Minnesota daycare owner pleads guilty to state and federal fraud charges over multi-million-dollar scheme

The former owner of an inactive Minneapolis daycare pleaded guilty Thursday to more than $4 million in fraud against the state of Minnesota and the federal government.

Fahima Egeh Mahamud, former CEO of Future Leaders Early Learning Center, admitted to submitting false paperwork to Minnesota’s Child Care Assistance Program, according to Fox 9 KMSP, the Minneapolis-St. Paul Fox News outlet.

Mahamud received more than $4.6 million in taxpayer dollars to run a non-operating childcare center. She also pleaded guilty to her involvement in the Feeding Our Future fraud scheme, in which she enrolled her daycare center in the federal child nutrition program and received $850,000 for thousands of meals she never really served, Fox reports.  

“If we would have stopped the childcare fraud back when it was first brought up in 2018-2019, we would have never ended up with Feeding Our Future and all these other types of Medicaid waivered services fraud,” state Rep. Kristin Robbins, a Republican representing the northwest district of the Twin Cities, told Heartlander News in an interview.

In March and April of 2019, just months after Gov. Tim Walz was inaugurated, the Office of Legislative Auditor released two reports detailing likely extensive fraud undermining Minnesota’s Department of Human Services’ (DHS) Child Care Assistance Program, Robbins explained.

“Instead of taking it seriously and doubling down on stopping fraud in childcare, the Walz administration closed the Child Criminal Investigation unit, and only would allow the Department to look at ‘overpayments,’ and so all the criminal prosecutions of childcare fraud stopped in 2019,” she said.

The reports estimated Minnesota lost roughly $100 million to childcare fraud annually, Robbins said.

In 2025, Minnesota’s Legislature created the House Fraud Prevention Committee, which Robbins chairs, with a 5-3 Republican majority. Robbins said the committee flagged Mahamud’s daycare and 71 other centers for potential fraud to DHS in February of 2025, based on high state reimbursements and high citation reports – two key “red flags” for fraud, according to the 2019 reports.

“We sent that letter with the list to the department prior to the hearing, so they could talk about it in the hearing with us, and they basically ghosted us,” she said.

In December of 2025, independent journalist Nick Shirley uncovered Mahamud’s scheme, and much more, in his reporting of non-operating daycares in Minnesota that still receive state and federal funds. In a video from earlier this year, Shirley spoke with Mahamud and asked to enroll his hypothetical son. Mahamud could not provide any paperwork, business cards or the manager’s contact information. When Shirley asked where the kids were, she said children would not come until 2 p.m.

Future Leaders Early Learning Center closed in January, according to state records. Minnesota Department of Children, Youth and Families (DCYF) Commissioner Tikki Brown said state officials have visited the 10 daycares Shirley uncovered at least once in the last six months, under standard licensing checks, Fox reports. But DHS still refuses to admit the existence of the fraud scheme, and many others like it, despite the federal government’s investigations, arrests and clear convictions, according to Robbins.

“The department, still to this day, will say there is no fraud there, but the woman has been convicted and indicted,” she said.

Mahamud’s plea agreement includes a sentence ranging from 27 to 33 months in prison, but federal judges can increase or decrease it. Mahamud was released on conditional bond, and a sentencing date has not yet been set, according to Fox.

Minnesota’s Legislature has passed laws to fight state fraud in childcare – creating both the Department of Children, Youth, and Families and an “independent office of inspector general within the executive branch,” Robbins explained.

“Fundamentally, we need a change in culture and leadership in the executive branch,” she said.

Both the new department and inspector general position should help provide needed accountability, she said.

“Minnesotans are so fed up, and they expect their government to be clean and to manage their money properly,” she said. “So, I think Minnesotans are going to drive change and are driving change.”