Federal Scrutiny Intensifies as Minnesota Faces Expanding Fraud Allegations

Labor Secretary Lori Chavez-DeRemer’s announcement marks the latest federal response to mounting concerns over fraud in Minnesota, an issue that has gained traction among senior officials in recent weeks. The focus intensified after President Donald Trump publicly highlighted the backgrounds of defendants charged in the Feeding Our Future and Medicaid fraud cases, noting that many were of Somali descent.

Treasury Secretary Scott Bessent also weighed in, stating that his department is increasing oversight of financial flows to what he described as “areas of concern, such as Somalia.” He added that investigators are examining allegations that funds from U.S. assistance programs may have been diverted to the militant group al-Shabaab. These claims, first reported by a conservative media outlet, have not been supported by federal terrorism-related charges.

Minnesota’s challenges have become emblematic of broader concerns surrounding oversight failures. Once known as the “Land of 10,000 Lakes,” the state has increasingly been described by critics as a hub for large-scale public fraud. Democratic Governor Tim Walz has faced growing pressure as multiple investigations have unfolded during his tenure.

The most prominent case remains the $250 million Feeding Our Future scandal, which continues to reverberate through state agencies. More recently, reporting by City Journal alleged additional misuse of funds tied to Minnesota’s Medicaid Housing Stabilization Services program, with claims that millions may have been improperly diverted.

According to investigators, the total amount of suspected fraud across various programs could approach $1 billion. Fox News National Correspondent Garrett Tenney reported that “fraud investigators are finding in Minnesota is growing by the day,” adding that Small Business Administration head Kelly Loeffler said her agency uncovered at least $1 million in PPP fraud within just two days of reviewing the state’s records. Whistleblowers have reportedly told lawmakers they believe the true figure could exceed $8 billion.

Governor Walz has defended his administration’s record, emphasizing the state’s economic performance. “And in spite of the headwinds we’re up against, Minnesota ranks economically, economic growth, happiness, number of people insured, education levels near the very top,” he said, while acknowledging that investigations into alleged misconduct are ongoing.