How a sprawling fraud scandal thrust Minnesota’s Somali community and its governor into the national spotlight

Minnesota fraud scandal reshapes political fault lines (Representative image)

What began as a child-nutrition fraud case in Minnesota has widened into one of the largest social-services scandals in US history. US Federal prosecutors say more than $1 billion was siphoned from programmes meant for vulnerable residents, implicating dozens of defendants—many of Somali descent—and triggering nearly 60 federal convictions. As new charges mount, Washington has taken notice, the Wall Street Journal reported.

This week, House Republicans opened an investigation into how such extensive fraud flourished under Democratic Gov. Tim Walz. The Oversight Committee demanded documents and accused the administration of ignoring warning signs “for fear of political retaliation.” Walz, facing re-election, now finds himself at the centre of a political storm that has reached all the way to President Trump.

Trump seized on the scandal, calling Minnesota “a hub of fraudulent money laundering activity” and claiming Somali gangs were “terrorizing” the state. He vowed to end temporary protected status for Somali immigrants and declared, “Send them back to where they came from.”

The remarks infuriated many in Minnesota’s Somali community, one of the largest in the country. Ahmed Samatar, a prominent Somali-American scholar, condemned the fraud as “civic betrayal” but described Trump’s comments as “unhinged.” Most Somali Minnesotans, he said, have become teachers, nurses, business owners and professionals who contribute quietly and substantially to the state.

The scandal first surfaced in 2022, when federal prosecutors charged 47 people with exploiting a federally funded Covid-era child nutrition programme. They described a network of operators who claimed to feed thousands of children but served none, using fake rosters to draw federal reimbursements. Some of the sites were parking lots; others were vacant storefronts.

Investigators say the proceeds funded luxury lifestyles: a Maldives honeymoon, high-end jewellery in Dubai, a Dodge Ram pickup, and real estate abroad. One young defendant alone collected more than $900,000.

As prosecutors dug deeper, they found similar abuses in Minnesota’s housing stabilization programme. In September, eight people were charged with pocketing $300,000 to $400,000 each from a federally funded disability-housing programme. Federal payouts in that programme soared from $21 million to $104 million in three years, which prosecutors say made it an inviting target for fraud.

A parallel case emerged in autism services. Prosecutors allege a 28-year-old woman registered a treatment company that billed the state more than $14 million for therapy that either wasn’t delivered or was never medically required. She and others allegedly paid kickbacks to parents—often within the Somali community—to enrol children, including those without autism diagnoses.

By autumn, Minnesota officials acknowledged the breadth of the problem. The state halted payments across 14 Medicaid programmes and shut down the housing stabilisation programme altogether, calling the fraud “widespread.”

Joseph Thompson, then acting US attorney for Minnesota, described the cases as interconnected. “Each case we bring exposes another strand of this network,” he said, noting how nutrition fraud, housing abuse and autism-services scams appeared linked by shared actors and tactics.

Walz defended ongoing enforcement efforts but faced growing criticism from Republicans who say his administration missed repeated red flags. Minnesota House Speaker Lisa Demuth, running against Walz for governor, called the scandal “the tip of the iceberg.”

The controversy intensified in November after a conservative Manhattan Institute report alleged that some stolen Minnesota funds may have been routed to Somalia and ultimately reached al-Shabaab, the al Qaeda-linked militant group.

US Treasury Secretary Scott Bessent announced an inquiry into whether taxpayer dollars were diverted to terrorism. House Speaker Mike Johnson amplified the concerns, and Trump again pointed to the scandal on the campaign trail.

Democratic leaders pushed back, accusing critics of weaponising the fraud cases to target an entire immigrant population. Sen. Amy Klobuchar noted that Somali Minnesotans “work in our schools, airports and hospitals,” and said Trump was using a single violent crime to smear 80,000 people.

The debate now extends far beyond the courtroom. Walz’s administration is scrambling to prove it can clean up the state’s social-services system while fending off accusations of negligence. Somali community leaders are fighting to separate their reputation from the actions of a small group of offenders. And Republicans are weaving the fraud into a broader critique of immigration, public spending and Democratic governance.

What began as pandemic-era misconduct has become a high-stakes national confrontation—one that intertwines questions of fraud, race, migration and political power in a state whose social-services model and diverse communities once drew bipartisan praise.