Hearings to examine blowing the whistle, focusing on inside the grift that keeps giving.

On small business and entrepreneurship to order. When Americans send their tax dollars to Washington, they deserve to know the money they worked hard to earn will be carefully safeguarded and responsibly spent. Yet fraudsters are ripping off one point four billion dollars of taxpayer money every single day. That's a lot of money to go missing without anyone noticing. Like I've always said, if you can't find waste, fraud or abuse in Washington, there can only be one reason. You weren't looking. Well, all around the country folks are now looking and what they are seeing is shocking. From vacant daycare centers in Minnesota to phony hospices in Los Angeles, To bogus home care services in Ohio, taxpayer dollars intended to care for children, the elderly, and the disabled are being stolen by serial criminals and fraud tourists. The fleecing is often occurring in plain sight. There are even fraud influencers shamelessly sharing their scams on social media. One woman who describes herself as a, quote, Con artist, end quote, flaunted her pricey purchases and lavish lifestyle on TikTok and Instagram, all financed by defrauding the Small Business Administration and federal programs for the unemployed. An SBA employee actually advertised and promoted her pyramid scheme on social media. She recruited accomplices online, who were instructed how to submit bogus applications for small business assistance, which she then used her insider access to approve in exchange for kickbacks. She got away with it for years, stealing more than three point five million dollars from four different programs. A rapper posted a music video on YouTube bragging about he got rich quickly by filing over a million dollars' worth of bogus unemployment claims and even flashing the checks in the video. Missing a rap video on YouTube is one thing, but bureaucrats handing out benefits are also missing the extensive rap sheets of repeat offenders fraudulently applying for and receiving taxpayer money. More than thirteen hundred companies owned by felons were given financial support by the during the pandemic despite not being eligible for the support due to their criminal histories. Other fraudsters are not quite as blatant, but just as obvious, like the Quality Learing Center in Minnesota. If you can't even spell learning properly, it's a safe bet that not a lot of learning is actually happening there, but a whole lot of fraud might be. The absence of children at the child care center should have been another dead giveaway. Yet Minnesota gave nearly ten million dollars to the now-closed child care center. I'm revealing today that the Quality Learing Center also received nearly a quarter of a million dollars from the SBA during the pandemic, including two hundred and twenty-one thousand dollars from the Paycheck Protection Program and a ten thousand economic injury disaster loan. I am asking the SBA Office of Inspector General to investigate these loans and recover every last cent. The con-owners at the Quality Learing Center are going to leer the hard way that fraud no longer pays. Cash from PPP was also handed out to other companies with names so outrageous no one could possibly believe they were real, such as Satanic Lives Matter, and others so tasteless I can't even say them out loud. Some submitted applications using the names of well-known celebrities and fictional characters like Charlie Brown and Nancy Drew and yet were still approved. In other cases, the bilking is being done by the very bureaucrats overseeing the benefits. Over the years, I've documented countless examples of government employees caught with their hands in the cookie jar, embezzling millions of dollars and abusing their positions for personal gain, rather than public good. At the Department of Veterans Affairs, for instance, a service representative who had been previously fired from a police department for exhort exhorting drivers at traffic stops, again a police officer who had been exhorting drivers. at traffic stops was shaking down disabled veterans for bribes to, quote, grease the wheels to speed up the approval of languishing claims. And here's how, this is the actual language, folks. Here's how a three thousand three hundred and eighty-five dollar kickback paid to him via Venmo was listed On the memo line, and this makes my blood boil. I am a veteran. Taking care of disabled veterans is something that we should do. But this is what the veteran submitted through the payment for Venmo to this fraudster. Notice what it says, folks. I'm gonna say it out loud, so close your ears if you're gonna be offended. Crooked shit. I know, it's appalling. K. It makes my blood boil. Government grift and graft is endless, but the public's patient patience isn't. So why is it allowed to continue? Civil servants flagging fraud in Minnesota's meals program were told to look the other way for years. A twenty-five year employee of the state's Department of Education said the abuse was, quote, "an open secret," end quote, and she would get her, quote, " hand-slap" by management for bringing it up. As a result, fraudsters were literally allowed to take two hundred and fifty million dollars from the mouths of children. Today we will hear from two long-time civil servants from Minnesota, who will share their own inside stories of how the consequences for flagging fraud can be far greater than committing the actual fraud. These taxpayer heroes were bullied by the bureaucracy for doing their jobs too well, and daring to call attention to abuses. While they faced retaliation, hundreds of their colleagues in Minnesota's fraud-riddled Department of Human Services were rewarded with financial bonuses. We will also hear from an investigative journalist who used Medicaid billing information provided by Doge to go door-to-door on the ground in Ohio to uncover fraudulent home care service providers that are serving no one other than themselves. When the Daily Wire broke this scandal just a few weeks ago, the state immediately pushed back, saying there are quote " extensive oversight mechanisms in place." That sounded a lot like the response in Minnesota, where the state insisted the questionable child care centers exposed by YouTuber Nick Shirley were quote " operating as expected." And folks, that is exactly the problem. It's the grift that just keeps on giving. If someone can't see all the red flags waving here, maybe it's because they are the ones of the they are one of the red flags. K? So on an encouraging note, the Vice President's task force to eliminate fraud is already protecting taxpayers by stopping payments to hundreds of suspicious service providers and chasing down criminals. Today's hearing will assist that effort by providing insights from our witnesses into how to spot the warning signs of rip-offs and cover-ups so we can put the fraud fluencers and government grifters out of business. And I now recognize ranking member Markey for his Thank you. Um all the data. So, we really run a lot.

This committee? Just last month we worked together to pass legislation to give investigators more time to find and verify cases of fraud in SBA programs, while ensuring that enforcement by the Department of Justice carried out fairly. We did that together. We passed a bill on the center floor. But there has been a far larger crime that has been committed against the American taxpayers. And you don't have to be Sherlock Holmes to figure out this crime. President Trump has been engaged in unprecedented corruption and self-dealing since taking office. And yet the massive, blatant, unprecedented fraud and corruption occurring at the White House is not on the agenda today, nor is it on the agenda of any Republican chaired committee in the House or Senate. The scope, the scale of Trump's fraud boggles the mind, since it would take much longer than my five minutes uh to cover everything that has happened during his second term, I'm just gonna stick to the most recent updates. Over the weekend we learned that during January through March of this year, Trump made thousands of stock trades involving major companies that his administration deals with. And these trades amounted to at least two hundred and twenty million dollars and resulted in enormous profits for Trump. On Monday of this week, we learned that Trump settled his lawsuit against his own administration in exchange for a massive slush fund of taxpayer dollars to dole out checks for his MAGA lobby uh uh loyalists, including January sixth insurrectionists. Not to compensate the hundred and fifty police officers who were injured or died on that day, but to compensate the insurrectionists. That's how upside down this world is. Now, when I went to law school, I was taught, like every lawyer in America, that you can't sue yourself, you can't settle with yourself, and you can't pilfer a legitimate victim compensation fund and turn it into a taxpayer funded payoff scheme. But Donald Trump thinks that he can grift nearly one point eight billion dollars from taxpayers without consequences, from congressional republicans or from his own Department of Justice. Congressional Republicans are in a witness protection program on Trump's, Trump's festival of fraud. They are nowhere to be found. To make matters worse, on Tuesday morning, just yesterday, Trump's Department of Justice also agreed, in writing, to tie its own hands so that the US government can't go after the shady financial dealings of Trump, his children, his cronies, his corporations, and this is plainly speaking corruption on stilts. And I would just hope that Republicans in the Senate would join with Congressman, Republican Congressman, uh Brian Fitzpatrick of uh Pennsylvania who was asking the right questions about this fund. He said We have to figure out the sources of the fund, is it an appropriation from last year, where did the money come from? What are the limitations that are put around the money? Are there constitutional questions? Are there statutory questions? What falls within Article one authority? These are all the things we're trying to unpack right now. And he said, this just in, that he is now working to kill Trump's one point eight billion dollar slush fund through legislative and other sources. So I'll be waiting to hear Republicans speaking up. Cuz it's pretty obvious that this is just one big slush fund for Trump, his children, his cronies and his corporations, okay? So with no God rails, no nothing around it, uh and all of it under the jurisdiction of the United States uh Congress. And now we have an additional feverish, you know, effort to hand over another one billion dollar in tax spare funds for a White House ballroom uh uh that Trump said would cost nothing. And that's just one week. That's just one week I'm giving you in Trump's circus of corruption. It's clear that Trump lives by the saying, rules for thee, but not for me and my family. As a result, Trump will continue to use the Department of Justice to enrich himself and his MAGA loyalists. It is being reported that he is already considering issuing two hundred and fifty pardons uh for the two hundred and fiftieth anniversary of America and if the past is any indication, many of those pardons will go to allies and convicted fraudsters. Trump's pardons for fraudst fraudsters have already wiped out more than a billion dollars in restitution and allowed criminals to keep stolen money. I agree, we should be doing more to prevent fraud, especially with this administration that is the which is the grift that keeps on giving. That is fleecing the taxpayer and rewarding its friends with clemency, no-bid contracts, and firing cash. But we should also be focusing on the trump-sized hole in the American people's pockets. We should address rising gas prices, electricity costs, health care premiums, food prices, but instead the instances of fraud that the congressional republicans and this administration choose to focus on, are solely to score political points. demonizing communities of color and attacking blue states. Last week Trump said that he doesn't think about the economic pain Americans are feeling due to the war in Iran, not even a little bit, he said. That's a direct quote. Instead, he's focused on padding the pockets of himself and his family with money from Gulf countries and other foreign entities. So let's not fall for Trump's art of the steal, the most alarming fraud, the fraud doing by far the most damage to the American people is taking place just down the street by the Grifter-in-Chief Donald Trump who's planning his next Art of the Steel right now. So I thank you, Madam Chair, and I look forward to the hearing.

Thank you, Ranking Member Markey, and again I want to extend a very warm welcome to all of our witnesses today. I am thankful that you took your time to join us and share your expertise and insight with this committee. I will now introduce our majority witnesses, and first we have Miss Fey Bernstein. Is it Steen or Stein?

Steen.

Okay, Steen. Miss Fey Bernstein. Miss Bernstein is a farm girl from Castleton, North Dakota, who left North Dakota to pursue her bachelor's and master's degree. Afterwards, she earned her J. D. from Hamline University School of Law in St. Paul, Minnesota. Before moving into public service, she worked at a mental health treatment center for ten years and since two thousand five has worked for the Minnesota Department of Human Services, serving in key contract management and compliance roles. Next, Mister J. Swanson, he is a retired criminal investigator for the Minnesota Department of Human Services Office of Inspector General, who oversaw investigations into the Minnesota Child Care Assistance program, or C-CAP. Prior to joining the department, Mister Swanson was a Minnesota State Trooper for more than thirty-four years, retiring as captain in twenty fourteen. Thank you for your service, Mister Swanson. Both of these civil servants faced intimidation and bullying for fighting fraud. As someone who has learned the hard way that this doesn't make you many friends, I salute you for your integrity and thank you for your courage on behalf of all Iowans and taxpayers across the country. We need more folks like you answering the call to public service. Our third witness, Mister Luke Rosiak, is an investigative reporter at the Daily Wire who has covered waste in the federal government for nearly twenty years. This month, using Doge release data, Mister Rosiak broke news of a billion dollar fraud scheme in Ohio's Medicaid reimbursement program. Nearly one hundred businesses were listed at the same address, a building he visited and found mostly vacant. Many of these businesses also received SBA assistance. Luke is an award-winning journalist who last year won the prestigious Dow Prize for Excellence in Investigative Journalism. Fittingly, as the goat of government waste reporting, Luke also has two pet goats. Thank you very much for your time, Mister Rosiak, and thank you again, and I now recognize Ranking Member Markey to introduce his witness.

Thank you, Madam Chair, and I'm proud to introduce Donald Sherman, who is one of our nation's leading experts in government ethics, the rule of law and anti-corruption policies, having served as key voice for democratic renewal and accountability outside of government and in senior positions in the House and the Senate. uh and in the executive branch. He has served as special assistant to the president at the White House. He has served as senior counsel for Claire McCaskill uh when she was in the the Senate. Uh and before that she he worked as uh chief of staff and senior counsel for oversight and investigation in the office of general counsel at the US Department of Housing and Urban Development and he also served as chief oversight counsel for the House Oversight Committee. Uh he began his commi- uh career on Capitol Hill as counsel on the non-partisan staff of the House Ethics Committee, where he investigated uh alleged ethical violations by members of Congress and House employees. He is an honest graduate of Georgetown University and earned his uh Juris Doctor from the Georgetown University Law Center. Thank you, Mister Sherman.

Wonderful. Thank you, Ranking Member Markey, and briefly I'll take a moment just to the lighting system that is in front of you. There uh are green, yellow and red light. Uh green means go, yellow means you're running out of time, and red means to go ahead and conclude your remarks. I ask unanimous consent that the witnesses' full statements be included in the record, without objection so ordered. As your written testimony has been made part of the record, the committee asks that you limit your oral remarks to five minutes. And with that, Miss Bernstein, you are recognized for five minutes for your testimony.

Thank you, Chair Ernst, Ranking Member Markey, and distinguished members of the committee. Thank you for the opportunity to testify today. My name is Fey Bernstein. I am a twenty year employee of the Minnesota Department of Human Services, and I am a Democrat. What that means to me is that I wholeheartedly support social service programs, and I am willing to pay the taxes that are necessary to support those programs. But it also means that I cannot tolerate when there is theft from those programs, because I come from a family that needed this support. There is no dignity in poverty. I watched The Waltons as a child, and The Waltons is an absolute lie. That is not what poverty looks like. In my life, poverty looked like going to bed many nights hungry, cold, and scared about the next outburst of violence that was gonna happen in my home. And that is why I chose to work for the Department of Human Services twenty years ago. But in twenty nineteen, I noticed contracting processes that weren't acceptable. And naively, I naively tried to get these problems solved, Because I thought I should. And it's not only that I should, state statute doesn't only permit me to talk about what I was seen,

What's

but it actually requires me to talk about what I was seen. What I saw and what I will describe in a moment are uncontroversial, they are clear-cut violations of law. For instance, conflicts of interest. in contracts we were giving out. No guardrails for double billing on contracts. Contracts that were unfairly awarded. Large advances given before work had even begun. And money that was awarded with no rhyme or reason as to the dollar amount. So what happened to me when I spoke about these things? I was walked out of the building, down a embarrassingly long hallway uh with a director in front of me and a deputy director behind me and everyone staring at me and the silence was so loud. I was trespassed from my own workplace and I was a victim of a smear campaign. I was investigated for being of course a uh incompetent employee, but I was investigated for bugging offices, and I was called racist. Uh, and if anyone has ever been called racist, you will know that that is career suicide. It is professionally, and in my case personally, um, an an extremely damaging statement. The environment of retaliation does two things in a workplace. Most work stops, legitimate work stops, because the environment is incredibly chaotic and everyone is just trying to figure out who's gonna be the next target and trying to avoid them being targeted. And it also opens the door to fraud. And in Minnesota, we know that's what happened, the door was thrown open. In Minnesota we have an unknown amount of of fraud. We we won't know the dollar amount for years. But these thefts, this fraud will impact families like I grew up in for years and years to come. Our Medicaid package, which right now is something that we brag about rightfully, it's expensive, it is fantastic, it serves so many people in so many ways. and it will have to be contracted. Whether it is one billion dollars or nine billion dollars, I don't really care about those those arguments on the exact dollar amount because to me, fraud is not a dollar. Fraud is about is about real families i i such as I grew up in. They're it's not the Weltons, it's it's it's not Norman Rockwell. And we all must do everything we can to prevent theft from these programs. Thank you.

Thank you very much for that testimony. Um, next we will proceed to Mister Sherman. You are recognized for five minutes.

Chair Ernst, Senator Markey, and members of the committee. Thank you for the opportunity to testify on the dangers that fraud poses to small business. My name is Donald Sherman. I am President and CEO of Citizens for Responsibility and Ethics in Washington, a non-partisan organization dedicated to fighting corruption and promoting ethical government. Small business is the lifeblood of the American economy, accounting for nearly forty-six percent of private private sector employment. Unfortunately, the Trump administration's corruption continues to harm our economy, especially small business. For example, the administration has routinely invoked special powers to award government contracts to President Trump's preferred vendors. More than half of the contracts canceled by Doge were held by small businesses. But the administration is fighting to shield Doge from transparency. And when the president grants access to businesses that pay money to his companies, PACs and pet projects, Big business gets a seat at the table that most small businesses cannot afford.

Money.

Last week, corporate giants like Meta, Apple, and Tesla, who contributed to Trump's inauguration, Ballroom, or Super PAC, were part of the White House delegation to China. Yet small businesses, devastated by tariffs, including from China, did not get comparable representation. Financial crimes like fraud invariably harm small businesses. In twenty twenty five, Seventy-two percent of small businesses were hit by fraud, scams, or ransomware, costing them tens of billions. Small businesses typically have limited resources to invest in anti-fraud controls, like external audits, fraud training, or tip lines. Smaller budgets also make financial losses and recovery more difficult. Recognizing these challenges, SBA has historically provided resources for small businesses to identify fraud. SBA's Office of Inspector General ensures that federal funds designated for small businesses aren't exploited including by investigating those who have defrauded the government of millions in COVID relief funds and small business loans. The unique vulnerabilities facing small business demand that the government take a holistic approach to fighting fraud. Unfortunately, this administration has been flagrantly unserious about tackling fraud, and instead fervently committed to enabling fraudsters that put small business at risk. I want to briefly highlight three such concerns in my testimony today. One, removal of oversight mechanisms including inspectors general, two, staffing cuts at agencies that combat fraud, and three, pardoning fraudsters with impunity. In his second term, President Trump has decimated watchdogs that investigate fraud within the executive branch. firing numerous inspectors general, such as SBA IG Hannibal Ware, creating many IG vacancies that remain unfilled. The White House has proposed cutting SBA OIG's budget and also hamstrung funding for the IG community's oversight body. As Chair Ernst said last year, IG's quote " serve a vital role in uncovering waste in Washington and must be empowered to continue looking out for taxpayers" end quote. When IGs are under attack, fraudsters win and small businesses lose. The president's gutting of the federal workforce has also severely hindered agencies that combat fraud, like the SBA. Of particular concern is the howling out of the Justice Department, which lost around ten thousand employees and closed over nine hundred cases of federal program or procurement fraud in twenty twenty five. In addition to undercutting fraud prevention, the President has enabled fraudsters and wiped out payments owed to fraud victims, by pardoning his political allies and donors. In one egregious example, Trump pardoned a donor who was convicted of defrauding investors of millions, and whose company received four point one million dollars in PPP small business funds. The pardon also prevents fraud victims from access to restitution. Another fraudster, pardoned by the President, illegally withheld thirty-nine million dollars in payroll taxes in his nursing home businesses harming patients and workers and left small businesses with unpaid bills. In closing, fraud is a problem not limited to a single state or program, yet the administration's anti-fraud efforts have targeted disfavored states and programs while enabling politically connected fraudsters who harm small business. Congress can advance the fight against fraud by adopting a holistic approach, including supporting IG independence, federal civil servants that investigate fraud, and legislation that prohibits the exchange of donations for pardons. Thank you. I look forward to your questions.

Thank you, and uh, Mr. Sherman. Next we will go to Mr. Swanson. You're recognized for five minutes.

Chair Ernst, Ranking Member Markey, and distinguished senators. For five years I was the Manager of Recipient and Child Care Provider Investigations at the Minnesota Department of Human Services. My team and I investigated fraud committed by child care centers receiving payments from the Child Care Assistance program. Our team of fraud investigators and BCA agents had a front row to watch the fraud as it happened and we came face to face with the people committing it on a regular basis. Our team of investigators and supervisors were all retired police officers with decades of experience conducting and supervising criminal investigations. The child care centers we investigated were not legitimate businesses, but were designed as a vehicle to steal as much money as possible, as quickly as possible. We received tips from a wide variety of sources. One day we received a phone call from a CCAP mother who stated that a child care center owner had stopped paying her the monthly cash kickback that they had agreed upon. Another day we received a call from a fire department inquiring if a child care center was still operating, because they had stopped there on numerous days to complete a fire safety inspection, but there were never any staff or kids there. I checked and learned the center was listed as open and had billed us approximately one million dollars in the past twelve months. Despite our best efforts, we soon concluded that fraudulent centers were opening faster than we could close them down. Due to the volume of fraud tips, we had to restrict ourselves to only investigating centers receiving at least seven hundred thousand dollars a year in annual funding. In August of twenty eighteen, I drafted a document in response to a request from the Legislative Auditor to provide a summary of the fraud trends in CCAP. A senior DHS official became angry when they reviewed the document and ordered me to delete a number of paragraphs where I described the scope of the fraud, saying, " This will make us look bad." I advised this official that I believed what they were telling me to do was illegal, because Minnesota law requires state employees to cooperate with the auditor and to provide information upon request. I soon learned that my refusal to hide this information from the auditor angered a number of high-ranking officials and within days the same official told me, quote, " You better be ready for the blanks Within weeks of that incident, DHS signed a ninety thousand dollar consulting contract with a firm that had no experience in evaluating public benefit program integrity internal control weaknesses and C cap I'm sorry whose mission I learned was not to evaluate internal control weaknesses and C cap but to discredit the statements I made regarding the scope of the fraud during a meeting with the consultants, they told me I had no basis for my claim of a hundred million dollars of annual fraud in CCAP. I advised them that they should be careful what they put in their report, because if they minimized the fraud, when the scale of this became public, their company would lose all credibility. I advised them that the fraud was so massive that one day it would come to light. In late twenty eighteen and end of twenty nineteen, our unit was directed to undergo a continuous improvement plan, or CIP. This process began with the lead CIP official berating our team for roughly thirty minutes, telling us in essence that we were incompetent and terrible employees. A DHS assistant commissioner was in the room at this time. Over the next six months, we spent so much time in meetings with this official that practically no investigative activity was completed. In June of twenty nineteen, this official dictated the following changes in how our unit would operate. First, the unit supervisor and I would no longer make the decision on which cases would be investigated. Instead, a committee of three would do this, two of which would be DHS officials with no experience in conducting financial fraud investigations. I would be the third committee member, although I would be clearly outvoted. Next, the amount of CCAP funding received by a center would no longer be considered in prioritizing cases. We were directed to spend fifty percent of our time on centers receiving small amounts of funding, which resulted in fifty percent fewer hours that we spent investigating centers receiving over a million dollars a year. Our team would not be allowed to contact the BCA agents working child care fraud cases unless we received prior approval from a DHS official. The BCA agents were advised to vacate their offices in our building where they had worked for the past five years. At this point, I advised our team that I was not gonna be a party to what was gonna happen, and I submitted my resignation and retirement notice. Thank you.

Thank you for your testimony. Next we'll go to Mister Rosiak, you're rec- recognized for five minutes.

Thank you, Senator Ernst, Senator Markey, committee members. It's an honor to be here to discuss the Daily Wire's investigation into Medicaid home health waiver programs in Ohio. Now in February, the Department of Health and Human Services released a database showing which corporations had been paid by Medicaid. Medicaid is fifteen percent of the federal budget, but until then, we really had no idea where it went. And when there's no transparency, bad things can happen. Now, Medicaid originally granted states waivers for in-home health care on the theory that sending nurses to people's houses was cheaper than sending them to a nursing home. But then this, the federal government permitted some states to have waivers adding what's called personal services, meaning not just nurses but uh people without a medical license to bill hourly for so-called for quote chores like cooking and cleaning and private residences. Um many of these aides are actually the family members of the people receiving the services. And in Ohio at least they can even bill for tasks like quote conversation and companionship. So in some cases people are actually billing Medicaid to hangout with their own family members at home. Um or, you know, in some cases doing things, if the family member really is sick, that they would do anyway, as as most of us would, for our family member for free. Um this program is highly susceptible to fraud because the government is paying invoices for things that happen between family members inside private residences. Is a mother gonna tattle on her son for not vacuuming uh vacuuming the carpet, even though he billed Medicaid for it? In other cases a personal services aide will have multiple clients, not just their relatives. Um, but we, that's vulnerable to kickback schemes. Um, these are people who maybe just get a cut of what the provider is getting paid by Medicaid, and no services are provided. And perhaps most importantly, there are people who aren't actually very sick at all, who find ways to get a doctor's sign-off. The doctors are in on this scheme, and I'd be very interested to see a list of the doctors who have approved the most home health care authorizations. You've heard of pill mills. There are also paper mills, these doctors that just sign the forms. Now, Ohio's Medicaid uh home health program alone spends a billion dollars a year. More money was spent on the personal services, not the nurses, but the regular people, than any billing code for which data is available, including really expensive actual medical stuff. So it gets to the scale of how much this program has grown. Now, the data in Ohio shows extreme ab abnormalities. Fifteen percent of all home health spending in Ohio, pretty big state occurs in a four square mile area in northeast Columbus. Now, when you drive down the street there, it seems like most businesses on some blocks have closed down and been replaced with these Medicaid home health care businesses. These are middlemen that have the so-called NPI number necessary to bill Medicaid and then they pay the people who are at home with their families while keeping a cut. Now, some of these companies, tiny empty offices and run-down strip malls bill the government as much as one million dollars a month I first noticed that something was odd actually because of SBA loans. Uh many of the people running these companies weren't what you might have assumed, people who had dedicated their lives to this field of caring for people, they had trained in that, um it's what it's what they they cared about. Um they actually had numerous different businesses in different industries. They might get an SBA loan for a business such as a grocery store, on that loan, open another business like trucking and get PPP loans, and then be running this Medicaid business on the side. It's like a one million dollar a year side hustle. Um, one of these buildings in Columbus had ninety-four Medicaid companies in it that build more than sixty-six million dollars over the last few years. One landlord owns seven buildings on the same street that have three hundred Medicaid companies in them and they build more than a quarter billion dollars, so that's just one one landlord's tenants. Now when I went to these buildings, almost all the offices were empty. They had signs saying employees had stepped out to lunch, even if it was early in the morning or late in the afternoon, and there was oftentimes piles of mail at the bottom of the door, showing that they hadn't been there in months. Um because of this new HHS data set, the public could for the first time do do basic research on who was actually behind these little store fronts that previously you might not have thought twice about. Um it didn't seem like anyone from the government had ever looked into these owners because when I looked them up for example one of them True Home Healthcare LLC is owned by a guy named Aliu Conteh and his wife Mamusu Kanu now Conteh is a career criminal with numerous convictions for fraud and offenses like child endangerment I talked to him and Conteh told me he was quote " just too dumb to know what is law" his wife was convicted of theft three times in three years after she was arrested felony malicious wounding in Virginia, they went up to Ohio specifically to get in the Medicaid business. The Medicaid, the nursing board had banned the husband from working as a nurse in home health care, um, because of his criminal record, but Medicaid let him start his own business, which billed one hundred thousand dollars a month. When I asked Alu about this, he threatened my family. Now, a thir- another company, uh, was a janitor who renamed her company to be Mental Health, and then build one hundred thousand dollars in the first month. So, the original justification that this saved money compared to nursing homes doesn't hold water because in many of these communities many people have worked with doctors to claim that they are sick and now uh you know Willie Sutton, when he was asked why do you rob banks, because that's where the money is. Um in New York State, home health care aid is now the most common job in the state and so I think it's a great time for Congress to reevaluate how sick

Thank you very much um for the testimony today. Now we'll start our question answer session, and I will defer um my questions until the end of uh all of our Republican members. Um so we will go ahead and start with Senator John Husted.

Thank you uh Madam Chair, and um Appreciate all of you being here today, for those of you who have stepped up and done some courageous work in rooting out fraud uh in your states uh and uh and state in which I live, I thank you for that. Um it's r- this uh reminds me um Madam Chair of a of a floor debate I heard one time when I was in the legislature where one individual employed her party not to vote for the bill because it was full of their pork, not our pork. Meaning that sometimes we think fraud is bad when it's the other team's problem, but but not when it's our problem. Well, it's all bad. It's all bad. Cuz it's stealing from the taxpayers and it's undermining the very programs that are designed to help those who are in need. That's why it's bad, for everyone. And um, I will tell you that as I I listen to these conversations, Um, uh, Mister Rosiak, I love the fact that you got the data on the Medicaid, because there was a project I worked in in Ohio called data dot Ohio dot gov that put all of this information out there so that enterprising people like you could look through the data and help sort out these things and get uh to make government more efficient. And so uh it's very rewarding to me to see that you used that tool for the research that you did and um but I want you to explain how the fraud happens, exactly how they structure it, because this this is not, they learned to do, this is a scam across the country. People are learning how to do it and then they are moving to states and im and then and then uh employing these tactics. Explain precisely how the fraud works and how you think we can fix it.

Sure, um it's a great question. There are organized groups, basically these middleman companies will knock on doors until

So multi-generational families al- already living in the same place taking care of one another.

Exactly. And they will direct that person to go to a particular doctor, they will tell them what symptoms to claim, and then the company and the family member basically split the costs. And oftentimes the the the el- the, say, the mother-in-law or the older generation, they're not actually being taken care of.

So, so the Medicaid provider Gets part of the cut and the family member gets part of the cut if they all participate in the scheme.

Correct, and and they have a certain number of hours and maybe sixteen hours a day, and so it's not a whole lot per hour, I think it might be like twenty eight bucks, but if you're working sixteen hour days that really adds up. And it turns out that oftentimes the older generation that's reportedly receiving care, they're not, they're oftentimes the matriarchs of the family, they're the ones actually doing all the cooking and cleaning. So it's people who aren't really sick, they don't really need the hours, and then it's just a small hourly wage at massive scale of very you know, half the people in certain communities are on this program.

And so, what what's the solution? First of all, you could eliminate the services, and I understand the case that people make, they say, well, if it's actually an a a sick individual, the cost of long-term care is l- is greater than the cost of this, so this is why the program was created, but it's now being abused. Uh, other than eliminating it, is there an any other, any other way to crack down on the fraud?

I think that you have to look at um who's at the top of this pyramid scheme, which is the doctors. Um this might seem like it's um maybe there's bipartisan agreement on this, maybe the Democrats would agree to bring some of this actually in house and make more government doctors in charge of authorizing these. I'm pretty concerned with Congress essentially delegating its power of the purse to private doctors, because what you can do is doctor shop, and you can find the doctor who is either just very lenient, cuz they don't really care, it doesn't cost them anything to sign that form, or is in on it taking kickbacks. And so if you look at the way the Department of Veterans Affairs works, the Gov- the the veteran has to go to a government doctor to get that initial disability determination that ensures that the same criteria is applied for everybody across the board I think it's if it's good enough for a veteran, it's good enough for uh s- a Somali person on uh on Medicaid in in Northeast Columbus.

And so i- i- in addition to that what you're wh- wh- what we also uh are seen uh e-verification tools, other things like that can be helpful but they're still not still if still if you got you gotta go after the root of the problem. And the states who receive most of that money from the federal government sometimes don't have much of a financial incentive to crack down on it. Is that correct?

I think that's exactly right, it's a matter of incentives, the people don't who are on Medicaid don't have an incentive not to sign up for these services cuz it doesn't cost them anything and then the states

Yeah.

It would take a long time to put all these people in jail, so I think you're on the right track coupling the broad prosecutions with policy reforms.

Yeah. Well, th- thank you um and and uh I will just finish with this. Um in the working family tax cut plan, We put provisions in there that said you have to do more frequent Medicaid checks. Why? Because there were there are millions of people who were illegally on the rolls who shouldn't be there because of lax federal standards in eligibility. So across the board, just upping the eligibility checks on things like we did in the working family tax cut plan, will help. But yes, more must be done and it and and we shouldn't tolerate it anywhere. It's a fraud that rips off from the taxpayers and jeopardizes the programs for people who are truly in need and so I thank all of you uh for your work to try to root out the fraud. Thank you.

Yeah, thank you, Senator Husted. Next I'll uh recognize Ranking Member Markey.

Yep, thank you, Madam Chair. Mister Sherman, um, you noted in your testimony that it was concerning that today's hearing ignores the dismantling of federal oversight and fraud prevention and the massive corruption taking place right down the street. The federal judge, the federal judge overseeing Trump's ten billion dollar lawsuit had been actually considering dismissing the case over concerns of collusion. IRS lawyers recommended to the Justice Department that the case be dismissed, not settled. The Treasury Department's top lawyer, Brian Morrissey, a Trump appointee, resigned after the slush fund was announced on Monday. And just today, two Capitol Hill police officers, Harry Dunn and Daniel Hodges, who defended the Capitol on January sixth, thank you, officers, filed suit against Trump to dismiss the fund. Here's what their suit says. It correctly points out that the President's slush fund would endanger their and other police officers' lives by encouraging violence and financing rioters under the assumption that they would be subsequently compensated by Donald Trump's slush fund. The President simply cannot go around the Constitution to finance his henchmen and political machine by taking money from the American people. So, Mister Sherman, what does the establishment of an almost one point eight billion dollar slush fund to reward political allies mean for the presidency and preventing corruption in politics and in government?

Thank you for the question, Senator. Um, the President's slush fund uh is an unprecedented and stunning uh example of corruption, um, particularly as everyday Americans are struggling with groceries, small businesses are struggling to make ends meet. Uh, the president is demonstrating that his priority is enabling individuals who engaged in a legal activity to overturn an election. And as you said, um, this is not just an example of grift, but it is an example of grift that will enable political violence in the future.

So thank you. So in your testimony, I just wanna highlight this for the committee, you noted that in Trump's second term alone, his pardons and commutations to convicted fraudsters have wiped out over one point five billion dollars in restitution, fines, forfeitures, and money otherwise owed to fraud victims and American citizens. And many of these fraudsters have donated directly to Trump and to Republican candidates. One year ago, Trump commuted the sentence of a Florida health care executive convicted of the largest therapy-related Medicare fraud in history stealing two hundred and five million dollars. It's now being reported that the president is considering issuing two hundred and fifty pardons for the two hundred and fiftieth anniversary of America, and we should just expect those pardons to be doled out as favors two wealthy donors and political allies and two fraudsters who are friends with the president. So, mister Sherman, when a president commutes a sentence or issues a pardon that ends restitution obligations, what happens to those victims? Is there any other way that they can recover what they are owed?