The “Minnesota fraud” story was a dagger in the heart of the Democrat Party before the anti-ICE riots “conveniently” diverted Americans’ attention. Here is a sampling of what independent investigators uncovered so far in Minnesota, and here is a detailed analysis of all of the fraud networks in Minnesota.
Yeah, you’re right: the so-called “indigenous protests” were actually funded and organized by trained professional leftwing agitators. Their purpose was to change the narrative away from the fraud story because fraud is nonideological, i.e., EVERYONE across the political spectrum understands what fraud is, and all but the most hardcore of leftists who follow the Cloward-Piven doctrine of bankrupting the country through uncontrolled spending are dead-set against defrauding US taxpayers.
That said, the fraud investigations in Minnesota and elsewhere continue unabated (e.g., Massachusetts here, New York here, California here, more California here, more California here, Florida here, Maine here, Maryland here, Michigan here, Texas here, Washington state here, more Minnesota here, etc.). Mostly in blue states, but the fraud is being exposed in some red states, too.
What about South Dakota? Let’s explore and theorize about the possibilities.
THE POTENTIAL FOR FRAUD
Fraud is an evil aspect of human nature. Whether there is money to be had for the taking, especially from abstract “others” like taxpayers, even innate moral deterrence fails especially among the weak-willed. Purposely lying while filling out an application for a particular government program isn’t a violent crime, either, especially if/when program administrators aren’t particularly diligent in fact-checking. Thus, the recent rash of fraud cases across America, with emphasis on the amazing fraud networks in Minnesota.
The potential for fraud in state-administered federal programs in South Dakota mirrors some of the vulnerabilities exposed in next door neighbor Minnesota’s Feeding Our Future scandal, particularly in reimbursement-based programs with self-reported claims, limited on-site verification, and pandemic-era relaxations in oversight. While no large-scale scandal on Minnesota’s level has yet surfaced in South Dakota as of February 2026, the state has experienced smaller incidents, including millions in fraudulent unemployment claims during the pandemic, internal theft from child protection funds, and isolated provider fraud cases.
Among the most vulnerable programs is the suite of child nutrition programs, such as the Child and Adult Care Food Program (CACFP), Summer Food Service Program (SFSP), and National School Lunch Program, administered by the South Dakota Department of Education under USDA guidelines. These programs are highly susceptible due to their reliance on sponsor-submitted reimbursements for meals served to children, often with insufficient audits or site visits—issues exacerbated by pandemic waivers that permitted no-contact distributions and relaxed meal requirements. This setup allows for inflated claims, such as reporting meals at non-existent or remote sites. South Dakota’s vast rural areas and Native American reservations, where child poverty rates are elevated and logistical verification is challenging, further heighten risks, as small providers or nonprofits could exploit the model through kickbacks or fake vendors, much like in Minnesota.
Medicaid, overseen by the South Dakota Department of Social Services, also carries medium-to-high fraud potential. The program involves reimbursements to providers in fee-for-service and managed care models, making it prone to issues like upcoding, billing for phantom services, or creating shell clinics to inflate patient counts. Pandemic-related enrollment expansions increased spending (with the state’s Medicaid budget surpassing $1 billion), while reduced eligibility checks created openings for abuse. Complexities on reservations, where tribal health facilities receive pass-through federal funds amid variable oversight, add to the vulnerabilities, and the state has seen recoveries from provider fraud settlements as well as recent indictments, such as a Pierre woman charged in 2025 with defrauding the program of over $588,000.
Unemployment Insurance (UI), managed by the South Dakota Department of Labor and Regulation, remains at medium-to-high risk, especially from pandemic-era expansions like PUA and PEUC, which involved rushed digital applications, waived job-search rules, and billions in federal disbursements. Fraud often occurred through identity theft or fake claims, and in a low-population state like South Dakota, anomalies can persist longer before detection; the state reported $58 million in fraudulent claims from 2020-2021, with limited recovery.
The Supplemental Nutrition Assistance Program (SNAP), also handled by the Department of Social Services, presents medium risk. While it delivers direct benefits via EBT cards rather than reimbursements, fraud can arise from benefit trafficking (e.g., selling them illegally), application misrepresentation, or collusive redemptions at rural stores or through nonprofits. Pandemic waivers on interviews increased exposure, though South Dakota has maintained relatively low error rates compared to other states, with retailer trafficking cases noted but on a smaller scale.
Finally, agricultural subsidies and crop insurance, administered through USDA Farm Service Agency state offices, hold medium potential for fraud. South Dakota’s agriculture-dependent economy amplifies the stakes for programs involving loans, payments, and insurance, where false acreage reports or exaggerated disaster claims can occur. Rural isolation aids concealment, and family-run operations may enable insider abuses, as seen in past cases like a father-son duo convicted of defrauding millions in COVID relief and crop insurance.
BROADER FACTORS THAT ENABLE FRAUD
Broader factors in South Dakota that enable fraud in state-administered federal programs include the lingering effects of pandemic-era waivers, which significantly reduced audits and verification processes, thereby amplifying vulnerabilities. For instance, waivers under Section 1135 of the Social Security Act allowed flexibilities in Medicaid, such as suspended eligibility checks and site visits, leading to heightened risks in programs like child nutrition and healthcare reimbursements.
In unemployment insurance, federal pandemic programs like PUA and PEUC waived job-search requirements and enabled rushed digital applications, contributing to $36 million in overpayments and an estimated $58 million in fraudulent claims from 2020-2021, with only partial recovery. These relaxations, intended to expedite aid during the crisis, often relied on self-reported data without robust oversight, mirroring the enablers in Minnesota’s scandals.
South Dakota’s expansive rural geography, spanning over 75,000 square miles with a low population density of about 900,000 residents, further strains limited state auditors and complicates effective monitoring. Large service areas and long travel distances make on-site verifications logistically challenging, particularly in remote areas like Native American reservations, where infrastructure issues—such as poor roads and extreme weather—hinder access.
High federal funding reliance on reservations, which cover about 9% of the state’s land and face elevated poverty rates, introduces additional administrative challenges due to jurisdictional complexities and limited tribal resources. Reservations receive substantial pass-through federal funds for programs like healthcare and nutrition, but this has led to documented fraud risks, including cases of wire fraud, larceny, and embezzlement from tribal funds.
The IRS has identified broader abuses in tribal contexts, such as disguising enterprises as tribally owned to evade taxes or exploit federal set-asides, increasing financial risks amid overlapping state, federal, and tribal oversight.
TOTAL ESTIMATED FRAUD
The estimated fraud potential in South Dakota’s state-administered federal programs remains speculative but draws from recent program funding levels, national and state-specific improper payment trends, and adjusted fraud subsets (since most improper payments reflect errors rather than intentional fraud). A very conservative estimate of the total annual fraud potential across the programs is between $16 and $46 million per year, as summarized below.
The below estimates use FY2025–2026 data where available, including South Dakota’s Medicaid budget (total around $800 million with federal share roughly $400–600 million based on FMAP adjustments and expansion dynamics), child nutrition allocations (prorated from national USDA figures, with SD-specific elements like FFVP at ~$2.7 million and broader CNP support in the tens of millions), SNAP benefits (serving about 75,000 recipients with federal funding estimated in the low hundreds of millions), unemployment insurance (normal-year payouts around $30 million post-pandemic, with trust fund stability), and agricultural subsidies/crop insurance (prorated from national levels, reflecting South Dakota’s significant farming sector at roughly $200–300 million in combined federal support).
Fraud rates are conservatively adjusted from national improper payment figures—such as Medicaid’s overall 6.12% improper rate (with fraud subset ~1–3%), child nutrition programs’ reimbursement vulnerabilities (2–5%), SNAP’s low error rate in South Dakota (3.3% or below national averages, with fraud ~0.5–1.5%), unemployment insurance’s post-pandemic patterns (2–4%), and agricultural programs’ lower reported rates (~0.5–1%)—factoring in South Dakota’s below-average fraud incidence (e.g., 42% below national per some metrics) and recent oversight improvements like MFCU expansions and training mandates.
For Medicaid, with federal funding in the range of $400–600 million annually (influenced by FMAP changes to ~48.47% and expansion adjustments), the estimated fraud rate of 1–3% translates to potential annual fraud losses of $4–18 million. The probability of significant fraud (over $1 million in losses or a notable scandal) over the next five years is around 60%, driven by billing complexities, provider reimbursements, and oversight challenges on reservations, though recent MFCU recoveries and federal scrutiny provide some mitigation.
Child nutrition programs (including CACFP, SFSP, and NSLP), with estimated federal support around $80 million (drawing from USDA allocations and state proration), carry a higher vulnerability at 2–5% fraud rate due to reimbursement claims and rural verification difficulties, yielding potential annual fraud of $1.6–4 million. The probability of significant fraud in the next five years is estimated at 70%, heightened by parallels to Minnesota’s scandals and pandemic-era waiver legacies, despite no major SD incidents yet.
Unemployment insurance, with typical annual payouts around $30 million in a stable economy, shows a 2–4% fraud rate (influenced by digital claim risks and historical pandemic overpayments), equating to $0.6–1.2 million in potential annual fraud. The five-year probability of significant fraud is about 50%, tempered by system modernizations but lingering from past $58 million in fraudulent claims during 2020–2021.
Supplemental Nutrition Assistance Program (SNAP), supporting roughly 75,000 recipients with federal benefits funding estimated at $100–150 million, maintains a lower fraud rate of 0.5–1.5% (bolstered by South Dakota’s strong error performance, often below 6%), suggesting $0.5–2.25 million in potential annual fraud. The probability of significant fraud over five years is around 40%, reflecting retailer trafficking risks but overall low state-level issues.
Agricultural subsidies and crop insurance, with federal payments prorated to approximately $200–300 million given South Dakota’s ag-heavy economy, feature a 0.5–1% fraud rate tied to false reports or claims, leading to $1–3 million in potential annual fraud. The five-year probability of significant fraud is about 30%, lower due to fewer reported cases but present in rural concealment opportunities.
CONCLUDING THOUGHTS
There is almost certainly fraud in South Dakota-administered programs, as speculated above. The questions that spring from this including: how much fraud really is there, what systemic incentives are motivating the fraud, and what can be done about it. These will be addressed in a follow-up post.
The end.