In Minnesota, federal authorities are currently investigating what they describe as "industrial-scale" fraud across multiple state-run social service programs, with potential losses estimated to reach into the billions. A major focus of this investigation is the Child Care Assistance Program (CCAP), which has come under national scrutiny following viral reports showing licensed centers, such as the Quality Learning Center in Minneapolis, appearing deserted despite receiving millions in taxpayer funds.
In response, the U.S. Labor Department deployed a "strike team" in late December 2025 to probe these benefit programs, and the FBI has surged investigative resources to the state to dismantle networks exploiting federal aid.
Federal prosecutors have already dismantled a $250 million scheme involving the Feeding Our Future network, which allegedly used sham vendors and shell companies to steal food aid intended for children during the pandemic.
Beyond child nutrition, investigators are focusing on 14 high-risk Medicaid programs, including Housing Stabilization Services (HSS) and autism services, which have cost the state approximately $18 billion since 2018; officials suggest as much as half of that spending may be fraudulent. These schemes often involved "billing for services that were never provided" and using the stolen funds to finance lavish lifestyles and real estate projects both in the U.S. and abroad.
In California, large-scale fraud has centered significantly on the Employment Development Department (EDD), which has been attempting to rebuild its systems after losing tens of billions of dollars to suspected fraud during the pandemic era.
While the state has implemented new verification tools that prevented thousands of fraudulent unemployment and disability claims in 2024 and 2025, the EDD remains under a massive $1.2 billion overhaul to address years of missed red flags and systemic failures.
Additionally, federal grand juries in California have recently unsealed indictments for large-scale commercial fraud, including a $109 million scheme to evade customs duties and conduct international money laundering through Bay Area businesses
In response, the U.S. Labor Department deployed a "strike team" in late December 2025 to probe these benefit programs, and the FBI has surged investigative resources to the state to dismantle networks exploiting federal aid.
Federal prosecutors have already dismantled a $250 million scheme involving the Feeding Our Future network, which allegedly used sham vendors and shell companies to steal food aid intended for children during the pandemic.
Beyond child nutrition, investigators are focusing on 14 high-risk Medicaid programs, including Housing Stabilization Services (HSS) and autism services, which have cost the state approximately $18 billion since 2018; officials suggest as much as half of that spending may be fraudulent. These schemes often involved "billing for services that were never provided" and using the stolen funds to finance lavish lifestyles and real estate projects both in the U.S. and abroad.
In California, large-scale fraud has centered significantly on the Employment Development Department (EDD), which has been attempting to rebuild its systems after losing tens of billions of dollars to suspected fraud during the pandemic era.
While the state has implemented new verification tools that prevented thousands of fraudulent unemployment and disability claims in 2024 and 2025, the EDD remains under a massive $1.2 billion overhaul to address years of missed red flags and systemic failures.
Additionally, federal grand juries in California have recently unsealed indictments for large-scale commercial fraud, including a $109 million scheme to evade customs duties and conduct international money laundering through Bay Area businesses