any other questions? So, thank thank you. Thank you all. one thing.

[00:20:50]>> Oh, >> so members of press, if uh there is a website out there, min mnf fraudfiles.com.

[00:20:57]Check it out. It's got all kinds of information about uh fraud. I'm sure you've been scouring the planet for this stuff. So, uh we call it the Take It Back Act.

[00:21:07]>> Yeah.

[00:21:08]>> Thanks.

[00:21:08]>> Thanks for coming.

[00:21:09]>> Thanks.

[00:21:11]>> Catch my breath now.

[00:21:14]free of committee.