Secretary Scott Bessent announced the investigation after Trump’s claims that Minnesota has been a money laundering hub.
The Treasury Department is investigating claims that Minnesota taxpayer funds were stolen by fraudulent nonprofits and rerouted to the Al-Shabaab terrorist group in Somalia, according to Secretary Scott Bessent on Dec. 1.
Bessent made the announcement on the social media platform X just days after President Donald Trump eliminated temporary deportation protections for Somalis living in Minnesota.
Trump, in his announcement on Nov. 21, also called Minnesota a “hub of fraudulent money laundering activity” and accused Democratic Gov. Tim Walz of failing to deter such crimes in the state.
Bessent said that “under the feckless mismanagement of the Biden administration and Gov. Tim Walz, hard-working Minnesotans’ tax dollars may have been diverted to the terrorist organization Al-Shabaab.”
The investigation comes amid concerns over welfare fraud in the state, especially relating to Somali communities.
Walz last week said he would work with the administration to root out fraud.
“Do not paint an entire group of people [Somali nationals] with that same brush—demonizing them, putting them at risk when there is no proof to do that,” the governor told local news outlet KTTC on Nov. 25. “But if you want to help us and you want to go after the criminals and make sure there’s no connection or find out where the money went, we welcome that. We’ll work with you on that.”
Minnesota’s Housing Stabilization Services program was eliminated Oct. 31 as a result of “large-scale fraud,” the state Department of Human Services said. The closure came after revelations of several schemes that allegedly laundered millions from the state’s taxpayer-funded initiatives.
One such case saw a criminal network allegedly exploit housing assistance programs, in which funds were earmarked for vulnerable residents, including seniors. These operations, which have often been linked to Somali immigrant groups, have attracted federal attention due to their size and sophistication.
“This was a brazen scheme of staggering proportions,” then-U.S. Attorney Andrew M. Luger said in 2022 when the first 47 people were charged in a $250 million fraud scheme involving meal sites.
The individuals allegedly devised a scheme to defraud the Federal Child Nutrition Program, which was intended to ensure underserved children received adequate nutrition during the COVID-19 pandemic.
A separate fraud scandal involved millions in fabricated Medicaid claims submitted through a Minnesota-based provider. The Department of Justice detailed that alleged perpetrators overcharged for services they did not render.
