John Hinderaker calls it “the worst scandal in Minnesota history,” and one can only hope he’s right. The local Fox affiliate spent five months tracking the flow of cash going out in carry-on baggage through Minneapolis-St. Paul airport, and more importantly, where it originates. That turns out to be in large part from government day-care payments that end up being for non-existent enrollees (via Instapundit):

In the morning of March 15, Fox 9 chased a tip about a man who was leaving the country. Sources said he took a carry-on bag through security that was packed with $1 million in cash. Travelers can do that, as long as they fill out the proper government forms.

Fox 9 learned that these cloak-and-dagger scenarios now happen almost weekly at MSP. The money is usually headed to the Middle East, Dubai and points beyond. Sources said last year alone, more than $100 million in cash left MSP in carry-on luggage.

The national, go-to expert on what is behind these mysterious money transfers is Glen Kerns.

“What we were interested in is where it was going,” Kerns said.

He is a former Seattle police detective who spent 15 years on the FBI’s joint terrorism task force, until his retirement.

“It’s an outright crime, it’s unbelievable,” he said.

The cash is going through hawalas, supposedly to family members of refugees, where banking systems are either unreliable or non-existent. We’ll come back to this in a moment, but it’s not clear just how much gets to “families” at all. Kerns discovered that some hawalas have other priorities:

“I talked to a couple of sources who had lived in that region and I said, ‘If money is going to this Hawala do you think it is going to al Shabaab?'” said Kerns. “And he said, ‘Oh definitely, that area is controlled by al Shabaab, and they control the Hawala there.’”

He said when the money arrives, whether it was intended for legitimate purposes or not, al Shabaab or other groups demand a cut.

In other words, at least some portion of this cash flow finances terrorism. But where does all this cash originate? After all, the communities that use hawalas are primarily refugees. It turns out that much of it comes from Minnesota taxpayers, using day care centers as a front:

In order for the scheme to work, the daycare centers need to sign up low income families that qualify for child care assistance funding.

Surveillance videos from a case prosecuted by Hennepin County show parents checking their kids into a center, only to leave with them a few minutes later. Sometimes, no children would show up.

Either way, the center would bill the state for a full day of childcare.

This also explains why they’re using hawalas and bags full of cash to transmit the funds — they can’t afford to explain this much cash flowing through banks. The feds recently won convictions for daycare center fraud in Minneapolis, but it appears to be just the tip of the iceberg. The state tells the local affiliate that ten more daycare centers are under investigation for fraud as well, and have “dozens” more on the radar. All of this adds up, the Fox affiliate notes, and the fraud may be siphoning off half or more of all government subsidies for day care:

Sources in the Somali community told Fox 9 it is an open secret that starting a daycare center is a license to make money.

The fraud is so widespread they said, that people buy shares of daycare businesses to get a cut of the huge public subsidies that are pouring in.

Government insiders believe this scam is costing the state at least a hundred million dollars a year, half of all child care subsidies.

So … let’s recap. Minnesota spends $100 million a year on daycare for terrorists and fraudsters.  Yeah, I’d say this might be Minnesota’s worst scandal. I’d hate to see a worse one.