The fraud scandal that rattled Minnesota was staggering in its scale and brazenness.
Federal prosecutors charged dozens of people with felonies, accusing them of stealing hundreds of millions of dollars from a government program meant to keep children fed during the COVID-19 pandemic.
At first, many in the state saw the case as a one-off abuse during a health emergency. But as new schemes targeting the state’s generous safety net programs came to light, state and federal officials began to grapple with a jarring reality.
Over the last five years, law enforcement officials say, fraud took root in pockets of Minnesota’s Somali diaspora as scores of individuals made small fortunes by setting up companies that billed state agencies for millions of dollars’ worth of social services that were never provided.
Federal prosecutors say 59 people have been convicted in those schemes so far and that more than $1 billion in taxpayers’ money has been stolen in three plots they are investigating.
Outrage has swelled among Minnesotans, and fraud has turned into a potent political issue in a competitive campaign season. Gov. Tim Walz and fellow Democrats are being asked to explain how so much money was stolen on their watch, providing Republicans, who hope to take back the governor’s office in 2026, with a powerful line of attack.
Many Somali Americans in Minnesota say the fraud has damaged the reputation of their entire community, around 80,000 people.
Debate over the fraud has opened new rifts between the state’s Somali community and other Minnesotans, and has left some Somali Americans saying they are unfairly facing a new layer of suspicion against all of them, rather than the small group accused of fraud. Critics of the Walz administration say the fraud persisted partly because state officials were fearful of alienating the Somali community in Minnesota. Walz, who has instituted new fraud prevention safeguards, defended his administration’s actions.
The episode has raised broader questions for some residents about the sustainability of Minnesota’s Scandinavian-modeled system of robust safety net programs bankrolled by high taxes. That system helped create an environment that drew immigrants to the state over many decades, including tens of thousands of Somali refugees after their country descended into civil war in the 1990s.
“No one will support these programs if they continue to be riddled with fraud,” Joseph H. Thompson, the federal prosecutor who has overseen the fraud cases, said in an interview.
The first public sign of a major problem in the state’s social services system came in 2022, when federal prosecutors began charging defendants in connection to a program aimed at feeding hungry children. The prosecutors focused on a Minneapolis nonprofit organization called Feeding Our Future, which became a partner to dozens of local businesses that enrolled as feeding sites.
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State agencies reimbursed the group and its partners for invoices claiming to have fed tens of thousands of children. In reality, federal prosecutors said, most of the meals were nonexistent, and business owners spent the funds on luxury cars, houses and even real estate projects abroad.
Behind the scenes, as federal investigators sifted through bank records and interviewed witnesses, they said they realized the meals fraud was not an isolated incident. In September, prosecutors charged nine people in two new plots tied to public funds meant for those in need.
In one case, hundreds of providers were reimbursed for assistance they claimed to have provided to people at risk for homelessness, though federal authorities said services weren’t provided.
The program’s annual cost ballooned to more than $104 million last year, authorities said, from a budgeted projection of $2.6 million when it began in 2020. Two of eight people charged in the scenario have pleaded guilty; six others have pleaded not guilty and are awaiting trial.
In another program, aimed to provide therapy for autistic children, prosecutors said providers recruited children in Minneapolis’ Somali community, falsely certifying them as qualifying for autism treatment and paying their parents kickbacks for their cooperation.
Prosecutors have so far charged one provider, Asha Farhan Hassan, 29, with wire fraud. They say she and business partners stole $14 million.
Hassan is of Somali ancestry, as are all but eight of the 86 people charged in the meals, housing and autism therapy fraud cases, according to prosecutors. A vast majority are American citizens, by birth or naturalization.
A report by Minnesota’s nonpartisan Office of the Legislative Auditor about the lapses that enabled the meals fraud later found the threat of litigation and of negative press affected how state officials used their regulatory power.
Kayseh Magan, a Somali American who formerly worked as a fraud investigator for the Minnesota attorney general’s office, said elected officials in the state were reluctant to take more assertive action in response to allegations in the Somali community.
“There is a perception that forcefully tackling this issue might cause political backlash among the Somali community, which is a core voting bloc” for Democrats, Magan said.
Thompson said he believed race sensitivities had played a major role in the rise of fraud. As pandemic assistance was disbursed, the state was also reeling from the killing of George Floyd by a Minneapolis police officer in May 2020, he said.
“This was a huge part of the problem,” Thompson said during an interview. “Allegations of racism can be a reputation or career killer.”
Walz, Minnesota’s second-term governor, who gained national attention last year as Kamala Harris’ running mate in a White House bid, said claims of racism did not hinder his administration’s response to fraud.
Walz has said his administration may have erred on the side of generosity during the pandemic as the state pushed out large sums of money quickly, seeking to keep Minnesotans housed, fed and healthy.
“The programs are set up to move the money to people,” Walz said in an interview. “The programs are set up to improve people’s lives, and in many cases, the criminals find the loopholes.”
Walz, who is seeking a third term next year, has created a new task force to pursue fraud cases; made it easier for state agencies to share information with one another; and announced plans for new technology, including artificial intelligence tools, to spot suspicious billing practices.
“The message here in Minnesota,” Walz said, “is if you commit a crime, if you commit fraud against public dollars, you are going to go to prison.”
Somali residents’ experiences have been challenging at times, as many in the community contended with poverty, unemployment and language barriers. Few episodes have left fissures as deep as the fraud scandal.
Ahmed Samatar, a professor at Macalester College who is a leading expert in Somali studies, said a reckoning over the fraud and its consequences for Minnesota was overdue. Samatar said Somali refugees who came to the United States after their country’s civil war were raised in a culture in which stealing from the country’s dysfunctional and corrupt government was widespread. Minnesota, he said, proved susceptible to rampant fraud because it is “so tolerant, so open and so geared toward keeping an eye on the weak.”
But some Somali Americans who have nothing to do with social service agencies said they had come to feel under siege amid all the fraud allegations and political accusations.
“The actions of a small group have made it easier for people already inclined to reject us to double down,” said Abdi Mohamed, a filmmaker in Minneapolis. “The broader Somali community — hardworking, family-oriented, deeply committed to Minnesota — is left carrying that burden.”
This article originally appeared in The New York Times.
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