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OPUS
OSINT - Publicly Available Sources January 06, 2026

minnesota child care investigation 2026-01-06

Analyst: OPUS (Claude Opus 4.5) Project Milk Carton
minnesota child care investigation 2026-01-06

minnesota child care investigation 2026-01-06

MINNESOTA CHILD CARE FACILITIES INVESTIGATION

Taxpayer-Funded Nonprofits, Board Cross-Pollination & Red Flag Analysis

Classification: OPEN SOURCE INTELLIGENCE REPORT Date: January 6, 2026 Analyst: OPUS - Project Milk Carton Case ID: PMC-MN-CHILDCARE-2026-001

EXECUTIVE SUMMARY

Minnesota’s child care sector is experiencing an unprecedented crisis involving hundreds of millions of dollars in suspected fraud across multiple taxpayer-funded programs. This investigation identifies key nonprofit organizations receiving public funds, maps board member networks, documents cross-pollination patterns, and provides a comprehensive red flag analysis with actionable solutions.

KEY FINDINGS AT A GLANCE

Metric Value Risk Level
Federal CCDF Funding (FY2024) $172,454,729 -
State CCAP Spending (FY2024) $283,939,391 -
Estimated Fraud Rate (OIG Finding) 11% CRITICAL
Potential Improper Payments $231.4 million CRITICAL
Active Fraud Investigations 62+ HIGH
Providers Payments Stopped (2021-2025) 79 MODERATE
Criminal Cases Referred (Annually) 5 LOW (Under-resourced)
Feeding Our Future Fraud Total $250+ million CONFIRMED
Convictions in FoF Case 57+ of 78 indicted ONGOING

PART 1: FUNDING LANDSCAPE

1.1 Child Care Assistance Program (CCAP)

Administering Agency: Minnesota Department of Children, Youth, and Families (DCYF) Prior Agency: Department of Human Services (DHS) - until July 1, 2024

Program Statistics (FY2024): - Families served monthly: ~12,000 - Children served monthly: ~23,000 - Average monthly payment per family: $1,710 - Total federal CCDF allocation: $172,454,729 - Total state CCAP spending: $283,939,391

Provider Types: - Licensed Family Child Care Providers - Licensed Child Care Centers - License Exempt Centers - Legally Non-Licensed Providers

Source: Minnesota DCYF

1.2 Head Start / Early Head Start

Federal Oversight: Office of Head Start, Administration for Children and Families (HHS) Regional Office: HHS Region Five (Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin)

Minnesota Head Start Programs: - 33 Federal Early Head Start and/or Head Start programs - 7 Tribal Head Start programs - 1 Migrant Head Start program

Recent Funding Opportunity: - Grant: HHS-2024-ACF-OHS-CH-R5-0122 (October 2023) - Amount: $18,312,969 - Recipients: Up to 5 organizations

Source: ACF.gov

1.3 Community Action Agencies

Minnesota has 24 Community Action Agencies and 10 Tribal governments delivering early childhood services statewide.

Funding Sources: - Minnesota Community Action Grant (State) - Community Services Block Grant (Federal) - Head Start/Early Head Start (Federal) - Child Care Development Block Grant (Federal)

PART 2: KEY NONPROFIT ORGANIZATIONS

2.1 Minnesota Child Care Resource And Referral Network

Field Data
EIN 41-1730422
Address 10 River Park Plaza, Suite 820, Saint Paul, MN 55107
Tax Status 501(c)(3), exempt since February 1993
Total Revenue (FY2024) $9,578,543
Total Expenses (FY2024) $9,246,252
Total Assets $8,449,489
Revenue Source 95.7% Contributions (Government Grants)

Executive Compensation (FY2024): - Ann McCully (Executive Director): $126,354 - Calahena Merrick (Associate Director): $115,740 - Nou Thao (Associate Director): $105,000

Board Officers: - Marcia Schlattman (Chair) - Liz Kuoppala (Vice Chair) [CROSS-POLLINATION IDENTIFIED] - Brittany Clausell (Secretary) - Maria Steen (Treasurer)

Source: ProPublica Nonprofit Explorer

2.2 Minnesota Head Start Association Inc

Field Data
EIN 36-3579547
Address PO BOX 667, Sauk Rapids, MN 56379
Tax Status 501(c)(3), exempt since May 1989
Total Revenue (FY2024) $437,524
Total Expenses (FY2024) $457,555
Total Assets $377,688
Executive Compensation $186,635 (40.8% of expenses)

Key Leadership: - Kraig Gratke (Executive Director) [DUAL ROLE - See MN CAP below] - Mary Lockhart Findling (Chairman) [CROSS-POLLINATION IDENTIFIED] - Sandy Simar (1st Vice Chair) [CROSS-POLLINATION IDENTIFIED] - Michelle Wilkowski (2nd Vice Chair) - Skip Ferris (Treasurer) - Becky Shogren (Secretary) [CROSS-POLLINATION IDENTIFIED]

Source: ProPublica Nonprofit Explorer

2.3 Minnesota Community Action Partnership

Field Data
EIN 41-1407742
Address 100 Empire Dr Ste 202, Saint Paul, MN 55103
Tax Status 501(c)(4), exempt since October 1992
Total Revenue (FY2024) $1,229,528
Total Expenses (FY2024) $1,094,348
Total Assets $955,661

Key Leadership: - Lori Schultz (Executive Director): $147,605 + $20,114 other - Kraig Gratke (Ed Mn Head Start Assoc): $114,941 + $19,066 other [DUAL COMPENSATION] - Lori Schwartz (Board Chair) - Amanda Mackie (Vice Chair) - Teresa Carter (Treasurer) - Debi Brandt (Secretary) [CROSS-POLLINATION IDENTIFIED]

Board Members with Cross-Organization Ties: - Sandy Simar [Also: MN Head Start Assoc Board] - Mary Lockhart Findling [Also: MN Head Start Assoc Chair, UCAP] - Liz Kuoppala [Also: MN Child Care Resource Network] - Maureen Rosato [Also: Kootasca]

Source: ProPublica Nonprofit Explorer

2.4 Parents In Community Action (PICA)

Field Data
EIN 41-0956226
Address 700 Humboldt Ave North, Minneapolis, MN 55411
Tax Status 501(c)(3), founded 1969
Total Revenue (FY2023) $38,609,291
Total Expenses (FY2023) $35,365,641
Total Assets $20,603,690
Employees 416

Executive Compensation (FY2023): - Jay Alexander (Executive Director/Head Start Director): $200,070 - Su Melton (Finance Director): $199,271 - Wanda Vorters (Director of Program Initiatives): $140,091

Program Scale: - 13-14 Head Start centers in Hennepin County - 2,500+ children served annually - $37.3M in grants/contributions

Board Members on MN Head Start Assoc: - Monshari Chandler (Director Affiliate) - Judy Baker (Staff Affiliate) - Rico Alexander (Additional Member)

Source: CauseIQ

2.5 United Community Action Partnership (UCAP)

Field Data
EIN 41-0904860
Address Marshall, Minnesota
Total Revenue (2022) $26,450,501
Employees 362
Volunteers 829
Board Size 27 members (Tripartite structure)

Executive Leadership: - Debi Brandt (Executive Director) [Also: MN CAP Secretary]

Board Structure: Tripartite (1/3 low-income consumers, 1/3 public officials, 1/3 private sector)

Counties Served: 9 counties in southwestern Minnesota

Cross-Pollination: - Mary Lockhart-Findling (Director on MN Head Start Assoc, also Chair) - Becky Shogren (Staff on MN Head Start Assoc, also Secretary) - Harlie Larson (Parent representative on MN Head Start Assoc)

Source: UCAP Board

PART 3: BOARD CROSS-POLLINATION ANALYSIS

3.1 Network Map - Key Individuals Serving Multiple Organizations

                    MARY LOCKHART-FINDLING
                    ┌─────────────────────┐
                    │                     │
        ┌───────────┼───────────┬─────────┼───────────┐
        │           │           │         │           │
        ▼           ▼           ▼         ▼           ▼
   MN Head      UCAP      MN CAP    (Chair of    Multiple
   Start Assoc  Director   Board     MN HS Assoc) Affiliations
   (Chairman)

                    KRAIG GRATKE
                    ┌─────────────────────┐
                    │  DUAL COMPENSATION  │
        ┌───────────┴───────────┬─────────┘
        │                       │
        ▼                       ▼
   MN Head Start          MN Community
   Association            Action Partnership
   (Executive Dir)        ($114,941 compensation)

                    SANDY SIMAR
                    ┌─────────────────────┐
        ┌───────────┴───────────┬─────────┘
        │                       │
        ▼                       ▼
   MN Head Start          MN CAP
   Assoc (1st VP)         Board Member

                    LIZ KUOPPALA
                    ┌─────────────────────┐
        ┌───────────┴───────────┬─────────┘
        │                       │
        ▼                       ▼
   MN Child Care          MN CAP
   Resource Network       Board Member
   (Vice Chair)

                    DEBI BRANDT
                    ┌─────────────────────┐
        ┌───────────┴───────────┬─────────┘
        │                       │
        ▼                       ▼
   UCAP                   MN CAP
   (Executive Director)   (Secretary)

3.2 Cross-Pollination Summary Table

Individual Org 1 Role 1 Org 2 Role 2 Org 3 Role 3
Mary Lockhart-Findling MN Head Start Assoc Chairman UCAP Director MN CAP Board
Kraig Gratke MN Head Start Assoc Exec Director MN CAP Paid Staff - -
Sandy Simar MN Head Start Assoc 1st Vice Chair MN CAP Board Families First Board
Liz Kuoppala MN Child Care R&R Vice Chair MN CAP Board - -
Debi Brandt UCAP Exec Director MN CAP Secretary - -
Becky Shogren MN Head Start Assoc Secretary UCAP Staff Rep - -
Maureen Rosato Kootasca Unknown MN CAP Board MN HS Assoc Friend

3.3 Implications of Cross-Pollination

CONCERNS: 1. Reduced Independent Oversight: Same individuals approving grants, policies, and operations across multiple funding streams 2. Conflict of Interest Risk: Board members may prioritize organizations where they hold executive positions 3. Echo Chamber Effect: Limited diversity of perspective on governance decisions 4. Accountability Gaps: Who investigates whom when the same people oversee multiple entities?

NOTE: Cross-pollination is not inherently fraudulent - it’s common in nonprofit sectors with limited talent pools. However, it creates vulnerability that requires enhanced controls.

PART 4: ACTIVE FRAUD INVESTIGATIONS & SCANDALS

4.1 Feeding Our Future - $250 Million Fraud (CONFIRMED)

Status: PROSECUTED - 57+ convicted

Key Facts: - Founded 2016 as legitimate nonprofit - Claimed to serve 90 million meals in <2 years (120,000/day) - Only ~3% of funds actually spent on food - Created 250+ “meal sites” and dozens of shell companies - Received $3.4M (2019) → $200M (2021)

Mastermind: Aimee Bock (convicted March 2025) - 7 federal charges: wire fraud, bribery, conspiracy - Ordered to forfeit $5.2 million

Political Connections: - Minneapolis Mayor Jacob Frey (aide Abdi Salah pled guilty) - State Senator Omar Fateh (supporter) - Council Member Jamal Osman (wife operated site receiving $400K+)

Demographic Note: 82 of 92 indicted defendants were Somali American (per US Attorney’s Office)

Sources: - DOJ Press Release - FBI Coverage

4.2 Child Care Assistance Program (CCAP) Fraud - ONGOING

Status: 62+ ACTIVE INVESTIGATIONS

Federal OIG Finding (May 2025): - 19% of sampled payments (38/200) had compliance violations - Estimated 11% of ALL payments had errors - Potential impact: $231.4 million across 1,150+ providers

State Enforcement (2021-2025): - 79 providers had payments stopped - 5 criminal referrals per year (average) - $2.4 million recovered by 4 investigators

Specific Problem Facilities:

Facility Violations Funding Received Status
Quality Learning Center 95 (2019-2023) $7.8M Conditional license removed 2024
Minnesota Child Care Center 36 (2021-2023) $2.67M (FY2025) Under investigation
Future Leaders ELC Unknown $3.68M (FY2025) Under investigation
Minnesota Best Child Care Unknown $3.4M (FY2025) Under investigation

Federal Response (Dec 2025 - Jan 2026): - HHS froze all CCDF payments to Minnesota - FBI Director Kash Patel: “This is just the tip of a very large iceberg” - 245+ fraud tips received since Dec 30, 2025

Sources: - HHS OIG Report - KSTP Investigation

Program Estimated Fraud Status
Feeding Our Future $250M+ Prosecuted
Medicaid (14 programs) Unknown Paused/Audited
Autism Therapy Services Unknown Under investigation
Housing Stabilization Unknown System shut down
Home Health Assistance Unknown Under investigation

Federal Prosecutor Statement: “Half or more” of the $18 billion billed to 14 Minnesota DHS programs since 2018 may be fraudulent.

PART 5: RED FLAG ANALYSIS

5.1 CRITICAL RED FLAGS (Immediate Action Required)

# Red Flag Evidence Risk Level
1 Massive Payment-Before-Verification Biden-era rule required payment before attendance confirmed CRITICAL
2 11% Error Rate in OIG Audit 38/200 sampled payments had compliance failures CRITICAL
3 Only 4 Fraud Investigators for $300M+ program Grossly understaffed for fraud detection CRITICAL
4 95 Violations = $7.8M in Payments Quality Learning Center received funds despite massive violations CRITICAL
5 No Real-Time Attendance Tracking OIG recommendation still unimplemented CRITICAL

5.2 HIGH RED FLAGS (Systemic Vulnerabilities)

# Red Flag Evidence Risk Level
6 Dual Compensation Across Nonprofits Kraig Gratke paid by both MN Head Start Assoc AND MN CAP HIGH
7 Executive Director = Board Secretary (Different Orgs) Debi Brandt: UCAP ED + MN CAP Secretary HIGH
8 One Person Chairs Multiple Oversight Bodies Mary Lockhart-Findling across 3+ organizations HIGH
9 Background Check Failures Not Stopping Payments MN Child Care Center: 6 unchecked staff in 2023, 8 in 2024 HIGH
10 Licensing Violations Disconnected from CCAP Eligibility Violations alone don’t affect payment eligibility HIGH

5.3 MODERATE RED FLAGS (Governance Weaknesses)

# Red Flag Evidence Risk Level
11 Tripartite Boards May Lack Financial Expertise Consumer/public/private sectors may lack fraud detection skills MODERATE
12 Small Nonprofit Networks = Limited Talent Pool Same names appearing across organizations MODERATE
13 Executive Compensation 40%+ of Expenses MN Head Start Assoc: 40.8% to executives MODERATE
14 Rapid Scaling Without Proportional Oversight FoF: $3.4M → $200M in 2 years MODERATE
15 Delayed License Revocations Conditional licenses maintained despite ongoing violations MODERATE

5.4 POLITICAL RED FLAGS

# Red Flag Evidence
16 Governor Dropped Reelection Tim Walz withdrew January 5, 2026 amid scandal
17 State Officials Disputed Federal Findings Initial state response dismissed fraud concerns
18 Political Staff Implicated Mayor’s aide pled guilty in FoF case
19 Council Member’s Family Received Funds Jamal Osman’s wife operated $400K+ site

PART 6: SOLUTIONS & RECOMMENDATIONS

6.1 IMMEDIATE ACTIONS (0-30 Days)

Priority Action Responsible Party
1 Implement Real-Time Attendance Verification DCYF
2 Suspend Payments to Providers with 10+ Unresolved Violations DCYF
3 Expand Fraud Investigation Team (4 → 20+ investigators) DCYF/Legislature
4 Require Photo/Video Documentation Already mandated by HHS
5 Cross-Reference CCAP Billing with License Status Daily DCYF IT

6.2 SHORT-TERM REFORMS (30-90 Days)

Priority Action Responsible Party
6 Mandate Board Conflict Disclosure for All Funded Nonprofits Attorney General
7 Prohibit Dual Compensation from State-Funded Entities Legislature
8 Create Public Dashboard of Provider Violations + Payments DCYF
9 Require Independent Audits for Providers >$500K Annually DCYF
10 Implement Whistleblower Rewards (% of Recovery) Legislature

6.3 LONG-TERM STRUCTURAL REFORMS (90+ Days)

Priority Action Responsible Party
11 Consolidate Child Care Oversight (Single agency, single database) Governor/Legislature
12 Board Term Limits (Max 6 years cumulative across funded nonprofits) Legislature
13 Rotate Auditors (No provider uses same auditor >3 years) DCYF
14 Federal/State Data Sharing Agreement DCYF + HHS
15 Automatic License Suspension at Violation Threshold Legislature

6.4 BOARD GOVERNANCE RECOMMENDATIONS

For Individual Nonprofits: 1. Disclose ALL other nonprofit affiliations on Form 990 Schedule O 2. Recuse from votes on grants/contracts involving affiliated organizations 3. Annual conflict of interest attestation with penalty for false statements 4. Independent audit committee (no members with executive roles elsewhere) 5. Whistleblower policy with external reporting mechanism

For State Oversight: 1. Public registry of nonprofit board members across child care sector 2. Automated alerts when same individual serves on 3+ funded boards 3. Required reporting of all compensation from state-funded sources 4. Annual governance training for boards receiving >$1M in state funds

PART 7: DATA SOURCES & METHODOLOGY

7.1 Primary Sources

Source Data Type URL
ProPublica Nonprofit Explorer IRS 990 Filings projects.propublica.org/nonprofits
HHS TAGGS Federal Grant Awards taggs.hhs.gov
MN DHS Licensing Lookup Provider Licenses/Violations licensinglookup.dhs.state.mn.us
HHS OIG Reports Audit Findings oig.hhs.gov
DOJ Press Releases Criminal Cases justice.gov/usao-mn
Minnesota Legislative Auditor State Audits auditor.leg.state.mn.us

7.2 News Sources (Cited)

  • Fox News - Minnesota fraud coverage
  • CNN - Child care investigation
  • CBS Minnesota - Local investigations
  • MPR News - Feeding Our Future trial
  • KSTP-TV - CCAP investigations
  • Newsweek - Violation analysis

7.3 Limitations

  1. Not all 990 filings fully digitized for board member extraction
  2. Some nonprofits file 990-EZ or 990-N without detailed compensation
  3. Real-time violation data requires direct database access
  4. Some investigations ongoing - facts may change

APPENDIX A: COMPLETE BOARD MEMBER LIST

Minnesota Head Start Association Board (Current)

Directors: - Penny Paul (TCC) - Sandy Simar (Families First) - Michelle Wilkowski (Mahube Otwa) - Mary Lockhart-Findling (UCAP) - Chair - Lee Turney (Leech Lake Band of Ojibwe) - Monshari Chandler (PICA)

Staff: - Edna Tudon (Tri Valley Opportunity Council) - 2nd Vice Chair - Vicki Dunlop (CAPRW) - 1st Vice Chair - Jillayne Schuder (Families First) - Judy Baker (PICA) - Becky Shogren (UCAP) - Secretary - Deb Wege (Scott Carver Dakota CAP)

Parents: - Nicolette Housey (NWCA) - Harlie Larson (UCAP) - Danielle Lemond (Tri-County CAA) - Acacia Ward (Families First/AEOA) - Cassie Adams (AEOA)

Additional: - Dennis DeMers (Tri-Valley) - Rico Alexander (PICA) - Skip Ferris (AEOA) - Treasurer

Friends: Maureen Rosato (Kootasca)

Staff: Kraig Gratke (Exec Dir), Paula Hanson (Membership)

APPENDIX B: FINANCIAL SUMMARY TABLE

Organization EIN Revenue (Latest) Expenses Assets Top Exec Comp
MN Child Care R&R Network 41-1730422 $9,578,543 $9,246,252 $8,449,489 $126,354
MN Head Start Assoc 36-3579547 $437,524 $457,555 $377,688 $186,635*
MN Community Action Partnership 41-1407742 $1,229,528 $1,094,348 $955,661 $147,605
PICA 41-0956226 $38,609,291 $35,365,641 $20,603,690 $200,070
UCAP 41-0904860 $26,450,501 - - Unknown

*Executive compensation as % of expenses

APPENDIX C: VIOLATIONS TIMELINE

Quality Learning Center Daycare

Year Violations Key Issues
2019 Multiple Initial documented issues
2020 Multiple Hazardous items near children
2021 Multiple No records for children
2022 Multiple Continuing compliance failures
2023 Multiple 95 total violations accumulated
2024 10 Conditional license removed
2025 Ongoing Under federal investigation

TOTAL FUNDING RECEIVED (2019-2025): $7.8 million

APPENDIX D: FRAUD SCHEME COMPARISON

Metric Feeding Our Future CCAP (Estimated)
Total Stolen/At Risk $250+ million $231+ million
Time Period 2020-2022 Ongoing
# Defendants/Providers 78 indicted 62+ under investigation
Conviction Rate 73%+ (57/78) Pending
Recovery Rate ~24% ($60M of $250M) Unknown
Primary Vulnerability Fake meal counts Fake attendance
Political Fallout Governor withdrew Federal funding frozen

CONCLUSION

Minnesota’s child care nonprofit sector presents a textbook case study in how well-intentioned public funding can be systematically exploited through:

  1. Weak verification requirements (payment before proof)
  2. Understaffed oversight (4 investigators for $300M+)
  3. Disconnected systems (licensing vs. payment databases)
  4. Board cross-pollination (same people overseeing multiple funding streams)
  5. Political resistance to accountability (initial dismissal of fraud concerns)

The solutions are clear and implementable. The question is whether Minnesota’s leadership has the political will to act.

Report Prepared By: OPUS - Project Milk Carton Intelligence Unit Classification: UNCLASSIFIED // FOR PUBLIC RELEASE Distribution: Unrestricted

“The welfare of children is not a partisan issue. It is a human issue.” - Project Milk Carton

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Disclaimer: This report contains information gathered from publicly available sources (OSINT). All findings should be independently verified. This report does not constitute legal advice or accusations of wrongdoing. Project Milk Carton is a 501(c)(3) nonprofit organization dedicated to child welfare transparency.