DC fraud hearing, Trump admin sues MN & more

[0:00] testimony in Washington, D.C. as they look at Minnesota fraud. We're hearing from a couple [0:05] of Minnesotans here. The opening statement from one of the Minnesotans just ended. That was [0:13] Faye Bernstein, who works for the Department of Human Services. We will hear from Jay Swanson, [0:18] who formerly worked for the department as a fraud investigator, along with several others here. So [0:23] on the other side of this, Courtney Godfrey will be in to continue the rest of the way through all [0:28] day here on Fox Local, but we'll take you back to this hearing now. Serve a vital role in uncovering [0:34] waste in Washington and must be empowered to continue looking out for taxpayers, end quote. [0:40] When IGs are under attack, fraudsters win and small businesses lose. The president's gutting of the [0:48] federal workforce has also severely hindered agencies that combat fraud, like the SBA. Of particular [0:56] concern is the hollowing out of the Justice Department, which lost around 10,000 employees [1:02] and closed over 900 cases of federal program or procurement fraud in 2025. In addition to [1:11] undercutting fraud prevention, the president has enabled fraudsters and wiped out payments owed to [1:17] fraud victims by pardoning his political allies and donors. In one egregious example, Trump pardoned a [1:24] donor who was convicted of defrauding investors of millions and whose company received $4.1 million [1:30] in PPP small business funds. The pardon also prevents fraud victims from access to restitution. [1:37] Another fraudster pardoned by the president illegally withheld $39 million in payroll taxes in his nursing [1:46] home businesses, harming patients and workers, and left small businesses with unpaid bills. In closing, [1:53] fraud is a problem not limited to a single state or program. Yet the administration's anti-fraud efforts [2:00] have targeted disfavored states and programs while enabling politically connected fraudsters who harm [2:06] small business. Congress can advance the fight against fraud by adopting a holistic approach including [2:13] supporting IG independents, federal civil servants that investigate fraud, and legislation that prohibits the [2:20] exchange of donations for pardons. Thank you. I look forward to your questions. Thank you. And Mr. Sherman, [2:27] next we will go to Mr. Swanson. You're recognized for five minutes. Chair Ernst, Ranking Member Markey, [2:35] and distinguished senators. For five years, I was the manager of recipient and child care provider [2:40] investigations at the Minnesota Department of Human Services. My team and I investigated fraud committed by [2:47] child care centers receiving payments from the child care assistance program. Our team of fraud [2:52] investigators and BCA agents had a front row to watch the fraud as it happened and we came face to face with [2:59] the people committing it on a regular basis. Our team of investigators and supervisors were all retired police [3:05] officers with decades of experience conducting and supervising criminal investigations. The child care centers we [3:13] investigated were not legitimate businesses but were designed as a vehicle to steal as much money as [3:18] possible as quickly as possible. We received tips from a wide variety of sources. One day we received a [3:26] phone call from a CCAP mother who stated that a child care center owner had stopped paying her the monthly cash [3:33] kickback that they had agreed upon. Another day we received a call from a fire department inquiring if a child [3:39] care center was still operating because they had stopped there on numerous days to complete a fire [3:45] safety inspection but there were never any staff or kids there. I checked and learned the center was [3:52] listed as open and had billed us approximately one million dollars in the past 12 months. Despite our best [3:59] efforts we soon concluded that fraudulent centers were opening faster than we could close them down. Due to the [4:05] volume of fraud tips we had to restrict ourselves to only investigating centers receiving at least [4:11] seven hundred thousand dollars a year in annual funding. In August of 2018 I drafted a document in [4:19] response to a request from the legislative auditor to provide a summary of the fraud trends in CCAP. [4:25] A senior DHS official became angry when they reviewed the document and ordered me to delete a number of [4:32] paragraphs where I described the scope of the fraud saying this will make us look bad. I advised this [4:39] official that I believed what they're telling me to do was illegal because Minnesota law requires state [4:44] employees to cooperate with the auditor and to provide information upon request. I soon learned [4:51] that my refusal to hide this information from the auditor angered a number of high-ranking officials [4:56] and within days the same official told me quote you better be ready for the blank storm that's coming [5:02] your way. Within weeks of that incident DHS signed a $90,000 consulting contract with a firm that had [5:10] no experience in evaluating public benefit program integrity internal control weaknesses in CCAP. I'm [5:18] sorry whose mission I learned was not to evaluate internal control weaknesses in CCAP but to discredit the [5:24] statements I made regarding the scope of the fraud. During a meeting with the consultants they told me I [5:30] had no basis for my claim of a hundred million dollars of annual fraud in CCAP. I advised them [5:36] that they should be careful what they put in their report because if they missed public their company [5:44] would lose all credibility. I advised them that the fraud was so massive that one day it would come to [5:50] light. In late 2018 and into 2019 our unit was directed to undergo a continuous improvement plan or CIP. [5:59] This process began with the lead CIP official berating our team for roughly 30 minutes telling [6:05] us in essence that we are incompetent and terrible employees. A DHS assistant commissioner was in the [6:11] room at this time. Over the next six months we spent so much time in meetings with this official that [6:17] practically no investigative activity was completed. In June of 2019 this official dictated the following [6:24] changes in how our unit would operate. First the unit supervisor and I would no longer make the decision on [6:30] which cases would be investigated. Instead a committee of three would do this two of which would be DHS [6:37] officials with no experience in conducting financial fraud investigations. I would be the third committee [6:43] member although I would be clearly outvoted. Next the amount of CCAP funding received by a center would [6:50] no longer be considered in prioritizing cases. We were directed to spend 50% of our time on centers [6:56] receiving small amounts of funding which resulted in 50% fewer hours that we spent investigating centers [7:04] receiving over a million dollars a year. Our team would not be allowed to contact the BCA agents working [7:11] child care fraud cases unless we received prior approval from a DHS official. The BCA agents who were [7:18] advised to vacate their offices in our building where they had worked for the past five years. At this point [7:25] I advised our team that I was not going to be a party to what was going to happen and I submitted [7:30] my resignation and retirement notice. Thank you. Thank you for your testimony. Next we'll go to [7:37] Mr. Rosiak. You're recognized for five minutes. Thank you Senator Ernst, Senator Markey, committee members. [7:44] It's an honor to be here to discuss the Daily Wire's investigation into Medicaid home health waiver [7:49] programs in Ohio. Now in February the Department of Health and Human Services released a database showing [7:57] which corporations had been paid by Medicaid. Medicaid is 15% of the federal budget but until then we [8:03] really had no idea where it went and when there's no transparency bad things can happen. Now Medicaid [8:09] originally granted states waivers for in-home health care on the theory that sending nurses to people's [8:15] houses was cheaper than sending them to a nursing home but then the federal government permitted some [8:20] states to have waivers adding what's called personal services meaning not just nurses but people without a [8:26] medical license to bill hourly for so-called for quote chores like cooking and cleaning and private [8:31] residences. Many of these aides are actually the family members of the people receiving the services [8:37] and in Ohio at least they can even bill for tasks like quote conversation and companionship. [8:42] So in some cases people are actually billing Medicaid to hang out with their own family members at home [8:49] or you know in some cases doing things if the family member really is sick that they would do anyway as [8:54] as most of us would for our family member for free. This program is highly susceptible to fraud because [9:00] the government is paying invoices for things that happen between family members inside private [9:05] residences. Is a mother going to tattle on her son for not vacuuming the carpet even though he billed [9:11] Medicaid for it? In other cases a personal services aide will have multiple clients not just their relatives [9:18] but we that's vulnerable to kickback schemes. These are people who maybe just get a cut of what the [9:23] provider is getting paid by Medicaid and no services are provided and perhaps most importantly there are [9:28] people who aren't actually very sick at all who find ways to get a doctor's sign off. The doctors are in [9:34] on this scheme and I'd be very interested to see a list of the doctors who have approved the most home [9:39] health care authorizations. You've heard of pill mills there are also paper mills these doctors that just [9:44] sign the forms. Now Ohio's Medicaid home health program alone spends a billion dollars a year. More money was [9:53] spent on the personal services not the nurses but the regular people than any billing code for which [9:58] data is available including really expensive actual medical stuff. So it gets to the scale of how much [10:04] this program has grown. Now the data in Ohio shows extreme abnormalities. 15% of all home health spending in [10:12] Ohio which is a pretty big state occurs in a four square mile area in northeast Columbus. Now when you drive [10:19] down the street there it seems like most businesses on some blocks have closed down and been replaced [10:25] with these Medicaid home health care businesses. These are middlemen that have the so-called NPI number [10:31] necessary to bill Medicaid and then they pay the people who are at home with their families while keeping [10:38] a cut. And some of these companies based out of tiny empty offices and run down strip malls bill the [10:43] government as much as one million dollars a month. I first noticed that something was odd actually because of [10:50] SBA loans. Many of the people running these companies weren't what you might have assumed. People who had [10:56] dedicated their lives to this field of caring for people. They had trained in that. It's what they they [11:02] cared about. They actually had numerous different businesses in different industries. They might get [11:07] an SBA loan for a business such as a grocery store default on that loan, open another business like [11:12] trucking and get PPP loans and then be running this Medicaid business on the side. It's like a one million [11:18] dollar a year side hustle. One of these buildings in Columbus had 94 Medicaid companies in it that [11:23] billed more than 66 million dollars over the last few years. One landlord owned seven buildings on the [11:29] same street that have 300 Medicaid companies in them and they billed more than a quarter billion dollars. [11:35] That's just one one landlord's tenants. Now when I went to these buildings almost all the offices were empty. [11:41] They had signs saying employees had stepped out to lunch even if it was early in the morning or late in the [11:46] afternoon and there was oftentimes piles of mail at the bottom of the door showing that they hadn't been [11:52] there in months. Because of this new HHS data set the public could for the first time do basic research [11:59] on who was actually behind these little storefronts that previously you might not have thought twice [12:03] about. It didn't seem like anyone from the government had ever looked into these owners because when I [12:10] looked them up for example one of them True Home Healthcare LLC is owned by a guy named Alyu Conte and [12:16] his wife Mamusu Kanu. Now Conte is a career criminal with numerous convictions for fraud and offenses like [12:22] child endangerment. I talked to him and Conte told me he was quote just too dumb to know what is law. [12:29] His wife was convicted of theft three times in three years. After she was arrested for felony malicious wounding [12:35] in Virginia they went up to Ohio specifically to get in the Medicaid business. The Medicaid the nursing [12:42] board had banned the husband from working as a nurse in home health care because of his criminal record [12:48] but Medicaid let him start his own business which billed $100,000 a month. When I asked Alyu about this [12:55] he threatened my family. Now another company was a janitor who renamed her company to be mental health [13:03] and then billed $100,000 in the first month. So the original justification that this saved money [13:10] compared to nursing homes doesn't hold water because in many of these communities many people have worked [13:15] with doctors to claim that they are sick and now uh you know Willie Sutton when he was asked why do you [13:21] rob banks because that's where the money is. In New York State home health care aid is now the most common [13:27] job in the state and so I think it's a great time for Congress to reevaluate how sick these people are [13:32] and how to potentially reform these programs to find fraud involving doctors and others. Thank you. [13:37] Thank you very much for the testimony today. Now we'll start our question answer session and I will defer [13:47] my questions until the end of all of our Republican members. So we will go ahead and start with Senator [13:55] John Husted. Thank you Madam Chair and appreciate all of you being here today for those of you who've [14:02] stepped up and done some courageous work in rooting out fraud uh in your states uh and uh and state in [14:11] which I live. I thank you for that um this uh reminds me uh Madam Chair of a of a floor debate I heard [14:18] one time when I was in the legislature where one individual employed her party not to vote for [14:26] the bill because it was full of their pork not our pork meaning that sometimes we think fraud is bad [14:35] 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 [14:41] because it's stealing from the taxpayers and it's undermining the very programs that are designed to [14:47] 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 [14:56] conversations um uh Mr. Rosiak I love the fact that you got the data on the Medicaid because it was a [15:03] project I worked in Ohio called data.ohio.gov that put all of this information out there so that [15:11] enterprising people like you could look through the data and help sort out these things and get [15:16] to make government more efficient and so uh it's very rewarding to me to see that you use that tool [15:23] for the research that you did and um but I want you to explain how the fraud happens exactly how [15:31] they structure it because this this is not they learn to do this is a scam across the country people [15:38] are learning how to do it and then they are moving to states and and then and then uh employing these [15:44] tactics explain precisely how the fraud works and how you think we can fix it sure um it's a great [15:51] question there are organized groups basically these middlemen companies will knock on doors until [15:56] they find people that have somebody that they think might plausibly qualify maybe a 55 year old mother-in-law [16:02] who lives with them and they will tell that person to go to a particular doctor so multi-generational [16:06] families all already living in the same place taking care of one another exactly and they will direct [16:12] that person to go to a particular doctor they will tell them what symptoms to claim and then the company [16:17] and the family member basically split the costs and oftentimes the the the eldest say the mother-in-law [16:22] the older generation they're not actually being so so the medicaid provider gets part of the cut and the [16:27] family member gets part of the cut if they all participate in the scheme correct and and they have a [16:32] certain number of hours and maybe 16 hours a day and so it's not a whole lot per hour i think it might be like [16:37] 28 bucks but if you're working 16 hour days that really adds up and it turns out that oftentimes the older generation that's [16:43] purportedly receiving care they're not they're oftentimes the matriarchs of the family they're [16:47] the ones actually doing all the cooking and cleaning so it's people aren't really sick they don't really [16:51] need the hours and then it's just a small hourly wage at massive scale of very you know half the people [16:57] in certain communities are on this program and so what what's the solution first of all you could [17:03] eliminate the services and i understand the case that people make they say well if it's actually a sick [17:09] individual the cost of long-term care is is greater than the cost of this this is why the program was [17:15] created but it's now being abused other than eliminated is there any other any other way to [17:22] crack down on the fraud i think that you have to look at who's at the top of this pyramid scheme which [17:27] is the doctors this might seem like it's maybe there's bipartisan agreement on this maybe the democrats [17:33] would agree to bring some of this actually in-house and make more government doctors in charge of [17:38] authorizing these i'm pretty concerned with congress essentially delegating its power of the purse [17:42] to private doctors because what you can do is doctor shop and you can find the doctor who is [17:48] either just very lenient because they don't really care it doesn't cost them anything to sign that form [17:52] or is in on it taking kickbacks and so if you look at the way the department of veterans affairs works [17:57] the government the veteran has to go to a government doctor to get that initial disability determination [18:02] that ensures that the same criteria is applied for everybody across the board i think it's if it's good [18:07] enough for a veteran it's good enough for a somali person on on medicaid in in northeast columbus [18:13] and so in addition to that what you're what we also uh are seeing uh e-verification tools other things [18:25] like that can be helpful but they're still not still if you got you got to go after the root of the [18:31] problem and the states who receive most of that money from the federal government sometimes don't have [18:37] much of a financial incentive to crack down on it is that correct i think that's exactly right it's [18:42] a matter of incentives the people don't who are on medicaid don't have an incentive not to sign up for [18:46] these services because it doesn't cost them anything and then the states don't have too much of an [18:50] incentive to care if it's wasted because 70 percent of it comes from the feds so um you know the examples [18:56] of criminals running these abound and red flags that maybe don't reach criminal threshold or even longer [19:02] it would take a long time to put all these people in jail so i think you're on the right track coupling that [19:07] is what they're talking about to do so that we have to do a lot of the right track how do we have to [19:11] have to do so that we have to do a lot of the right track going on and and and uh i will just finish with this [19:15] in the working family tax cut plan we put provisions in there that said you have to do more [19:21] frequent medicaid checks why because there were there are millions of people who were illegally on the [19:31] rolls who shouldn't be there because of lax federal standards in eligibility so across the board [19:38] Just upping the eligibility checks on things like we did in the working family tax cut plan will help. [19:44] But yes, more must be done, and we shouldn't tolerate it anywhere. [19:50] It's a fraud that rips off from the taxpayers and jeopardizes the programs for people who are truly in need. [19:57] And so I thank all of you for your work to try to root out the fraud. [20:01] Thank you. [20:02] Yeah, thank you, Senator Husted. [20:04] Next, I'll recognize Ranking Member Markey. [20:06] Thank you, Madam Chair. [20:07] Mr. Sherman, 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. [20:25] The federal judge, the federal judge overseeing Trump's $10 billion lawsuit, had been actually considering dismissing the case over concerns of collusion. [20:40] IRS lawyers recommended to the Justice Department that the case be dismissed, not settled. [20:48] The Treasury Department's top lawyer, Brian Morrissey, a Trump appointee, resigned after the slush fund was announced on Monday. [21:00] And just today, two Capitol Hill police officers, Harry Dunn and Daniel Hodges, who defended the Capitol on January 6th, thank you, officers, filed suit against Trump to dismiss the fund. [21:14] Here's what their suit says. [21:16] 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. [21:33] But the president simply cannot go around the Constitution to finance his henchmen and political machine by taking money from the American people. [21:42] So, Mr. Sherman, what does the establishment of an almost $1.8 billion slush fund to reward political allies mean for the presidency and preventing corruption in politics and in government? [21:56] Thank you for the question, Senator. [21:58] The president's slush fund is an unprecedented and stunning example of corruption, particularly as everyday Americans are struggling with groceries, small businesses are struggling to make ends meet. [22:17] The president is demonstrating that his priority is enabling individuals who engaged in a legal activity to overturn an election. [22:26] And as you said, this is not just an example of grift, but it is an example of grift that will enable political violence in the future. [22:39] So, thank you. [22:41] So, in your testimony, I just want to highlight this for the committee. [22:43] You noted that in Trump's second term alone, his pardons and commutations to convicted fraudsters have wiped out over $1.5 billion in restitution, fines, forfeitures, and money, otherwise owed to fraud victims and American citizens. [23:02] And many of these fraudsters have donated directly to Trump and to Republican candidates. [23:07] One year ago, Trump commuted the sentence of a Florida health care executive convicted of the largest therapy-related Medicare fraud in history, stealing $205 million. [23:18] It's now being reported that the president is considering issuing 250 pardons for the 250th anniversary of America, [23:26] and we should just expect those pardons to be doled out as favors to wealthy donors and political allies and to fraudsters who are friends with the president. [23:37] So, Mr. Sherman, when a president commutes a sentence or issues a pardon that ends restitution obligations, what happens to those victims? [23:45] Is there any other way that they can recover what they are owed? [23:49] Well, it's noteworthy that even if the president wanted to pardon these fraudsters, he didn't have to go so far as to then allow these fraudsters to escape paying restitution. [24:03] So, he went the extra mile for his political allies to the detriment of fraud victims across this country. [24:11] It enables fraud, and it sends a clear signal that if you are engaged in fraud, you can get away with it if you are rich enough to carry influence with the president. [24:22] So, you're saying he could have just pardoned them but said, but you still got to pay the restitution. [24:27] Exactly. [24:27] Instead, he says, I pardon you, and you don't have to pay back all the people who you defrauded. [24:32] That's coming right out of the White House. [24:34] That's exactly right. [24:35] And, you know, it puts, it makes everyday Americans, it makes small businesses more vulnerable to fraud because the president demonstrates time and time again that he's willing to enable it. [24:46] So, in your legal judgment, is that a legitimate exercise of executive power or is it something else? [24:53] It is an illegitimate abuse of power. [24:56] Without question, and I just want to say, even in this fund that he has created, there's going to be a five-person oversight board, but every one of them can be removed by Trump without cause. [25:11] So, there is no oversight over this fund, and it's all coming out of taxpayer dollars appropriated, by the way, by Congress. [25:20] We appropriate the money that goes into this fund, okay? [25:23] So, I'm waiting for those oversight hearings, okay? [25:25] Are there any standards, are there any constraints, are there any restrictions on how this massive, by the way, it's an unlimited fund that can be dispensed. [25:37] And now we're learning there are no restrictions on what the Justice Department can put as the standards that are used in dispensing this money. [25:45] It's an absolute, almost, it's an invitation to fraud that Donald Trump is absolutely going to accept with the greatest of joy. [25:55] Thank you. [25:56] Thank you. [25:57] I'll now recognize myself for five minutes for questions. [26:00] And, Ms. Bernstein, according to your testimony, in early 2019, while you were serving as a Minnesota Department of Human Services contract specialist, you raised concerns about risky contracting practices that would leave the department open to double-dipping. [26:20] Could you give us an example of this double-dipping risk to the state? [26:27] And explain what kind of response you received from your department head when you raised this potential issue. [26:35] Thank you, Chair. [26:36] This was a group of contracts that I really fought about because I think it was important. [26:43] It was about, it was a group totally in about $12 million, and it was for pregnant and parenting women who were addicted. [26:51] And so that's a very important service. [26:54] I wanted that service. [26:56] However, we had just put that in our Medicaid package, so it was billable to insurance. [27:03] There was no reason that we would be giving grant dollars for it. [27:07] And not only was there no reason for us to do it, but there was also no way for us to tell if the agency that we gave it to billed twice, the double-dipping. [27:20] There was no way for us to do it, and so I thought about this one for probably three or four months before it was finally assigned to a probationary employee, a brand-new employee who did the contracts. [27:36] And oddly enough, and oddly enough, was later promoted into my job when I was removed, but the response I got from leadership was anywhere from, I don't understand what the problem is. [27:51] We've always done this, Faye, to just a complete dismissal to try to get me to stop talking about it. [28:01] And this, again, is one of those very uncontroversial, very cut-and-dried situations. [28:10] I do not know how someone could logically disagree with me. [28:16] And are you aware of anyone else that was reprimanded or had any other personnel action taken against them in this similar situation? [28:29] Yes, it was very common for employees to be stifled, was the word that was used against me, that I needed to be stifled. [28:40] There was many efforts to do that. [28:43] It worked in a lot of cases. [28:46] There is much less public speaking now. [28:50] There is a large group of anonymous tweeters who do communicate on this, but there are very rare instances where someone will come forward publicly. [29:01] Okay, and just to reiterate, you were removed out of that equation because you questioned those contracts, but someone with absolutely much less experience than was given those contracts, didn't question it, and then was later promoted into your position? [29:20] Correct. [29:20] Okay, I just wanted to make sure I heard you correctly there. [29:25] Mr. Swanson, by now everyone has heard of Minnesota's infamous Leering Center, Quality Leering Center. [29:34] But you were on the ground serving as a criminal investigator for Minnesota's Child Care Assistance Program, and you were uncovering many of those similar fraud schemes. [29:43] Can you briefly explain to us the kickback system that fraudsters use to enroll children at these child care centers? [29:55] Madam Chair, yes, in Minnesota, and I would assume most other states that have a program like this, the child care centers can only bill for children when their parents are on public assistance. [30:11] And the parents have to be engaged in either an educational or work-related activity that would necessitate the need for child care. [30:22] What we saw time after time was that the fraudulent child care centers would go around to immigrant communities and they would offer, you know, kickbacks to these mothers if they would tell their caseworker that my child is going to be going to this particular child care center for [30:41] five or six or seven days a week, and essentially what they would do is they would tell the mothers that we don't want you to bring the kids to our child care center, you take care of your kids at home, but we'll pay you, it started out with $200 a month per child, it went up to about $300 a month by the time I left. [31:01] So a mother of five children would, you know, be taking in $1,000 a month to take care of their kids at home, and then in order to fulfill the education or work requirement, the child care center would falsify employment documents so the mothers could take those to their caseworker and show them that they were working at the child care center. [31:25] Oh, for heaven's sakes. Okay. Well, Mr. Swanson, if you look at the front of the quality leering center right below the sign and above the entrance to the building, there's a video camera and a sign that states the premises are under 24-hour surveillance. So sign right here. Are all child care centers required to have security cameras? [31:50] No, no, Madam Chair, they're not. Do you think that would those videos be archived so that investigators could access them if they did have surveillance cameras like this one? [32:03] Madam Chair, there were a few centers that we investigated that had video cameras that were archived and we had staff in our digital forensics unit that were able to retrieve the footage. [32:19] But in Minnesota, no child care center was required to have any sort of video surveillance system, but some did. [32:28] Very interesting. And as investigators, if you had availability to cameras, you would be able to go back and view that, correct? [32:40] That's correct, Chair. [32:41] Okay. Okay. So right here at the leering center, do you think we would be able to get videotape from the leering center and see if there were children coming and going? [32:52] You know, if their system was set up, you know, and designed, you know, so we could retrieve the video archives, you could. [33:02] Okay. Thank you very much. It's interesting. We didn't have children coming and going from that leering center, even though there's video surveillance. [33:13] So my time has expired. We'll go next to Senator Hawley. [33:18] Thank you very much, Madam Chair. Thanks to the witnesses for being here. [33:22] Ms. Bernstein, if I could just start with you. You worked in the Minnesota Department of Human Services. Is that right? [33:29] Correct. [33:29] 20 years or more. And at the agency there, you served in roles related to contract management and compliance. [33:37] Is that basically right? [33:39] Several years ago, looking here at your written testimony, you say that you started to notice some inconsistencies in contracts that came across your desk. [33:45] Can you just describe what those inconsistencies or irregularities were, what they looked like? [33:51] It was anything from obvious conflicts of interest to large, large advances being given. [34:01] If the contract was for three or four million dollars, we were giving million dollar advances before any work had occurred. [34:08] That is a very risky thing to do. A business can just close up and they've got your money and they haven't done a thing for you. [34:14] To whom were these, if I might ask, to whom were these advances going? What kind of entities do you recall? What kind of entities are we talking about? [34:26] So states do not, in general, do their own social services. They do not do services for the residents of their state. [34:35] They contract out that work to most often non-profits, occasionally profits, but most often non-profits. [34:43] And so those are then considered grant contracts. And those grant contracts are well regulated in statute, well defined in statute. [34:53] And we were doing many things that were not compliant with statute. [34:59] There would be a contract with a dollar amount that had no formula, nothing that I could find that would establish why that dollar amount was. [35:10] Could you detect a pattern in these inconsistencies? [35:14] In general, no, but I did notice a slight preference for our tribes. [35:24] Our tribes were one situation where I saw contracts that no one could explain to me why they were the dollar amount that they were. [35:36] What happened when you reported these inconsistencies to your superiors? [35:40] I was called racist, you know, and then I was walked out. There was quite a smear campaign. [35:49] I was investigated. I have about 400 pages of investigatory information about me. [36:00] You'd worked there for 20 years at this point. You have a long track record. [36:04] Yes. [36:04] As a civil servant, as a public servant, you bring this to the attention of your supervisors, as you are supposed to do. [36:11] And it sounds to me like you were retaliated against. I mean, is that a fair thing to say? [36:14] Yes, absolutely. [36:15] And how did this end? I mean, how long did this go on? What was the result of it? [36:19] It actually still goes on. This started for me seven years ago, but I am still just shuffled from one job to another. [36:27] A supervisor about a year ago said, well, we have to find you something else to do now. [36:31] So now I redact documents. I have nine years of college and I put black marks on documents for media requests. [36:39] Do you think in light of the revelations of widespread fraud and abuse in the state that maybe, maybe there's a systemic problem in state government that you exposed in part, but that probably extends far beyond you? [36:53] I mean, is that fair to say? [36:55] There absolutely is. And I now realize that it was long before me. [37:00] Are you familiar with the case of Keith Ellison? [37:04] Yes. [37:05] Keith Ellison testified under oath before a committee of this body not long ago and insisted to me that he had never done anything wrong and didn't know anything about any of the fraud and abuse. [37:16] The only problem is, is that there are records, tape recordings of various fraudsters coming to see him associated with the scandals that the chairwoman was just talking about a moment ago, coming to see him complaining about people, I think in your department, the fraudsters were saying, oh, we're getting pushback. [37:33] Who knows? Maybe it was you. We're getting investigated. Can you do something about it? [37:37] And Ellison said, oh, well, I'll see what I can do. And they offered him campaign contributions and he took them unbelievably. [37:44] And we know this is all true because they recorded it all. It's a problem. We work with scumbags. [37:49] They'll double cross you just like they'll double cross anybody. The whole thing is on tape. [37:54] I can't think of a greater instance of abuse of public trust. [37:58] And if your own attorney general is doing it, who knows how deep, how far, how wide this fraud goes. [38:03] It's extraordinary. I don't understand what people like him are in prison. [38:07] But I want to applaud you, Ms. Bernstein, for doing your job. [38:10] And I think it is absolutely shameful that you have been retaliated against and treated like scum when you are a 20-year civil servant, proud Minnesotan, just doing your job. [38:21] I don't know what your politics are. I don't think it matters. [38:24] I'm sure it didn't matter to you when you did your job. [38:25] And yet you're treated like that. [38:26] And meanwhile, people like Ellison are feted and lauded and he's a star in his party. [38:32] It's unbelievable. [38:33] He's a crook. [38:34] It's exceptional. [38:37] We need more people like you who are doing their jobs and who are fighting for the public and fighting for what is right and true and just. [38:44] And I want to thank you for coming forward. [38:45] And I want to thank you, Madam Chair, for having this hearing. [38:49] Yeah. [38:49] Thank you very much. [38:50] And now we'll go back to Ranking Member Markey. [38:53] You're recognized if you would like. [38:54] Okay. [38:55] All right. [38:56] Well, I have a few more questions. [38:59] Again, we want to thank our witnesses for being here today. [39:02] So, Mr. Swanson, I'm just going to continue with some of the work that you have done. [39:08] In your testimony, you had described preparing a report for the Minnesota Inspector General, citing approximately $100 million or more in Minnesota's Child Care Assistance Program fraud. [39:22] And I hear your report was not warmly welcomed by your superiors. [39:28] So, would you share with the committee what happened after that? [39:33] You touched upon it in your opening remarks. [39:36] But if you could just do a deep dive for us and understand when you raise concerns as an investigator, how was that received? [39:45] Madam Chair, yes, the document I wrote was an answer to a request from the Minnesota Office of Legislative Auditor asking for a summary of fraud trends that I saw in CCAP. [40:02] And I prepared it and as soon as I gave it to some higher officials in Minnesota, the first official that received it became very angry and said, you can't send this. [40:17] This is going to make us look bad. [40:19] And I think my response was, we're losing over $100 million a year just on this program alone. [40:25] I think we probably deserve to look bad. [40:28] And then they demanded that I redact most of the most damaging paragraphs from that document. [40:36] And that's when I told them that, I think what you're telling me to do is illegal. [40:41] Under Minnesota law, we have to cooperate with the legislative auditor. [40:44] And then a few days later, that official came back to my office and told me that your document's being transmitted to the legislative auditor, but you better be ready for the blank storm that's coming. [41:00] And from that point on, our entire unit was harassed and vilified for what I put in that document. [41:12] And again, what they termed the continuous improvement project started with a meeting of our entire team, a lead or head continuous improvement official, and an assistant commissioner at the Department of Human Services. [41:32] And for approximately 30 minutes, we were verbally beat down, in essence, told that we were incompetent and we were worthless employees. [41:45] And because of that, they were going to do a close look at how our unit operated, and they would attempt to fix our unit. [41:55] And so we spent literally the next six months in meetings with this official, where he would ask us questions repeatedly about how the investigative process worked. [42:07] And then he would give us, quote, homework assignments that would take up a whole bunch of our time between the meetings, and then we would have to report back. [42:16] And I said, this went on for six months until in June of 2019, he came out with the changes that were going to be made to the system. [42:27] And, you know, starting with the lead investigator, the supervisor of this unit and I, who, between us, we had 70 years of criminal investigative experience. [42:39] We would no longer be making the decision, what child care centers would be investigated. [42:46] Again, that would be done by a committee of three, two with no experience in this area, and then myself. [42:55] Then the second thing he directed was that we would be focusing 50% of our time on child care centers receiving very little funding, [43:07] which meant that we would be spending 50% less time on centers that received a million dollars or more a year in funding. [43:18] Because, frankly, the cases we were choosing, because we couldn't investigate all the cases, we focused on those high-dollar cases, [43:28] and we were finding fraud right and left with centers that we were paying over a million dollars a year to. [43:34] And, you know, we couldn't fathom why somebody would take 50% of our time away from that and focus it on providers receiving less funding. [43:44] Right. [43:44] And it's a real problem. [43:48] And as many of you have stated or insinuated, that any dollar taken away from valuable programs is a real problem for those families [43:57] that expect to receive those services and those dollars. [44:01] So thank you for the testimony. [44:03] And, Mr. Rosiak, Doge had released Medicaid data that allows anyone to follow the money, anyone to follow the money. [44:12] And you followed it to what appeared to be a $1 billion per year Medicaid fraud scheme in Columbus, Ohio. [44:20] How hard was it for you to go out there and find what would be fishy-looking buildings or something that didn't seem right? [44:32] Was it really, really difficult, and it took you a lot of time to find these fraudsters? [44:39] No, it was actually quite easy. [44:41] Once the data was there, it's some basic coding, especially with AI now. [44:45] It's not hard to do. [44:46] What's remarkable is the fact that nobody else had done it before, none of the government bureaucrats. [44:51] I mean, you have Nick Shirley, who didn't have a budget, but he has two eyes and an iPhone, and he found things that government bureaucrats never, [44:58] maybe they weren't allowed to go see it by their superiors. [45:01] For whatever reason, they were never inspecting it. [45:03] So, number one, I think these agencies are collecting the data, but never using it. [45:07] And apparently, you have to actually get permission from HHS to mine your own data as a state, which is crazy. [45:14] And not all states have even asked permission for that. [45:16] So they're just recording who they pay out to, but they're never looking into it. [45:20] And so you have pay-and-chase model, but they're not even chasing. [45:23] And so you want to stop that money going out on the front end, and you also want to acknowledge that as powerful as data is, fraudsters lie. [45:30] So you've got to do these on-the-ground visits, because what the government has in its spreadsheet may not correlate with what you see on the ground. [45:37] Very good. [45:38] Well, I do want to thank everybody for coming out today. [45:42] And Ranking Member Markey, thank you very much for participation today as well. [45:48] I think we can acknowledge that our federal government has many really good, solid programs. [45:55] And, Ms. Bernstein, I want to thank you for sharing your personal story as well, because it just shows how important these dollars are for the right usage in these programs. [46:06] And many of them truly believe in these programs. [46:09] So we want to make sure that those dollars are going for the right use within the programs. [46:16] And if they are not, then we need to hold those folks accountable. [46:21] So I really do appreciate the discussion today. [46:25] We appreciate the entire panel coming out and sharing their experiences. [46:32] I will ask that unanimous consent, that today's hearing, the record of today's hearing, remain open for two weeks for members to submit questions, [46:43] revise and extend their remarks, and submit additional information into the record. [46:47] And without objection, so ordered. [46:51] And further, I ask unanimous consent to enter into the record. [46:56] First, a letter from my office dated May 20th of 2026, requesting the SBA Office of Inspector General thoroughly investigate the 28 companies cited in Mr. Rosiak's investigation [47:09] that received millions of dollars in SBA assistance. [47:13] All right. You have been listening to the Senate today on small business and entrepreneurship hearing, chaired by Senator Jody Ertz. [47:21] In that hearing, we heard from Faye Bernstein, who's a compliance specialist with the Minnesota Department of Human Services, [47:28] as well as Jay Swanson, who's a fraud investigator for the Minnesota Department of Human Services. [47:34] Some key points that I want to highlight here, we heard from Bernstein, who said she started noticing inconsistencies [47:40] in the cases that came across her desk. And when she flagged them, she says that she was retaliated against. [47:48] She said that she was called racist and that she continued to get shuffled around at the Department of Human Services [47:56] because of her reporting what she believed was fraud. [48:00] And then we also heard from Jay Swanson, that fraud investigator with the Minnesota Department of Human Services, [48:05] who reported much of the same, that they noticed the fraud, that they reported it. [48:10] And when they reported it, they believe that they were retaliated against. [48:15] And again, this hearing was about how fraud and misconduct persist in government programs [48:20] and what happens to those who expose it. [48:24] We're going to take a quick break here, but when we come back, we're going to take a check of headlines. [48:29] And we're also going to have a guest join us to talk about National Boating Safety Week. [48:35] Stay with us. [48:36] Thanks for joining us here on Fox 9 all day. [49:02] Wednesday, hump day, we made it. [49:04] It's currently 2.51 here in the Twin Cities metro. [49:08] Well, this week is National Boat Safety Week. [49:11] This is a topic that's very personal to me for our viewers who don't know. [49:15] It was about nine years ago now that I was involved in a boating accident that changed my life forever. [49:22] As a result of that accident, I became an amputee. [49:25] I lost my foot and I wear a prosthetic leg. [49:29] Today, I have two children and we love boating. [49:33] We love to be on the water and we love to participate in water sports. [49:37] But I'm very passionate about keeping them safe, especially after what happened to me. [49:42] But I don't want our viewers to go through what I went through in order for them to be safe. [49:47] I want them to practice safe boating before anything bad happens. [49:51] And that's why I'm so happy to talk about this topic today. [49:55] And we've got Travis Robinson from Midwest Water Sports joining us now. [50:00] Travis, thanks for joining us to talk about this important topic. [50:04] Absolutely. [50:05] Thank you for having me. [50:06] And, Courtney, I'm incredibly sorry to hear about that accident. [50:09] So hopefully through this and other education, we can help prevent that down the road. [50:13] Absolutely. [50:14] It is Memorial Day weekend ahead of us. [50:16] So we have a lot of boats that are going to be hitting the water this weekend. [50:20] What's your main message to anyone that will be going out? [50:24] Absolutely. [50:25] This is a very hectic and busy weekend indeed. [50:28] One thing I always say is just drive slow, dock slow. [50:31] You know, a number of times people just, they get rushed. [50:34] They're nervous. [50:35] People just go too fast, whether it's open water or at the docks, boat ramps. [50:38] So drive slow and dock slow, especially when it's your first time out this weekend. [50:43] They control your system's work, being safe. [50:45] I think if there's any advice I could share, that would be it. [50:48] Yeah. [50:49] I mean, and there's also a lot of etiquette that goes along with boating. [50:51] You know, if you are dropping in in the public access, [50:53] is there any advice that you give to those waiting to go in, those pulling out? [51:00] Absolutely. [51:00] The very unique thing about boating is we have people from whether it's your first time [51:04] or some maybe fishermen go every single day. [51:07] My biggest thing is practice. [51:08] If it's your first time, if you just got a new boat over the winter, [51:11] if it sat in the storage all winter, you know, go to a parking lot and practice. [51:14] Don't let the boat ramp at 10 a.m. on Saturday Memorial Day weekend be your shining moment. [51:20] You know, practice. [51:21] Take the cover off. [51:21] Install the battery. [51:22] Test run the boat at home. [51:24] You know, don't set yourself up for failure. [51:26] Go ahead and practice beforehand. [51:27] Make sure all your safety gear is aligned. [51:29] You know, make sure your plug's in the boat. [51:31] These are moving too fast can cause, you know, a lot of, [51:34] we always see the scary moments that happen and people move too fast [51:37] and are unprepared. [51:39] So take the time, do the extra safety checks, practice backing up a little bit, [51:43] and go slow. [51:44] It's scary there when there's a big line and everyone wants to get on the water. [51:48] Let's talk about the pre-departure checklist. [51:51] There are a few things that you should do. [51:53] I mean, you should check the battery. [51:54] You should make sure you have enough gas. [51:56] Something that I think a lot of people forget, my husband is, like, OCD about this, [52:02] making sure that you have enough life jackets on the boat for the number of people that you have on the boat. [52:07] Run us through, you know, the basic departure checklist. [52:11] Absolutely. [52:12] So there's two things. [52:13] There's required safety gear, and then there's also things that people, [52:17] depending on what sport or activity or type of boat you have, can change. [52:20] You always need the appropriate amount of life jackets. [52:22] One thing is, you know, if you have eight people on the boat, you need eight Coast Guard-approved life jackets. [52:27] And they also need to be sized proportionally. [52:30] So I have two daughters. [52:31] One's a newborn and one's about four years old. [52:33] So you have to have, you know, if you just have the four-pack of orange life jackets, [52:37] they don't fit a four-year-old and an infant. [52:39] So you want to make sure you have the right life jackets to fit every person in the boat. [52:42] You want to make sure you have your fire extinguisher, any safety kits there, and your throwable. [52:48] And what a lot of people don't know is the throwable actually needs to be exposed in the boat. [52:52] That's if someone falls overboard, usually those square-style life jackets. [52:56] If it's tucked away in a compartment and still sealed the plastic, [53:00] if someone falls overboard, you can't get access to that. [53:02] So that's one thing a lot of people overlook is that it's stowed away, hidden. [53:07] You actually need that out in the open to be compliant. [53:09] And a lot of these things, too, are things that Water Patrol will cite you for if you get pulled over. [53:16] So I just want to point that out. [53:18] But continue. [53:19] One thing a lot of people forget about, too, is an anchor, especially going your first weekend out. [53:25] Something can happen. [53:26] Maybe it's bad gas. [53:27] And if you're in a scary situation, an anchor allows you to hold your position and let help come to you. [53:32] So that's one thing a lot of people forget as well. [53:34] And check the expiration date on that fire extinguisher. [53:37] Absolutely. [53:37] Because a lot of people have a fire extinguisher on the boat, but it probably expired 10 years ago. [53:42] So check that. [53:42] And, again, that is something that they will cite you for if you get pulled over. [53:46] And I like your point about the standard orange life jackets because I didn't know that that was a rule that you really need life jackets that actually fit everyone. [53:55] Finding a life jacket, by the way, for a newborn is not easy. [53:58] I've been in that position. [53:59] Yep. [54:00] Absolutely. [54:00] Talk to me about the rider flag, because especially on a busy lake like Pryor Lake or Lake Minnetonka, where we're going to see a lot of boats out on weekends, if you have someone in the water, there is something called a rider flag. [54:16] Explain what this is and why everyone should have it on board. [54:19] Yep. [54:20] So there's a lot of different circumstances. [54:22] This photo is actually from Lake Minnetonka this weekend, so it got lucky and had some incredibly nice weather. [54:27] And it's a very busy lake. [54:29] No matter the size, there's a lot of people running around. [54:32] If you're water skiing, tubing, surfing, or even just swimming in the lake, you want to have that orange flag displayed to where people are in the water. [54:42] Now, where these get misused oftentimes, and every state has certain regulations and rules, so follow up on your individual state. [54:49] Obviously, focusing on Minnesota here. [54:52] You want that flag to only be displayed if people are actively in the water, whereas some people just put it up on display, whether they're driving around or don't have people. [55:00] So make sure it's only displayed when people are actively in the water. [55:04] And it's not just the driver that needs to be aware. [55:06] Everyone on the boat needs to be aware of their surroundings. [55:10] Talk to me about that, because especially on these busy lakes like Lake Minnetonka, you just need to be constantly aware of what's coming at you. [55:20] Absolutely. [55:20] It's no secret. [55:21] Boats have gotten bigger and just busier. [55:23] And so whether you're doing water sports, water sports specifically, Lake Minnetonka does require a spotter. [55:28] So no matter what technology you have on your boat, whether it's a mirror, cameras, or anything like that, you do need an active spotter, which is someone ideally facing the opposite direction, looking behind you, to notify the driver of, hey, so-and-so fell while they're skiing or tubing to help identify your surroundings there. [55:45] And then also, if you're simply just cruising, a lot of times I have my wife or a friend have an extra set of eyes. [55:51] Sometimes people go really fast. [55:53] There's blind spots or you're focused on, you know, one thing that's different from the road to the water is water's moving. [55:58] You know, you have big bumps. [55:59] You have big oncoming waves. [56:01] There's no lanes to stay in. [56:03] So extra set of eyes is always helpful. [56:05] And charge your phone, right? [56:08] Absolutely. [56:09] Absolutely. [56:10] Constant communication is important. [56:11] Yeah, you don't want a dead phone and then you're stuck out there in the middle of the water. [56:16] Let's start, we touched on etiquette a little bit, but, you know, these wake surf boats, which I know that you guys sell a lot of, they're very popular right now, you know, they can be controversial. [56:25] And one of the big things is the waves, but also the loud music. [56:32] So if people are going to be out and surfing, what are some etiquette tips that you recommend so that, you know, people don't get upset with you? [56:43] Absolutely. [56:44] So every boat obviously has its impact on the water and we want everyone to stay safe regardless. [56:49] With different boats, hold different responsibilities. [56:51] And we work really closely with the WSIA for a wake responsibly campaign. [56:55] And that's a few things. [56:57] It's minimizing repetitive passes. [56:59] So you may have a favorite band, an artist that is not mine. [57:03] And so after maybe the 10th time of going past a certain way, you may get tired of the waves coming by and the music blaring. [57:10] So we really recommend minimize repetitive passes. [57:13] Stay a minimum of about 200 feet away. [57:15] So that's, we like to have a little extra distance between other boats and shore just to help minimize impacts there. [57:22] And like I said, repetitive passes, keep music at a reasonable level and also stay a little extra distance from shore there and other boats as well. [57:31] You know, I think something to keep in mind too is to not assume that everyone is a seasoned boater. [57:36] You know, you know what you're talking about. [57:38] A lot of people who've grown up in Minnesota know what they're talking about, but not everyone is, [57:43] especially now that we have all these like boat rental companies. [57:47] What is your advice to people, especially with people, like just knowing that there are people out there who might not necessarily know as much as you? [57:56] Absolutely. [57:57] And the beautiful thing about boating is, you know, some people I've been fortunate enough to do it my whole life. [58:02] You want to give people the benefit of the doubt because it could be, you know, boating can be challenging. [58:06] Whether you rented a pontoon boat for the first day, you know, that could be the start of a family's best summer of their life. [58:11] And so you want to give them a little bit of benefit of the doubt. [58:14] Just give extra space. [58:15] Give a little bit of extra time, a little extra just patience, if you will, on the water. [58:20] But also be safe. [58:21] You know, if you're questioning a boater's direction, whether they're seasoned or not or they're going at a different speed, a little bit of space goes a long way. [58:29] Yeah. [58:29] Just a little bit of grace, right? [58:31] I mean, you know, we don't need, we're on the water. [58:34] It's a good time. [58:35] We don't need to get so upset. [58:36] But as long as everyone's being safe, you know, it is, I know it can be upsetting when you see somebody doing something unsafe. [58:43] There are some laws here in Minnesota that I want to note. [58:47] Kids under the age of 10 must wear a life jacket. [58:50] I know this is a big question in my house. [58:52] Like, Mom, how long do I have to wear the life jacket? [58:56] It's 10. [58:57] You know, I know that at my in-law's house, it's 12. [59:01] You know, everybody has their own rules. [59:03] Talk to me about the, what is required for life jackets because adults aren't required to wear them, right? [59:12] Correct. [59:12] And there's, you'll see different, it's all situational in my opinion. [59:16] You know, some people, there's also boats that are yacht certified, which if they're based, if they are a certain size, you technically don't have to wear a life jacket. [59:24] And so, one, if I'm a captain of a boat, just recreating, if someone can't swim on the boat, they're going to wear a life jacket. [59:31] You know, anything can happen. [59:33] I don't care how big the boat is, how calm it is. [59:34] If you physically can't swim, I'm going to have a life jacket on you regardless. [59:38] Now, kids are, again, another non-negotiable. [59:40] If that's the state law, they need to be in a life jacket. [59:43] And so many parents, the kids will complain, the life jacket doesn't fit, it's scratchy. [59:48] And that's simply because they don't have a life jacket that doesn't fit properly or is uncomfortable or is 25 years old and you just dug it out of the back of the boat. [59:56] So, I really recommend going into some of your local stores, finding a good fitting life jacket for your kid. [1:00:02] You know, my daughters, they both wear life jackets on the boat all day. [1:00:05] Sure, they complain from time to time, but they are comfortable, they're easy to wear. [1:00:09] And it's something, the biggest thing I see is an equipment failure from just not fitting people in the right life jackets. [1:00:15] Yeah, it's an investment that could save your life. [1:00:17] So, it's an investment that's worth it. [1:00:19] There is a law that took effect last summer, July 1st of 2025, that requires many boat operators to take a safety course and obtain a permit. [1:00:32] Talk to me about that. [1:00:34] And then, also, have you noticed a difference on the water because of this new requirement? [1:00:39] Yep. [1:00:40] So, one thing a lot of people don't realize is if you move, with all the moving and stuff going on now, [1:00:46] if you are a resident, say, in Wisconsin, and no matter what you were born in, if you then move to Minnesota, [1:00:52] if you become a resident of that state, you actually, your voting license in the previous state does not automatically move on to the next one. [1:01:00] So, say you lived in Florida for a long time, moved back to Minnesota, you now have to get a Minnesota license. [1:01:04] And that's because a lot of these boating safety courses are specific to the state. [1:01:09] And they're, whether it's a refresher for some people or a way to get a lot of good information, [1:01:15] it's certainly something you can never have too much safety information or awareness. [1:01:19] Because whether you, I really encourage people, even if you're born after the date where you don't need to get the boater safety, [1:01:25] I really recommend getting it because it's a lot of really good, useful information that could potentially save a life or an accident. [1:01:32] Yeah. [1:01:33] And there's some daily essentials that you recommend bringing on the boat, especially when the weather warms up. [1:01:39] Yep. [1:01:40] And that's, there's a reason why every boat we have comes with a cooler. [1:01:43] You know, you can't have enough water on the boat mainly, and kids can never eat enough snacks. [1:01:48] So, you see a lot of, you know, dads like myself, you want that precious time of their family to be as long as possible. [1:01:54] And if you don't have enough drinks, you don't have enough snacks, maybe it's rain gear, anything preventative, you want to make sure you have plenty of. [1:02:01] So, water is one thing. [1:02:03] It can get hot really quickly out there, and even though you're surrounded by it, you can't drink it. [1:02:07] So, you want to make sure you have plenty of water, stuff to hydrate you, and again, snacks are always important too. [1:02:12] And honestly, towels are one thing. [1:02:15] It sounds silly, but people get cold quickly. [1:02:17] So, you want to make sure you can stay dry, stay warm, and stay hydrated. [1:02:20] Yeah. [1:02:20] Unfortunately, I've been on the boat where I'm like, ooh, I did not pack enough towels. [1:02:23] And that's not a pleasant experience, especially with kids. [1:02:27] Any other tips that you want to offer to help people stay safe and enjoy their time on the water? [1:02:34] Absolutely. [1:02:35] Check the weather ahead of time. [1:02:37] That's one thing. [1:02:38] I know a lot of people are 9 to 5s. [1:02:40] They have Saturday, Sunday off, and that's all they're doing. [1:02:43] And the biggest thing is so many people, they don't monitor storms. [1:02:47] If all of a sudden a storm is rolling in, you're not the only person that needs to pull your boat out of the boat ramp. [1:02:51] So, really try to monitor weather. [1:02:52] We have so much information at our fingertips now with phones and everything else. [1:02:56] Keep an eye on the weather. [1:02:57] It happens fast. [1:02:58] And wind is probably the most important thing. [1:03:01] Everyone focuses on clouds or rains, but wind foreboding is probably the most important thing to watch. [1:03:06] Especially when you're on those big lakes because high wind can make high surf very quickly. [1:03:11] Absolutely. [1:03:12] A quick plug for our weather app, the Fox Weather App, is free to download. [1:03:16] So, that's a good one to check before you go out on the weather. [1:03:19] Travis Robinson from Midwest Water Sports, thank you so much for joining us. [1:03:26] All kinds of good advice in this interview today, and I really appreciate it. [1:03:30] Absolutely. [1:03:30] Thank you, Courtney, and good luck both of you this summer. [1:03:33] Yeah, have fun out there on the water, but always remember to stay safe. [1:03:39] We're going to take a quick break here, but we're going to come back with more news and weather after this. [1:03:44] Wednesday, thanks for joining us here today. [1:04:11] Currently 58 degrees here in the Twin Cities metro. [1:04:15] Let's take a check of our headlines real quick, shall we? [1:04:18] Well, a suspect has been arrested in the shooting of a firefighting plane. [1:04:23] A 48-year-old St. Louis County resident was charged today after law enforcement say he shot at a firefighting plane [1:04:31] that was dumping water on the Stewart Trail fire over the weekend. [1:04:35] A deputy investigating the shooting said that he suspected the man because he had previous contact with him [1:04:42] due to his complaints about float planes flying over his house. [1:04:46] The suspect claims that he was crow hunting when the shooting took place. [1:04:53] And Delano schools have been targeted in a cyber attack. [1:04:56] Classes have been canceled for today following that cyber security incident. [1:05:01] That officials say happened Monday night. [1:05:04] The Internet was shut down immediately after the network was compromised. [1:05:08] So they claim that no further damage could be done. [1:05:11] And they are currently working on identifying and fixing the issue, [1:05:15] saying that kids won't go back to school until they've been assured that it's safe to do so. [1:05:23] And the Moorhead Police Department are investigating a middle school student [1:05:27] who got sick Monday by eating candy they believed contained THC. [1:05:33] Police responded to Horizons Middle School in Moorhead about 1240 in the afternoon Monday [1:05:38] as 10 students reported being ill after eating the candy. [1:05:44] Two had to be taken to a medical facility. [1:05:47] Police say the students involved have not been cooperating as this continues, [1:05:52] as the investigation continues. [1:05:55] All right. And coming up here later in the show, [1:05:58] we are going to talk to a Twin Cities real estate agent [1:06:01] about the current market we have here in the city. [1:06:04] Really depends on what your budget is, I think. [1:06:06] But it looks like it's turning into a buyer's market here. [1:06:09] So we're going to talk to him all about that. [1:06:11] We're also going to have an expert on to talk about [1:06:14] the Minnesota's prediction market ban. [1:06:17] It is the first in the country, [1:06:18] and it prompted a lawsuit from the Trump administration. [1:06:22] So we're going to talk all about that and more after this quick break. [1:06:26] Stay with us. [1:07:00] Here today, well, the Twin Cities home prices saw their biggest annual decline [1:07:05] in more than 14 years back in April. [1:07:10] And here to talk about it is the guy you see on all the billboards across the Twin Cities, [1:07:15] Chris Lindahl, joins me now. [1:07:16] Chris, thanks for joining. [1:07:17] I can't believe, I feel like I have a celebrity in the house. [1:07:20] I feel the same way with you. [1:07:21] Oh, you're too kind. [1:07:23] Talk to me about this. [1:07:24] It seems like we are entering a buyer's market quickly. [1:07:28] Yeah, that's true. [1:07:29] I mean, rates are really volatile, right? [1:07:32] I mean, mortgage rates are up, they're down. [1:07:34] I mean, as of today, they're increasing pretty significantly, [1:07:37] which is getting more expensive for buyers. [1:07:40] But I think the reason why things are getting so volatile [1:07:43] and why we're shifting into a buyer's market so aggressively, [1:07:46] I mean, there's a couple of things that come to mind. [1:07:48] I mean, some of these indicators aren't really good. [1:07:50] Credit card debt is, I mean, is approaching levels that we've never seen before. [1:07:55] Student loan debt, inflation. [1:07:57] I mean, there are, you know, the average savings. [1:08:00] I mean, there are some of these indicators that are really blinking red. [1:08:04] And it's making buyers really nervous. [1:08:08] And unfortunately, homeowners that go on the open market [1:08:10] are sort of taking the brunt of that risk right now. [1:08:14] What's your advice to anyone looking to sell their house right now? [1:08:17] I think the most important thing is if you're considering selling a house [1:08:21] in the upcoming months, fearing the fall is a super important piece of this [1:08:27] because the market is adjusting down. [1:08:30] I mean, I think all the indicators, everything that's out there, [1:08:32] I mean, the last several days you'd see like the reports are not very favorable. [1:08:35] And if it's this bad right now, this fall is going to be even worse. [1:08:40] Because sort of like over, you know, historically you would start to see a decline. [1:08:44] You know, it used to be the spring market would be the peak [1:08:47] and you'd sort of kind of climb down and the spring would go back up. [1:08:49] But several months ago, I was on one of the local news stations [1:08:53] and they were interviewing me and I said, [1:08:55] I'm not sure how much of a spring market there's actually going to be. [1:08:57] And now here we are, right? [1:08:59] I mean, I feel bad for homeowners. [1:09:02] I mean, it is a tough time. [1:09:04] And especially if they're, you know, I think there's a couple of things. [1:09:06] There's like essentially like there's this bubble that's happening [1:09:08] where I think a lot of homeowners still think their house is worth like 2021 pricing [1:09:13] and then they're overestimating what the open market can do for them. [1:09:17] And so they go in a little too optimistic and then they get stuck. [1:09:21] And I think people are seeing and hearing that everywhere [1:09:23] with price reduction, price reduction, price reduction. [1:09:26] I mean, most homeowners that I talk to, you know, [1:09:28] they're well aware that the market has shifted. [1:09:30] They just haven't applied it to themselves yet. [1:09:32] So it's like looking down, you look at a neighborhood and you're like, [1:09:35] oh yeah, three houses on my block. [1:09:36] I'm sort of surprised they haven't sold yet. [1:09:38] Yeah. [1:09:39] Those conversations are happening more today than they have before. [1:09:41] I mean, it's a higher end, but there's a house down the street from me [1:09:43] that's been sitting on the market for a year. [1:09:45] That's right. [1:09:46] And this conversation is coming up a lot. [1:09:48] So I think the eyes and ears test for so many homeowners, [1:09:51] they're starting to see it. [1:09:52] I don't know if they fully realize how much that has impacted them yet. [1:09:57] Some of them that are on the market are realizing it [1:09:59] because they've been on the market for months and months and not selling it. [1:10:02] It's super stressful. [1:10:03] It's unfortunate. [1:10:05] We are in a correction. [1:10:06] Right. [1:10:07] In a shifting time. [1:10:08] And I think there are a lot of things that were blinking, [1:10:11] a lot of lights that were blinking ahead of time before we got here. [1:10:13] But this is, you know, these are some of the first reports that have come out [1:10:17] in housing, especially around here locally, where things don't look so favorable. [1:10:21] All right. [1:10:21] Compared to previous springs, are you seeing a lot of houses being listed? [1:10:26] Are there a lot of houses in the inventory? [1:10:28] Yeah. [1:10:28] There's an uptick because I think a lot of homeowners, [1:10:31] especially ones that went through this last time where there was a correction, [1:10:36] we've also had historic record levels of equity, home equity gained, right? [1:10:41] As these values have went up over time, there's been a lot more equity in these homes. [1:10:45] And I think a lot of people remember last time, like, I want to grab my equity. [1:10:48] I don't want to go on the market. [1:10:49] I don't want to wait. [1:10:49] I want to get rid of it. [1:10:51] And so inventory is climbing and demand is softening, right? [1:10:55] And homes are getting more expensive. [1:10:57] And it's just, this is basic economics. [1:10:59] It's supply and demand, right? [1:11:00] I mean, if things get more expensive and there's a surplus of inventory, [1:11:04] the inventory, the homeowners on the open market are going to get less. [1:11:08] You know, when we bought a home, it was back in the 2.8% rate days. [1:11:12] Those people seem to be sitting on their homes because they don't want to have to pay a 6.5% mortgage rate. [1:11:20] So they may have outgrown their home, but they're like, I'm going to be here forever. [1:11:25] Right. [1:11:25] Do you see that happening? [1:11:26] That part of the market's frozen, right? [1:11:28] Unless there's some life-changing event of relocation or death or divorce or expecting or something like that. [1:11:35] Like most of those people aren't moving. [1:11:37] So that part of the market is frozen. [1:11:39] But I will tell you that there's pressure now, even on the, even on the homeowner at 2.8, 3%, 3.5%, [1:11:45] because things are getting more expensive, right? [1:11:48] I mean, I mean, we know groceries and I mean, all the inflationary things are just going up. [1:11:52] Like the cost of living is really expensive. [1:11:55] And so, although it is, it is way less of a payment, it's all the other things that are happening in people's lives [1:12:03] that are, that are getting expensive, that are forcing some tough conversations right now. [1:12:07] You have a pulse on these things. [1:12:09] Do you see mortgage rates coming down anytime soon? [1:12:14] I mean, I would have thought they would have been a little bit lower right now. [1:12:19] But I think everything's off the table now. [1:12:21] I mean, I could see low sixes just as much as I could see it going eight plus, right? [1:12:27] I mean, because a lot of the reports that are coming out around inflation and the things that are going on [1:12:32] suggest that rates might be going up even more, right? [1:12:35] And what I've learned, I mean, I've sat at the kitchen table with thousands and thousands of homeowners [1:12:40] throughout the years, home buyers buy on payment. [1:12:44] So it's a combination of all of this stuff. [1:12:46] And so, and there's only so much share of wallet. [1:12:50] There's only so much in the wallet that a consumer has. [1:12:53] And so when other things are taking more of the wallet, and then you add in housing expense [1:12:58] that is increasing between rates and everything else, there's not enough to go around. [1:13:03] And so that freezes the home buyer, which then impacts the homeowner because now they're on [1:13:08] the market and there are less buyers. [1:13:10] And then the buyers that are active know there are less buyers. [1:13:13] And so they're taking advantage of the homeowners that are on the open market because they know [1:13:18] that they've got, you know, the leverage is flipped. [1:13:20] So as you flip back to more to a buyer's market, so it's a frustrating time for homeowners that [1:13:24] are on the open market. [1:13:26] I was just, I was looking at my notes because the median home sale price dropped 2% year [1:13:30] over year to $392,000. [1:13:34] So does that signal anything to you that the home, that the median home price is dropping? [1:13:39] Well, I'll give you that. [1:13:40] I mean, that's, yeah, obviously there's some concern there, but I'll give you one that's [1:13:43] even a little bit bigger than that. [1:13:44] Closed home sales year over year, 6.3% down. [1:13:47] Wow. [1:13:48] 6.3%. [1:13:49] I mean, when you start adding those types of percentages in it, I mean, it is, it is [1:13:52] scary. [1:13:53] Another stat here from our local MLS, you know, as of today, there are nearly 10,000 homes [1:13:58] that have canceled or expired on the MLS, meaning they went on the open market and they [1:14:03] didn't successfully sell. [1:14:04] And when do you expire? [1:14:05] Six months or? [1:14:06] It depends. [1:14:07] Like, I mean, everyone has a different timeline of when they want to go on, but the market, [1:14:10] whether, whether it was a month or whether it was 12 months or whatever time period it [1:14:13] was, the market, the open market rejected it. [1:14:16] And, and so now they're back to, you know, do I stay, do I rent it out? [1:14:20] Do I put it back on the market again? [1:14:21] And, and people are exhausted with being on the market and the showings and the price [1:14:26] reductions and the open houses. [1:14:27] It's, and I think most homeowners would say they got a little spoiled if they sold at [1:14:33] the peak of the market back in 2021. [1:14:34] And like you had mentioned, we went very much overpaid for our house, but we got a low rate. [1:14:40] So it kind of even. [1:14:41] And so there was a, you know, I think a lot of people got spoiled in, and they were able [1:14:45] to sell quickly too. [1:14:46] Totally. [1:14:47] And now it's, and I think now if you were going, uh, this isn't quite right, I'll tell [1:14:51] you like, uh, just a quick little antidote that we're, it all changed for us. [1:14:54] You know, I, where the big shift happened is when, so we obviously we have our guaranteed [1:14:59] cash off program, which is the trade in your house, skip the open market. [1:15:02] We have real estate agents calling us for houses that they have on the market and an [1:15:06] alarming level, asking us for an offer on their listings. [1:15:10] And when I started seeing this, I went, this is a shifting time, right? [1:15:15] Where the house isn't moving and now they're reaching out to us for an offer. [1:15:19] And it's a, yeah, it's, it's a, it's a challenging time and it's, it's concerning. [1:15:23] Cause I think there are a lot of people in the market right now that aren't aware of [1:15:27] what's really going on, or they're a little bit delusionally optimistic. [1:15:31] And I understand why, cause I think a lot of people that want to sell a house, they start [1:15:36] with, I need a down payment. [1:15:37] I need to pay off some credit cards. [1:15:39] Like they kind of reverse engineer where they need to sell based on the things that they [1:15:42] need to do. [1:15:43] And then the open market rejects it. [1:15:45] And then everything that they needed to do starts coming down with price reductions, price [1:15:48] reductions. [1:15:49] And sometimes they get fully rejected like the nearly 10,000 homes that don't sell at [1:15:53] all. [1:15:54] So do you think if you're in the market to buy right now, would you hold out because [1:15:58] it's going to dip a little more? [1:15:59] I mean, the, I mean, it depends, right? [1:16:02] It depends. [1:16:03] It really comes down to, can you afford to do it, right? [1:16:05] Can you afford to do it? [1:16:06] I mean, you're going to get a deal, right? [1:16:08] If you're a buyer, you're going to get a deal because homeowners that are on the open [1:16:11] market are totally exposed right now, right? [1:16:13] I mean, it's like if you're looking for a house today and you see a house has been on the [1:16:17] market for an open market for four months and it's price reduction, price reduction, [1:16:21] you know, you do. [1:16:22] And are you going to come in and give full price? [1:16:24] No, no, no way. [1:16:25] Right. [1:16:25] You're going to come back with a low offer. [1:16:27] And I think those are some of the stats that aren't showing up right now in the reports [1:16:30] that are all over the news and the headlines everywhere right now. [1:16:34] There's things like you're on the open market for three or four months and you get an offer [1:16:39] that's $30,000 under your asking price. [1:16:42] That's the level of offers that are coming in from buyers right now because they know that [1:16:45] there's no competition, right? [1:16:47] And so then you're having to counter offer and try to get them up. [1:16:49] And most people are really frustrated with negotiations and constant negotiations. [1:16:53] And even if you get lucky enough on the open market to negotiate an offer that gets accepted, [1:16:58] then you've got to clear home inspections. [1:17:01] And then if you're the only buyer that's interested in a property, well, what are you going to do? [1:17:04] You're going to negotiate more requests. [1:17:06] The inspector goes in, you're like, I don't like the carpet. [1:17:08] I don't like this. [1:17:09] I don't like the cupboards. [1:17:10] I think this might be a safety concern. [1:17:11] The roof might need this. [1:17:12] And so then they nickel and dime you on all of these home inspections. [1:17:16] And then after that, then you have to worry about will the loan for the buyer, will it [1:17:21] appraise, right? [1:17:22] Will it appraise with all the volatility that's going on in the market? [1:17:24] And then after that, you have to hope that nothing changes in the home buyer's job, right? [1:17:29] So with jobs being impacted in today's world, or maybe even credit cards, that debt to income [1:17:34] ratio impacts their ability to get qualified to close on that loan. [1:17:38] And so there's a lot of risk right now in the market. [1:17:41] And I think people going on the open market, it is a higher gamble today than it's been [1:17:44] before. [1:17:45] Yeah. [1:17:45] It's all so interesting. [1:17:47] Do you see it? [1:17:48] Because like we have a coworker who's looking for a house and she said, you know, we put [1:17:52] offers in on six houses all over asking, no inspection. [1:17:56] So I'm wondering, is there a price range or a location that maybe is not being impacted [1:18:02] right now? [1:18:03] Right. [1:18:03] So it's back to kind of the economics. [1:18:05] Great question. [1:18:06] It's the supply and demand, right? [1:18:08] So if there are little pockets left where there's not a lot for sale and there's more [1:18:12] demand, the challenge is, especially for a homeowner on the open market, they don't [1:18:16] have access to that data because you can't go to any website and go, how many home buyers [1:18:20] are looking on the open market in this particular area and price point at this time? [1:18:24] And the only way to find out is to go risk the open market and put it on. [1:18:28] And sometimes you win and more often than not in this market, you lose. [1:18:32] Right. [1:18:32] And so that there are little tiny pockets like you're talking about. [1:18:36] And, you know, I would imagine your friend and coworkers that have done this, they might [1:18:39] be looking in areas that like everyone's looking in, right? [1:18:42] But those are very little pockets and there's very few of them left. [1:18:45] The majority of homeowners right now are feeling excruciating pain on the open market. [1:18:49] And you can see that on any real estate website that you want to go to, just start searching [1:18:53] and look at the number of price reductions and the days on market is climbing, you know, [1:18:57] quickly. [1:18:58] Yeah. [1:18:58] Very different from when I was looking and it was like, we need your offers by tonight. [1:19:02] Yes. [1:19:02] There's no opportunity for a counter. [1:19:04] You know, I mean, I remember we lost out on a home and we offered an exorbitant amount [1:19:09] over asking and we were the fourth highest offer. [1:19:11] Right. [1:19:11] Because this was, you know, when rates were super low. [1:19:14] That's right. [1:19:15] And there was a lot of movement to the burbs at that time. [1:19:19] And we talked about those people sitting in those homes because they have a 2.8% mortgage rate. [1:19:24] And it's like, I'm going to die in this house because I don't think I'm ever going to get a better rate. [1:19:27] You know, what people I don't think think about is, but if you go out there on the open market [1:19:31] right now and you're getting a really good deal on a house, you know, maybe it's worth [1:19:36] giving up that 2.8% rate because you're going to get a better deal on a house and it kind [1:19:41] of evens itself out. [1:19:42] It could. [1:19:43] It's all economics. [1:19:44] Right. [1:19:44] So it all, I think it's, I've seen scenarios where that does work out and I've seen others [1:19:49] that go, this open market process has been so stressful. [1:19:52] I never want to own another house again. [1:19:54] Yeah. [1:19:54] Right. [1:19:54] And you've seen some, they're going, I want to own another house, others go, I just, I [1:19:57] want to be done with this whole thing. [1:19:58] I don't like the level of risk here of the volatility of, you know, just several years [1:20:03] ago, it was like an all-time high. [1:20:04] Everyone's got so much equity, you know, big news reports everywhere talking about it to [1:20:08] now, like, are we free falling? [1:20:09] Are we, are we stabilizing? [1:20:11] Are we going down? [1:20:12] Are we going up? [1:20:13] And then, I mean, even. [1:20:13] But then the problem is, do you see more people staying in their homes, not as many people [1:20:18] listing? [1:20:18] And that's what, that's what we saw the last several years. [1:20:21] But I think the pressure now of the economy and everything that's downsizing. [1:20:26] Yes, they are. [1:20:26] And I, and I think it's, it's, it's getting to a point where, I mean, even the one I didn't [1:20:30] mention earlier is gas, right? [1:20:32] I mean, look at all the conversations around how expensive gas is today. [1:20:36] That impacts real estate and, and commute and driving. [1:20:39] And so a lot of open market buyers that have to drive to work are feeling some pain when [1:20:45] it comes to gas prices. [1:20:46] And so it just seems like everywhere you look, there's something else that's gone. [1:20:50] This isn't great. [1:20:52] How long do you think this could last? [1:20:53] I mean, you've been in the business so long here in the Twin Cities and real estate is [1:20:56] constantly like this, you know, it's flip-flopping from a buyer's market to a seller's market [1:21:00] to a buyer's market, to a seller's market. [1:21:02] How long do you think this could last? [1:21:04] Especially here in Minnesota where we're unique and we really have a season, you know, spring [1:21:08] in summer is our season. [1:21:10] That's right. [1:21:10] It's like the kiss of death if your house is still listed in October. [1:21:13] Yes. [1:21:14] So talk to me about that. [1:21:16] We're at the beginning phases of this shift. [1:21:18] Like, and you're right. [1:21:20] I mean, we've had plenty of them. [1:21:21] They all look different. [1:21:22] Like this one isn't, wasn't led by housing. [1:21:26] It's going to be led by the credit cards. [1:21:28] It's going to be led by student loan debt. [1:21:29] It's going to be led by other inflation, other things. [1:21:32] But it's now starting to impact housing because of just the sheer number of dollars that are involved [1:21:38] here for so many homeowners. [1:21:41] I don't want to alarm anyone, but it is the beginning. [1:21:44] There's just too many indicators that are off, that are blinking, that aren't off. [1:21:48] And, you know, I think the thing is I look at like a lot of the numbers, there are a lot [1:21:52] of things you don't see in the numbers that are actually far worse, right? [1:21:55] So when you go on the open market, for example, like the home inspection requests are up significantly, [1:22:02] but you don't see that in any report today. [1:22:03] Because if an open market buyer knows they're the only buyer, they're going to ask you for [1:22:07] everything they possibly can in the negotiation, right? [1:22:10] And so like those types of things don't show up in any reports. [1:22:12] And if the markets where it's at today, and to your point, historically in our area, this [1:22:18] would have been what would likely be somewhere around the peak of the year. [1:22:22] If it's here now, that's why I said fear the fall, like the fall is going to be a lot worse. [1:22:26] Like if it's if we didn't hit a spring market now, there is no way that later in the year [1:22:32] is going to be better, right? [1:22:33] And I think that's the that's the thing that I would just share today with everyone that's [1:22:37] watching is proceed with caution, right? [1:22:41] I mean, this is no longer like just hire an agent, throw it on the open market. [1:22:45] And it's a for sure bet that tomorrow you're going to have six offers. [1:22:48] And, you know, everyone's bidding way over asking price. [1:22:51] You get this wrong and it's extremely costly, frustrating, and it's a lot of stress. [1:22:56] Well, I really appreciate your candidness, because I think a lot of real estate agents [1:22:59] would be like, it's fine, you know, get out there, buy, sell. [1:23:03] But you're very candid about the situation and honest. [1:23:05] And I appreciate that. [1:23:07] Yes. [1:23:08] Because you're here, can we just get one of these? [1:23:10] Yes, let's do it. [1:23:11] One of these. [1:23:12] Yes. [1:23:12] Chris Lindahl, the man you see on the billboards. [1:23:15] So much information. [1:23:16] I mean, wow. [1:23:17] So much good insight. [1:23:18] I really appreciate you joining us. [1:23:19] Thank you so much. [1:23:20] We're going to take a quick break. [1:23:21] We'll be back. [1:23:22] After Fox 9 all day, I'm Courtney Godfrey. [1:24:09] Well, Minnesota will soon become the first state to ban prediction markets. [1:24:13] And as a result, the Trump administration just yesterday filed suit against Minnesota for this [1:24:20] very ban. [1:24:22] Joining us to talk all about it is Ryan Butler, senior news analyst with Covers.com. [1:24:27] Ryan, thanks for joining us. [1:24:29] Yeah, happy to be here. [1:24:30] Thanks for having me. [1:24:31] Ryan, first of all, people might not know, what is a prediction market? [1:24:34] Yeah, prediction market is a way for two users to trade a wide range of things now of commodities [1:24:42] derivatives. [1:24:43] Now, this encompasses sports, which is actually most of what their trading volume is, but also [1:24:47] current events, pop culture, who's going to win an award, things like that. [1:24:51] It's a pretty wide-ranging plan to download and use on your phone that allows you to, as [1:24:56] their slogans say, buy or sell or trade on almost any occurrence. [1:25:00] Yeah, I mean, you can bet on the weather. [1:25:02] It's pretty amazing. [1:25:04] The attorney general here in Minnesota said that they wanted to ban prediction markets [1:25:09] because it preys on a vulnerable population, young people, low-income individuals, and it [1:25:17] just helps the ultra-rich get richer and the rest of us get poorer. [1:25:21] That's a direct quote from our attorney general, Keith Ellison. [1:25:23] But I want to hear from you. [1:25:25] I mean, why do you think that the state of Minnesota decided to ban this, and do you [1:25:30] think other states could follow? [1:25:33] Yeah, so that outline is definitely one of the concerns, but I think it's one of the larger [1:25:37] things, and maybe the more pressing or the more pertinent is states' rights, essentially, [1:25:41] is the right to regulate gambling, which is what Minnesota and most other states have determined [1:25:46] what these platforms are. [1:25:48] Now, there is a really long legal battle going on with this about whether this is sports betting [1:25:53] or gambling of some form, or if this is more akin to stock trading, a very kind of complex [1:25:57] question that we all expect to be resolved in the Supreme Court. [1:26:01] But in the meantime, it's this idea. [1:26:02] Minnesota is one of 11 states that hasn't legalized sports betting. [1:26:05] This is a big focus of this particular bill, and it's the idea that Minnesota, like the other [1:26:10] states that choose not to have sports betting, should have the right to do so, where critics [1:26:14] like the attorney general here in Minnesota view that this is not only an infringement of the [1:26:18] state's rights, but also basically allowing something that in Minnesota they want it to be [1:26:22] considered illegal. [1:26:23] So there's a lot of different aspects with it, but those are kind of the two big elements [1:26:27] that Minnesota sees, and a lot of other states have similar views. [1:26:30] So how was this able to happen in Minnesota in the first place if sports betting is illegal? [1:26:35] Yeah, these platforms are regulated by the federal government right now, the CFTC, which [1:26:40] considers them more akin to stock trading. [1:26:43] It's similar to the Robinhood app. [1:26:45] It's kind of this idea. [1:26:45] And again, it's that legal definition, right? [1:26:47] It's that fine line is, you know, if I put $10 in a major company, the S&P or something [1:26:54] like that, and wait off for it for five years, it's probably investing, right? [1:26:57] That's not necessarily trading or gambling. [1:27:00] But if I'm day trading on a risky tech stock and I'm trying to see if I can get more money [1:27:05] at the end of the day or the beginning of the hour than I had earlier, you might consider [1:27:09] that more like gambling. [1:27:10] It's an interesting question with it. [1:27:11] And so here are these prediction market platforms. [1:27:13] The federal government, the Trump administration has been adamant, and they are the ones actually [1:27:18] suing Minnesota, not the prediction markets themselves. [1:27:20] It is the federal government going after Minnesota, trying to prevent these from operating. [1:27:25] They have maintained that this is commodities. [1:27:27] This is like stock trading, that the states cannot and should not do this. [1:27:32] And that's part of why this has become such a big question of all is the federal government, [1:27:35] politics, and a lot of different moving parts. [1:27:37] Yeah. [1:27:38] Why does the Trump administration care? [1:27:39] I mean, why do they care if we ban polymarket? [1:27:44] I don't understand why the administration would care. [1:27:47] Yeah. [1:27:48] So from the explicit outcome of this is the idea is that federal government should have [1:27:54] oversight over the stock type futures. [1:27:56] And that makes sense, right? [1:27:57] If you were looking at just the stock market, it'd be pretty chaotic if the 50 states all had [1:28:01] different rules for stocks. [1:28:03] We wouldn't have an Aztec or the S&B like the way we do now. [1:28:07] We wouldn't have these trading forms. [1:28:08] Why are they so aggressively going after it? [1:28:13] Well, there is ties to it. [1:28:14] Donald Trump Jr. is an advisor to Cauchy and Polymarket, which are the two largest prediction [1:28:19] markets available in the U.S. [1:28:21] So there's that aspect with it, too. [1:28:23] And there's also this idea of kind of what's gone with it, that the Trump administration [1:28:27] has been very permissive of cryptocurrency. [1:28:29] It's been very permissive of artificial intelligence. [1:28:31] A lot of these new tech innovations, which Cauchy and Polymarket and these prediction markets [1:28:35] are part of, the Trump administration has been very supportive of it. [1:28:38] And it kind of ties into this larger idea of these platforms should have essentially [1:28:43] unencumbered or limited reign, especially at the state level. [1:28:46] So I'm sure these companies don't like this ban that is set to take effect August 1st. [1:28:53] What do you expect they will do about this new law? [1:28:57] Yeah, so they could enjoin with it, the CFTC going first and then maybe like an amicus brief, [1:29:02] some other legal form with it. [1:29:03] They'll obviously support the federal government and their efforts to do with this. [1:29:07] What will happen is that there probably will be some sort of ruler injunction that stops [1:29:11] it from going into place August 1st to try to stop this ban from happening. [1:29:15] But we'll also have to see. [1:29:16] There are court cases going on in more than a dozen states already. [1:29:21] There is two circuit federal level court cases that have already gone on. [1:29:25] There is already pushes to bring this to the Supreme Court. [1:29:27] And ultimately, I think the Supreme Court is going to have to rule on this. [1:29:31] When there is division, there is the New Jersey, our third circuit court in New Jersey [1:29:36] ruled in favor of these prediction markets. [1:29:37] We're looking at a court in the West Coast of Nevada that's looking like it might rule [1:29:41] against them, adding even more complexity to all this. [1:29:44] So the bottom line is that this is going to the Supreme Court. [1:29:47] This is another battlefront. [1:29:48] This is another idea with it. [1:29:50] And Minnesota has put itself there to be on the forefront of what's going to be an ongoing [1:29:55] and protracted legal battle nationwide. [1:29:58] Why Minnesota? [1:29:59] I mean, Minnesota is the first. [1:30:00] It sounds like there's several states that are fighting this. [1:30:02] Why do you think Minnesota was the one willing to take the first swing at this? [1:30:10] Yeah, a lot of it was just kind of the political willpower with it. [1:30:13] As simple as the answer with that, these futures contracts that we're looking at here, [1:30:19] a lot of them originated from the idea of trading grain prices as sort of a hedge of [1:30:24] insurance in case there was a bad crop. [1:30:26] Minnesota, obviously, a long agricultural history and everything with it. [1:30:29] That was the intended purpose of these contracts. [1:30:32] And now this is kind of being distorted, that it's expanded to basically everything else. [1:30:37] It's kind of crazy to think that something that was 100 years old, they wouldn't have [1:30:40] ever imagined, you know, placing trades on how many Taylor Swift albums are going to [1:30:44] be sold, things like that. [1:30:46] So that's one of the ideas with it. [1:30:47] I think Minnesota is also one of the few remaining states, one of the 11, like I said, that doesn't [1:30:51] have any form of legal sports betting. [1:30:53] The biggest criticisms with these platforms has been that they are illegal sports betting. [1:30:57] And it makes sense that Minnesota policymakers would want to be on the forefront of this [1:31:01] for those two areas. [1:31:03] Do you think that the ban will actually go into effect August 1st, or will there be some [1:31:07] kind of court order stopping it? [1:31:10] If I could place an event contract, as I said, on one of these prediction markets, I would [1:31:14] say that there is a ruling that stops the ban from going into effect first as they continue [1:31:19] to look through this process. [1:31:20] They also may wait and they may defer until the Supreme Court ruling, which could come the [1:31:24] next 12 to 18 months or so. [1:31:26] We could see something like this. [1:31:27] So I would see the court at the moment as it takes. [1:31:30] These are very long-winded, slow-moving processes, but I could see the court siding with the prediction [1:31:36] markets and saying, we won't enforce this ban until we get more clarity from the other [1:31:41] courts or until that here the local courts have more time to figure out what's going on. [1:31:46] Is there any other way, if they do that, and the courts side with the federal government, [1:31:51] say you can't ban it, is there any other way that Minnesota could go about making this illegal? [1:31:58] Yeah, there's workarounds. [1:31:59] You could also try to impose a tax of some sort that makes it prohibitive. [1:32:03] You could try to go after payment processors. [1:32:05] You could try to go after advertisers. [1:32:07] There's a lot of different angles with it. [1:32:09] This bill they passed is pretty sweeping. [1:32:11] It's pretty comprehensive. [1:32:11] They wanted all those groups I just mentioned to be kind of encompassed by it. [1:32:15] So there are other ways, but they're limited. [1:32:18] And ultimately, states do have to listen to the federal government. [1:32:21] And when the federal government has been so aggressively protecting these platforms, [1:32:26] it kind of gets hard for a state to be able to say no. [1:32:29] What about at the end of the Trump administration? [1:32:32] If we get a different party in the White House, could things change? [1:32:36] Or is this a bipartisan issue? [1:32:39] No, absolutely. [1:32:40] Today, actually, in the Senate, earlier Wednesday, we saw bipartisan support against these prediction [1:32:47] markets and for regulation. [1:32:48] But one of the big things to your original question is, absolutely, right now, a lot of [1:32:52] the prediction markets' legal argument is that they are approved by the federal government. [1:32:56] When the federal government says you're OK, there's not much states can do otherwise. [1:33:00] So if a Democrat takes over in 2029, they could change the makeup of the CFTC. [1:33:06] Right now, the CFTC only has one member. [1:33:08] It's supposed to have five. [1:33:09] They could put in a more Democratic-leading CFTC, which has a broad leeway to approve or [1:33:15] reject what these types of event contracts are offered. [1:33:17] And a Democratic CFTC from the federal government could absolutely say, nope, we're banning everything [1:33:22] except the historic grain futures and crop prices and things like this, and we get rid [1:33:26] of the sports with it. [1:33:27] So it's a huge factor that goes into it. [1:33:29] And if you look at the long-term viability of these platforms, if the Supreme Court ultimately [1:33:34] rules against them, if the federal government makeup changes significantly, we could see a [1:33:38] drastic curtailing of what these prediction markets are able to do. [1:33:41] All right. [1:33:41] So what I hear you saying is that this story isn't going anywhere. [1:33:44] We're going to continue to talk about it. [1:33:46] Ryan Butler, senior news analyst with Covers.com. [1:33:49] I appreciate you joining us. [1:33:52] Thanks for having me. [1:33:54] All right. [1:33:54] And like I said, Minnesota will become the first state to ban prediction markets. [1:33:58] That ban is set to take effect on August 1st. [1:34:02] All right. [1:34:03] We are going to take a quick break here, but we will be back with more after this. [1:34:06] Today, it's currently 58 degrees here in the Twin Cities metro, but in other parts of the [1:34:40] country, they're actually getting some late season snow. [1:34:44] Take a look at this video from Colorado. [1:34:47] The Rocky Mountains or parts of the Rocky Mountains are getting blanketed with snow as unsettled weather [1:34:54] grips Colorado. [1:34:55] This is all so ironic because, unfortunately, that region had very little snow all winter [1:35:02] when they really needed it, when the ski resorts were open. [1:35:05] But this footage was posted to social media in Woodland Park, Colorado, and it was estimated [1:35:11] that that area got about three inches of snow today. [1:35:16] So just incredible considering that Colorado had no snow this winter, and now there they [1:35:20] are getting snow when they don't want it. [1:35:23] They wanted it back in February. [1:35:26] I'm going to bring in our very own meteorologist, Erica Marazic, to get a check of the weather [1:35:31] here. [1:35:31] Look at you, Erica. [1:35:32] So beautiful and pink today. [1:35:34] Thanks. [1:35:34] Yeah, I was feeling springy with the sunshine and temperatures that are, well, they're a [1:35:38] little below average, but it's warmer than yesterday. [1:35:40] Well, on Wednesdays, we wear pink, Erica. [1:35:42] Right. [1:35:42] I forgot about that. [1:35:43] I didn't even do that on purpose. [1:35:45] Of course you didn't. [1:35:46] Yeah, great movie. [1:35:47] Today, some sunshine, feeling more comfortable than your Tuesday. [1:35:52] A couple degrees warmer, also dry, and at the moment, barely any clouds over our state. [1:35:58] A few passing clouds to the south, but other than that, it is just a very clear, quiet day. [1:36:04] And then overnight tonight, it's going to stay warmer than last night, but there is a frost [1:36:08] advisory out for a few counties that are in the Arrowhead. [1:36:11] That's Lake Cook, part of St. Louis counties. [1:36:15] So up in the north and the east, cover up the plants, but nowhere else really needs to [1:36:19] be doing that for tonight into tomorrow. [1:36:21] And then for today, temperature started off actually in the 30s. [1:36:25] I wore a fleece this morning. [1:36:26] It kind of skipped out on the winter coat, but I also wasn't outside for very long. [1:36:29] And then afternoon highs so far, about 58 degrees. [1:36:32] And across the region, mostly 50s and 60s. [1:36:35] A little bit warmer towards the west. [1:36:37] That's 61 for Bemidji, Detroit Lakes. [1:36:39] 58 here in the Twin Cities, and temperatures sticking to those mid to upper 50s south of [1:36:45] the Twin Cities. [1:36:46] And then at the moment, breeze is pretty light, 5 to 10 miles an hour, coming from different [1:36:51] directions for different parts of the area. [1:36:53] But overall, just completely, mostly clear. [1:36:55] Blue sky looks gorgeous outside. [1:36:57] Grab the sunglasses if you still have plans later today. [1:37:01] Temperature is 58, and that's more of a May-ish or April-ish temperature than a May. [1:37:07] So, April for the week. [1:37:11] So, next couple of days staying below normal temperature-wise, but it's going to be fairly [1:37:14] dry today. [1:37:15] And for the majority of the daytime, well, for all of tomorrow, majority of the daytime on [1:37:20] Friday, there is a chance for a shower rumbler to move through late Friday into the first [1:37:27] half of Saturday. [1:37:28] And then after that, that's when the trend changes. [1:37:31] So, expect a huge warm-up by next week. [1:37:35] So, the second half of your Memorial Day weekend, temperatures are going to be in the 80s, and [1:37:39] it's looking like they're going to stay fairly warm throughout next week as well. [1:37:43] So, that's what's ahead for the next couple of days. [1:37:46] Okay, Erica. [1:37:47] I mean, I love to see that. [1:37:48] 80s for Memorial Day? [1:37:49] Come on. [1:37:50] That is perfect boating weather. [1:37:52] Literally. [1:37:53] Perfect weather for the pool. [1:37:53] Camping weather. [1:37:54] Yes, yes. [1:37:55] And the bugs aren't too bad yet, so that's awesome. [1:37:59] By the way, I like that MAPROL, you should copyright that. [1:38:03] That one I have to give credit to Ian for. [1:38:06] Okay, okay. [1:38:07] Ian Leonard, always taking all the credit. [1:38:09] He'll trademark that one with the Stay Sky Aware, too. [1:38:12] Okay, great. [1:38:12] All right, Erica, thanks so much. [1:38:14] We'll see you again tomorrow. [1:38:14] Thanks, bye. [1:38:16] All right. [1:38:17] We love on this show to take a look at what is trending on social media. [1:38:21] This one is a little newsy here because we got video from the Minnesota Air Rescue Team [1:38:27] who showed them rescuing two people who were stranded in the wilderness of northern Minnesota [1:38:33] on Thursday. [1:38:35] Mart released this footage on Facebook explaining that the two people were stranded in the wilderness, [1:38:41] the BWCA, after their canoe capsized and sank. [1:38:45] The rescue team said that the people did not have the gear to make it through the night [1:38:51] and that there were high water levels and strong currents and that complicated ground rescue efforts, [1:38:58] so they had to go in through the air. [1:39:01] State patrol pilots and the St. Paul Fire Department were able to help there. [1:39:06] But just amazing video and a great reminder that if you're going to go into the boundary waters, [1:39:12] you need to go prepared. [1:39:14] Like I said, rescuers said that these individuals did not have the proper supplies to be able to survive overnight, [1:39:21] and so they were lucky that these guys were able to get out there and help them because, yeah, it's just too bad. [1:39:29] If you're going out in the boundary waters, please be prepared and have the correct gear [1:39:33] and the correct training I think is the lesson here. [1:39:35] Yeah, this is a super scary situation, obviously, but the Minnesota Air Rescue Team, [1:39:41] they actually have a really cool Facebook page where they have multiple videos of them conducting rescues like this. [1:39:48] And hopefully tomorrow we're going to get someone from, [1:39:51] MART is the acronym for the Minnesota Air Rescue Team, on the show to kind of walk us through what the rescue looked like [1:39:59] and just give us some general safety tips. [1:40:02] I mean, the rescues that they conduct are for a multitude of different situations, [1:40:07] but, I mean, I'm sure they have some good tips. [1:40:10] If you find yourself in the situation, what you can do to make the rescue operation go as smoothly as possible. [1:40:15] And by the way, these rescue operations are costly and they're dangerous. [1:40:20] So, you know, yeah, just again, if you're going to go out there, make sure you're prepared. [1:40:24] Yeah, absolutely. [1:40:26] So, looking forward to have one of them on. [1:40:30] And like I said, check out their Facebook page because they have some really cool videos on there. [1:40:34] Awesome. [1:40:34] I'll have to do that. [1:40:35] Thanks, Grace. [1:40:35] I appreciate your insight there. [1:40:37] And I love this next one because it is so cute. [1:40:40] For our animal lovers, you're going to love this one too. [1:40:42] When a Texas Tech graduate, Michaela Mews, walked the stage at her college graduation this past weekend, [1:40:49] she had her service dog, Sadie, by her side. [1:40:53] By the way, they were wearing matching graduation gowns. [1:40:56] How adorable. [1:40:57] But the moment was made extra special because, much to Michaela's surprise, [1:41:01] her dog was also handed his vario to Ponga Day. [1:41:07] Yes, such a good doggie. [1:41:25] And you could tell that Sadie liked getting that bone there. [1:41:27] But Mews credits Sadie, who helps manage her various health conditions as her lifeline. [1:41:33] And she credits Sadie with getting her through her four-year degree. [1:41:37] Mews graduated with a bachelor's degree in, no surprise, animal sciences. [1:41:41] And she plans to attend vet school where Sadie will be by her side. [1:41:48] I mean, come on, Grace. [1:41:50] You've got to love this. [1:41:51] I love it. [1:41:52] I love everything about it. [1:41:53] I mean, I just, the dog is so well-behaved, first of all. [1:41:58] I mean, would your dog act that way? [1:42:00] I mean, girl. [1:42:02] No, my dog would be taking a pee right there in the middle of the carpet. [1:42:06] Listen, let me tell you, there is a reason why Shepard is not a service animal. [1:42:10] So, Shepard has the energy of a Kentucky Derby racehorse and about the manners of a two-year-old. [1:42:17] That's vivid. [1:42:18] That's a vivid description, Courtney. [1:42:20] He is about two years old. [1:42:22] So, yeah, no. [1:42:22] Shepard is not worthy of being a service dog, but he is quite the killer in the, not literally, [1:42:29] but quite the killer in the hunting field. [1:42:31] So, he's a great hunter, but no, he's not for this. [1:42:34] So, you get a diploma in hunting. [1:42:36] My dog, I think, would probably get a diploma in being cute. [1:42:39] She's a rescue. [1:42:41] We love her. [1:42:41] Napping. [1:42:42] Napping. [1:42:42] Oh, she's a great napper. [1:42:44] She loves to sunbathe, but, yeah. [1:42:47] Yeah. [1:42:47] And she doesn't bark. [1:42:49] She doesn't bark. [1:42:49] So, that's a plus. [1:42:51] That is a plus. [1:42:52] Yeah, absolutely. [1:42:53] But this dog, obviously, just better than, the number one dog. [1:42:58] Obviously, deserved a diploma. [1:43:00] Such a good doggie. [1:43:01] Okay. [1:43:02] We love dogs here, if you can't tell. [1:43:04] We're going to take a quick break. [1:43:05] We'll be back with a last check of your headlines before we say goodbye. [1:43:08] Stay with us. [1:43:09] Joined us here today. [1:43:38] Welcome back to Fox 9 All Day. [1:43:40] Let's take a quick check of our headlines to close out our show here this afternoon. [1:43:44] Like I mentioned earlier, a 48-year-old St. Louis County man has been charged with shooting at a firefighting plane that was assisting in the efforts to put out the Stewart Trail fire that was burning up near two harbors over the weekend. [1:44:00] A deputy investigating this case says he suspected the man because he had had contact with him previously due to his complaints about float planes flying over his property. [1:44:11] When the deputy went to investigate, neighbors confirmed that they would hear shots going off every time one of those firefighting planes would fly overhead. [1:44:21] They were, of course, scooping water out of Lake Superior and then dumping it on the fire. [1:44:25] The suspect claims that he was just crow hunting when the plane was hit. [1:44:32] Delano schools have been targeted by a cyber attack. [1:44:35] Classes at Delano schools have been canceled for today due to that cybersecurity incident. [1:44:41] The public schools say that the incident happened Monday night and that the Internet was shut down immediately after the network was compromised so that no further damage could be done. [1:44:51] Teams are working on identifying and fixing the issue, and students will not go back until experts say that it is safe. [1:45:02] And the Moorhead Police Department are investigating as middle school students have gotten sick by eating candy they believed was laced with THC. [1:45:12] Police responded to Horizon Middle School in Moorhead about 1240 on Monday as about 10 students became ill after eating the candy. [1:45:21] Two had to receive hospital treatment. [1:45:24] The police said that it was one student who brought the candies to school and handed them out to about nine other kids. [1:45:31] Police say the students involved have not been cooperating as this investigation continues. [1:45:38] Grace Henry, you know, I think that this has been a worry for some time. [1:45:43] When we legalized THC edibles, this was a concern. [1:45:47] The Minnesota Poison Control Agency has said since that legalization went into place, [1:45:52] they have seen an increase in calls of kids that have accidentally ingested THC. [1:45:59] In this case, it maybe wasn't accidental, but obviously the effects on those 10-year-olds were serious enough that law enforcement had to be called. [1:46:06] Yeah, absolutely. [1:46:07] And a lot of these, you know, they can be peach gummy rings I've seen, gummy bears. [1:46:12] I mean, really appealing candy that you really would not be able to tell apart from normal candy contain high milligram dosages of THC. [1:46:21] So if you're eating a whole pack of those, that can be extremely dangerous even for an adult. [1:46:25] So I don't know how much candy these kids consumed, but that's a big worry. [1:46:31] You want to make sure you're securing your sweets, your THC-laced sweets securely just for that reason, [1:46:39] even if your kids don't know or they do know that it is laced with THC. [1:46:44] Yeah, lock up all your goodies, parents. [1:46:47] All right, thanks, Grace. [1:46:48] And thank you to you for watching. [1:46:49] That's going to do it for us here today. [1:46:51] We hope that you'll join us again tomorrow. [1:46:52] I take over here on the Fox Local app every day at 2 o'clock, and we hope to see you then. [1:46:59] Bye-bye.