MINNEAPOLIS, Minn. (Diya TV) — An investigative report by the New Journal has uncovered a sweeping wave of welfare fraud in Minnesota that federal officials say has cost taxpayers billions of dollars and, in some cases, sent money to the Islamist terror group Al-Shabaab. New investigations, indictments, and court records show that a series of fraud rings exploited state programs with little oversight, raising major concerns ahead of the 2026 elections.
Federal prosecutors say Minnesota’s generous social-service programs made the state a target for scammers. The programs were designed to help seniors, people with disabilities, and families in need. Instead, investigators say criminal groups created fake companies, filed false claims, and stole vast sums of public money.
The state’s Housing Stabilization Services program became one of the largest flashpoints. Minnesota created the program in 2020 to help people secure and maintain stable housing. Officials estimated its annual cost would be $2.6 million. Within a few years, yearly payouts ballooned past $100 million.
In August, the Minnesota Department of Human Services shut down the program after finding widespread fraud. Federal authorities later said most of the program’s claims were fake. Acting U.S. Attorney Joe Thompson announced charges in September against several people accused of running fraudulent operations. Investigators say many of the accused created shell companies and billed Medicaid for services they never provided.
Thompson said the schemes did not stop with housing programs. Many of the same people billed other Medicaid services, including autism therapy and mental-health care. The number of autism providers in Minnesota surged from 41 to 328 in recent years, and Medicaid autism spending jumped from $3 million in 2018 to nearly $400 million in 2023.
Federal officials say one recent case involved a $14 million autism-services scheme that paid cash kickbacks to parents who enrolled their children, sometimes without a diagnosis. Prosecutors say the scammers targeted families for financial gain and threatened to leave certain centers if parents did not receive higher payments.
Minnesota is also still dealing with fallout from the massive Feeding Our Future scandal. The nonprofit received nearly $200 million in federal child-nutrition money in 2021 alone. Prosecutors say the group and its partners used fake meal counts, inflated invoices, and forged records to steal more than $250 million. At least 56 defendants have pleaded guilty.
Investigators say several individuals involved in that scheme also had ties to elected officials. Federal records show some appeared at political events or worked in local government. The connections have fueled criticism of state leaders, including Gov. Tim Walz, who now faces sharp scrutiny as he seeks a third term.
Law-enforcement officials say some stolen funds left the country through “hawalas,” informal money-transfer networks used widely in Somalia. According to multiple counterterrorism sources, Al-Shabaab takes a cut from money flowing into the country, regardless of the sender’s intent.
A former federal task-force official said every dollar sent back to Somalia helps the group in some way. Another former investigator described the amount of cash leaving Minnesota as “staggering.” Officials say this pattern has persisted for years and remains difficult to track because hawalas rely on personal trust rather than bank systems.
The fraud scandals have put heavy pressure on Minnesota’s Democratic leadership. Critics say state agencies ignored warnings and avoided tough oversight for fear of appearing biased. Former state officials say the issue became politically sensitive, especially in Minneapolis, where the Somali community holds significant electoral influence.
Republicans have made fraud prevention a central issue heading into the 2026 governor’s race. Federal authorities say more indictments are coming, and insiders believe the true scale of the fraud is far larger than what has been made public.
Federal investigators say the fraud network spans multiple programs and continues to drain money meant for vulnerable residents. They warn that billions of taxpayer dollars are at stake.
Minnesota now faces a difficult task: restoring public trust while preventing further abuse. Officials say recognizing the full scope of the problem is the first step. As more details emerge, pressure is mounting for stronger oversight, faster enforcement, and long-term reforms to safeguard public funds.
