WATCH: The waste, fraud and abuse plaguing blue states

Video

Thursday, May 7, 2026

OPINION:

O.J. Oleka, CEO of the State Financial Officers Foundation, joins Washington Times Commentary Editor Kelly Sadler on Politically Unstable to expose the rampant fraud draining taxpayer dollars across the country. From fake childcare centers in Minnesota to fraudulent hospices in Los Angeles County, Oleka breaks down how these schemes flourish, and why Democratic leaders in states like Minnesota and California turned a blind eye.

[SADLER] It’s happening in every state, sometimes at differing levels. We saw an FBI raid in Minnesota where they’re still uncovering fraudulent child care, daycare centers, autistic centers. We’ve seen in California when it comes to hospice fraud. O.J., why is this so prevalent?

[OLEKA] Sadly, it’s prevalent because in our system, fraud has become a feature and not a bug. There really is an industry of people who decide they want to come to the United States, or they’re already citizens here, and they want to engage in the American public sense of charity, of genuine desire to help other people — they want to steal from it.

And as a result, you have this industry of fraud that’s really been developed. And I am certainly one that wants to applaud the vice president of the United States. I want to applaud our conservative state financial officers, the auditors, treasurers and comptrollers who are trying to end this fraud industrial complex that exists. It’s gone on far too long. I’m excited we finally have people in government who are willing to do the work to stop it.

[SADLER] What happens between the breakdown of federal dollars going to states? I mean, let’s use the case example of Minnesota. They’re getting federal taxpayer monies. Is it then the state’s responsibility to be good stewards of those taxpayer funds and make sure that they’re being used how they are intended to be used?

In the state of Minnesota, for example, it was for child care and learning centers — or rather “learing centers.” Oftentimes, individuals applied for these federal dollars, said that they set up these centers, but they serviced no children. They were just there in name alone on the books, but getting millions of dollars annually. How does this happen and where is the breakdown?

[OLEKA] Unfortunately, the breakdown happens in a few different places. One, you’ve got the eligibility and verification portions on the front end, which the federal government, in terms of their federal agencies, they’ve got an opportunity and a responsibility to work through. So effectively, they’re supposed to be looking to make sure that the people who are applying for these federal funds are actually eligible to get it and that they verify that eligibility.

We’ve suggested — the State Financial Officers Foundation, my organization — we’ve suggested that there are ways that the agencies can talk better together in real time to effectively root out some of the fraudsters who go from agency to agency trying to steal monies. Then you get at the state level where that verification goes down to the states. They’re the ones actually dispersing those funds to those organizations and to those individuals. That same kind of verification can happen there.

And then also you’ve got good state auditors — or at least in the sense you should have good state auditors — who then on a regular basis are routinely auditing and examining to make sure, again, that that money is going to the place that it ought to go.

This is the problem in Minnesota and a number of our different states. In Minnesota, they don’t have a state treasurer who’s elected at all. And the auditor doesn’t have the requisite authority to do this particular job well. So what we’re excited about is that our state financial officers — again, that’s your treasurer, your auditor and your comptroller — our folks are conservatives. They’re elected statewide, 41 of them across 28 different states. They actually take their job seriously.

And what they do is they make sure that the treasurers on the front end, they do try to verify and make sure that there are good eligibility protocols in place. And then the auditors on the back end do their version of that, too. It’s why they found roughly six billion dollars of improper payments, waste, fraud and abuse that they stopped and called attention to in 2025, and why they found and safeguarded twenty-eight billion dollars overall for the American people. Our people work hard. They take their job seriously, and we need more of them across the states in the country.

[SADLER] Why does this seem to be a red state / blue state issue? Minnesota is obviously a blue state. You have the governor there, Tim Walz, and you have Keith Ellison as their AG. There were whistleblowers that came forward — this is not a new scandal — over the years alerting them of this potential fraud. But they did nothing about it. It seems like they didn’t care to do anything about it until the feds had to get actively involved.

[OLEKA] What we have found is that there are really three things that are required for a state auditor or a state treasurer or a state financial officer to root out fraud and to do it well. One, you need to actually have the knowledge and the tools. You need to recognize the things that you could actually do — again, the verification eligibility requirements on the front end, the auditing, the special examinations on the back end. You need to know what you’re able to do.

But you also need the statutory authority to be able to do it. In a lot of cases, as I mentioned, the treasurer just doesn’t exist in Minnesota and the auditor doesn’t have the authority. So you may have the knowledge, but not the authority. And the third one, I think, is what’s at play here, Kelly, is that you need the political incentive — or in a word, courage. You need to be in a position where you actually want to stand up for the American people. You actually want to benefit your constituents. And sadly, what we’ve seen is that in many states where fraud is rampant, where it is ugly and it is corrosive, they just don’t have the political courage to do the right thing.