By Max Nesterak | Deputy Editor
Good morning, Reformers.
A predictable plot line emerged from Tuesday’s law enforcement raids on more than 20 locations, mostly Twin Cities childcare and autism service providers: squabbling over who deserves credit for cracking down on fraud. Success has a thousand fathers but failure is an orphan, as they say.
Gov. Tim Walz boasted the raids were the result of state agencies reporting “irregular behavior,” to which FBI Director Kash Patel replied “Come again? This FBI and DOJ with our DHS partners drafted and executed every search warrant today.”
Of course, both things could be true. One does wonder if the state reported irregularities at the now famous “Quality Learing Center” before or after it was featured in Nick Shirley’s viral video.
While Patel insinuated the state was absent, his own FBI Minneapolis office said the warrants were executed with support from state and local law enforcement. There’s ample video footage and photos of agents from the state Bureau of Criminal Apprehension on the scene.
Legislative Republicans ran with the Patel version, cheering the federal government for stepping in to clean up the state’s mess.
“The federal government — not the state government — is looking into the fraud,” GOP state Rep. Krista Knudsen said in a social media video.
In addition to being incorrect, it draws attention to the Trump administration’s own law-and-order shortcomings. The Department of Justice has seen a wave of resignations during the second Trump administration, which has greatly weakened its ability to conduct complex white-collar criminal investigations like the ones on display yesterday (more on that below).
One notable critic of all the hoopla was the progressive advocacy group ISAIAH, which has an initiative called Kids Count on Us. The group condemned the raids as being executed “under the guise of a fraud investigation.”
“That is unconscionable. If this were truly about financial fraud, financial investigators would have been sent. Instead, the federal government chose a show of force that endangered children, traumatized providers, and escalated fear in already targeted communities,” the group’s news release said.
Gov. Tim Walz gives his final State of the State address Tuesday, April 28, 2026 in the Minnesota House chambers in Saint Paul. (Photo by Nicole Neri/Minnesota Reformer)
By Michelle Griffith
Gov. Tim Walz delivered his eighth and final State of the State address on Tuesday — seeking to burnish a nearly-completed tenure that’s been marked by crises, including a pandemic, the police killing of George Floyd and resulting civil unrest and most recently the federal immigration crackdown that resulted in the deaths of two Minnesotans.
Walz, during his nearly 40-minute speech, praised the resilience of Minnesotans: “For all the work we do here in St. Paul, the real work is happening in communities across the state, as neighbors build and rebuild the bonds that hold us together in difficult times.”
Walz is unlikely to sign any more legacy-defining legislation. Lawmakers have less than three weeks to pass bills — the session must end by 11:59 p.m. on May 17 — but Walz used his speech to push his long-shot priorities, including broadening and reducing the sales tax; reforming safety net programs; taxing Big Tech; and enacting a ban on the kind of firearms used in the Annunciation attack.
By Kevin Hardy
Increasing taxes on millionaires is an idea gaining traction in Democratic-led states with proposals in at least a dozen states, including Illinois, Minnesota, Rhode Island and Virginia.
The taxes can take different forms — taxing annual incomes above a certain threshold or taxing capital assets, including high-value stocks and real estate. Earlier this month, New York Mayor Zohran Mamdani and Gov. Kathy Hochul, both Democrats, proposed a new pied-à-terre tax for homes valued above $5 million when owners have a separate primary residence outside of New York City. In California, advocates announced they gathered enough signatures for a ballot initiative that would impose a one-time tax on billionaires.
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OH BY THE WAY
Attorneys who represent people charged with fraud, tax evasion, money laundering and other financial crimes are struggling to find work during Trump’s second term (social service fraud in Minnesota notwithstanding).
The Financial Times has a dispatch from a conference for white-collar attorneys where attendees joked about needing to retrain. One said they had the impression that there are “no cops on the beat right now.”
“I’m back among the unwashed, doing commercial litigation [and] waiting for white-collar enforcement to step up a little bit,” John Gleeson, a partner at Debevoise & Plimpton and a former federal judge, joked during a panel discussion.
Indeed, white-collar prosecutions have steadily declined since the financial crisis to the lowest levels since at least 1986. The Department of Justice has been hollowed out since the Trump administration pivoted to immigration — locking up thousands of workaday people with no criminal records — and revenge prosecutions. The DOJ now has around 800 fewer lawyers than it did at the start of Trump’s second term, the Financial Times reports.
At the same time, enforcement actions by the Securities and Exchange Commission have fallen to the lowest level in two decades. SEC Chairman Paul Atkins said in a news release this year heralding the low number of enforcement actions that “the Commission has put a stop to regulation by enforcement.” He went on to say they were prioritizing misconduct that inflicted the greatest harm rather than pursuing a high volume of actions, but Sen. Elizabeth Warren has accused the SEC of “abdicating its enforcement responsibilities.”
Not mentioned in the article, but the Internal Revenue Service has also been cut to the bone with significant ramifications for the federal budget as tax cheating — especially by the wealthy — goes unchecked.
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