Minnesota's $1 Billion Fraud Scandal: Somali Schemes Drain Taxpayer Funds Under Walz's Watch

Minneapolis, Minn. – December 1, 2025  In the heart of America's heartland, a scandal of staggering proportions has rocked Minnesota, where federal prosecutors allege that a web of fraudsters—many from the state's vibrant Somali diaspora—siphoned more than $1 billion in taxpayer dollars from vital social safety net programs. The schemes, which flourished over the past five years amid lax oversight during the COVID-19 pandemic and beyond, have left residents reeling, with one local business owner lamenting to this reporter, "We're losing our way of life—our hard-earned taxes funding luxury cars and worse, halfway around the world." The revelations, detailed in a bombshell New York Times investigation published Friday, paint a picture of systemic vulnerabilities exploited by dozens of individuals who set up sham companies to bill the state for nonexistent services. These included child nutrition programs, autism therapies, and housing stabilization aid—lifelines intended to support vulnerable families.

Federal authorities have secured 59 convictions so far in three major plots, with charges against 78 defendants, nearly all tied to Minnesota's Somali community, the largest such population in the U.S. at around 80,000 strong. Estimates peg the total losses at over $1 billion, though some insiders whisper the true figure could climb higher as probes deepen. At the epicenter of the storm is the infamous Feeding Our Future scandal, the nation's largest COVID-era fraud case, where a nonprofit funneled $250 million in federal child nutrition funds through ghost kitchens and fake meal sites. Defendants splurged on Lamborghinis, real estate in Turkey and Kenya, and even, investigators claim, wired millions back to Somalia via informal "hawala" networks—potentially bankrolling the terrorist group Al-Shabaab, an Al-Qaeda affiliate notorious for bombings and assassinations.

"This isn't just theft; it's a betrayal that could have funded terror," said one anonymous federal source involved in the case. The fraud didn't stop there. In a separate scheme targeting Medicaid-funded autism services, fraudsters allegedly fabricated diagnoses and treatments for children in Minneapolis's Somali neighborhoods, pocketing $14 million in kickbacks and inflated claims from 2019 to 2024. Another blow came from the Housing Stabilization Services program, designed to aid the homeless, which ballooned from $21 million in spending in 2021 to $104 million in 2024—only for authorities to deem "the vast majority" fraudulent, with six of eight charged defendants of Somali descent. Since Gov. Tim Walz took office in 2019, at least 28 such scandals have erupted, totaling billions in losses under what critics call a "cascade of systemic failures." Governor Walz, a Democrat who served as Vice President Kamala Harris's running mate in the 2024 election, has faced blistering accusations of negligence and retaliation against whistleblowers. Over 400 employees from the Minnesota Department of Human Services (DHS) unleashed a scathing open letter on X over the weekend, branding Walz "100 percent responsible" for the mess. "We let Tim Walz know of fraud early on, hoping for a partnership in stopping it," the group wrote. "But no—we got the opposite response: monitoring, threats, repression, and efforts to discredit fraud reports."

The employees, representing a faction of DHS's 4,800-strong workforce, claim Walz's administration prioritized political optics over accountability, fearing backlash from the Somali community—a key Democratic voting bloc in the state. Walz, appearing on NBC's Meet the Press Sunday, deflected pointed questions from host Kristen Welker about the billion-dollar debacle. "Certainly, I take responsibility for putting people in jail," he quipped, before pivoting to blame former President Donald Trump for inadequate federal safeguards during the pandemic. The governor touted recent reforms, including the temporary suspension of 13 Medicaid waiver programs for review and new fraud-detection tech, but critics dismissed it as too little, too late.

"Walz welcomed a federal probe only after Republicans demanded it," noted Minnesota House Speaker Lisa Demuth, who co-signed a letter to U.S. Attorney Sarah Rosen urging an investigation into terror-linked money flows. The political fallout has been swift and seismic. Republicans, eyeing a 2026 gubernatorial comeback, have seized on the scandal as a cudgel against Walz's "Scandinavian-style" welfare model—high taxes funding generous benefits that, detractors say, invited abuse without rigorous checks.

President Trump, fresh off his November reelection triumph, amplified the uproar Thursday, labeling Minnesota "a hub of fraudulent money laundering activity" and vowing to deport convicted perpetrators "back to where they came from." He followed through by terminating Temporary Protected Status for roughly 700 Somali nationals nationwide—about 500 in Minnesota—sparking protests in Minneapolis. "This is a political act, fabricated to rile up conservatives," countered Jaylani Hussein, executive director of the nonprofit Minneapolis Cares. Within Minnesota's Somali enclaves, the mood is one of wounded pride and division.

Community leaders like filmmaker Abdi Mohamed decry the "small group" of bad actors for tarnishing an entire diaspora built by refugees fleeing Somalia's 1990s civil war. "The actions of a few have made it easier for those already inclined to reject us to double down," Mohamed told the Times. Rep. Ilhan Omar, the Somali-born congresswoman from Minneapolis, echoed that sentiment: "We do not blame the lawlessness of an individual on a whole community." Yet silence from other Somali figures has fueled speculation of clan-based cover-ups, with some fraudsters reportedly tied to donors who hobnobbed with Democratic insiders, including Attorney General Keith Ellison.

As auditors from the nonpartisan Office of the Legislative Auditor pore over the wreckage—faulting state agencies for "lax oversight" in everything from pandemic waivers to light-rail overruns—Minnesotans grapple with deeper questions. Is the state's vaunted safety net, once a beacon of progressive compassion, now a magnet for exploitation? And with billions vanished into thin air—or worse, into jihadist coffers—can trust in government ever be rebuilt? For now, the fraud's tentacles continue to unwind, leaving a trail of pending indictments, shattered illusions, and a rallying cry from everyday taxpayers: Enough is enough. 17GEN4