How Fraud Swamped Minnesota’s Social Services System on Tim Walz’s Watch

 

How Fraud Swamped Minnesota’s Social Services System on Tim Walz’s Watch

Prosecutors say members of the Somali diaspora, a group with growing political power, were largely responsible. President Trump has drawn national attention to the scandal amid his crackdown on immigration.

Joseph H. Thompson, center, the federal prosecutor overseeing the cases, at the U.S. District Courthouse in Minneapolis in September.Credit...Ben Brewer for The New York Times

 

By Ernesto Londoño

Published Nov. 29, 2025Updated Jan. 7, 2026

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 that 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. That is more than Minnesota spends annually to run its Department of Corrections. Minnesota’s fraud scandal stood out even in the context of rampant theft during the pandemic, when Americans stole tens of billions through

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.

In recent days, President Trump has weighed in, calling Minnesota “a hub of fraudulent money laundering activity” and saying that Somali perpetrators should be sent “back to where they came from.”

Many Somali Americans in Minnesota say the fraud has damaged the reputation of their entire community, around 80,000 people, at a moment when their political and economic standing was on the rise.

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 that the fraud persisted partly because state officials were fearful of alienating the Somali community in Minnesota. Governor 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. “We’re losing our way of life in Minnesota in a very real way.”

Minneapolis is home to one of the largest Somali-American communities in the United States.Credit...Ben Brewer for The New York Times

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. Merrick B. Garland, attorney general during the Biden administration, called it the country’s largest pandemic relief fraud scheme.  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. 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 that 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, the 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’s 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.  Ryan Pacyga, Ms. Hassan’s lawyer, said his client had entered the social services field with good intentions, but eventually began to submit fraudulent invoices. He said she intends to plead guilty.  Ms. 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.

Mr. Pacyga, who also has represented other defendants in the fraud cases, said that some involved became convinced that state agencies were tolerating, if not tacitly allowing, the fraud.  “No one was doing anything about the red flags,” he said. “It was like someone was stealing money from the cookie jar and they kept refilling it.”

‘A Core Voting Bloc’

Whiteboards filled with cases and charges line the walls inside a room used by investigators to track fraud.Credit...Ben Brewer for The New York Times

Red flags in the meals program surfaced in the early months of the pandemic, but the money kept flowing.

In 2020, Minnesota Department of Education officials who administered the program became overwhelmed by the number of applicants seeking to register new feeding sites and began raising questions about the plausibility of some invoices.

Feeding Our Future, the nonprofit group that was the largest provider in the pandemic program, responded with a warning. In an email, the group told the state agency that failing to promptly approve new applicants from “minority-owned businesses” would result in a lawsuit featuring accusations of racism that would be “sprawled across the news.”

Feeding Our Future later sued the agency, which continued reimbursing claims and approving new sites in the months that followed.  A report by Minnesota’s nonpartisan Office of the Legislative Auditor about the lapses that enabled the meals fraud later found that 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 — and particularly those who were part of the state’s Democratic-led administration — 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, said Mr. Magan, who is among the few prominent figures in the Somali community to speak about the fraud.  As a trial in the meals fraud case was coming to a close last summer, an attempt to bribe a juror included an explicit insinuation about racism, prosecutors said. Several defendants in the trial were found to have arranged to send a bag containing $120,000 to a juror along with a note that read, “Why, why, why is it always people of color and immigrants prosecuted for the fault of other people?”

Mr. Thompson, a career prosecutor who served as interim U.S. attorney for several months this year, and who declined to discuss his own political preferences, said he believed that 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,” Mr. Thompson said during an interview in the summer. “Allegations of racism can be a reputation or career killer.”

Mr. Walz, Minnesota’s second-term governor who gained national attention last year as Kamala Harris’s running mate in a White House bid, said this week that claims of racism did not hinder his administration’s response to fraud.  Mr. Walz has said that 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,” Mr. Walz said in an interview. “The programs are set up to improve people’s lives, and in many cases, the criminals find the loopholes.”

Mr. 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,” Mr. Walz said, “is if you commit a crime, if you commit fraud against public dollars, you are going to go to prison.”

Fraud has already become a central issue in a competitive governor’s race. Lisa Demuth, a Republican and current Minnesota House speaker, accused the governor of raising taxes while letting “fraud run wild” in a video announcing her bid to replace Mr. Walz.  In recent months Mr. Walz’s administration began shutting down the housing program altogether, acknowledging that it was riddled with fraud. Last month the state hired an independent auditor to review claims for 14 other Medicaid-funded programs that the state said were at high risk of fraud.  “Greedy people and businesses have learned how to exploit our programs,” James Clark, the inspector general at the Department of Human Services, told

Ahmed Samatar, a professor at Macalester College, said a reckoning over the fraud and its consequences for Minnesota was overdue.Credit...Ben Brewer for The New York Times

Years after the fraud cases first came to light, the issue has come under a harsh national spotlight amid the Trump administration’s immigration crackdown.

Mr. Trump last week denounced the Minnesota fraud cases on social media and simultaneously announced an end to a temporary legal status that allows several hundred Somali immigrants to live and work in the United States.  His comments followed a report this month in the Manhattan Institute’s publication, City Journal, in which Ryan Thorpe, a reporter, and Christopher Rufo, a conservative activist, said that money from Minnesota’s fraud was funding Al Shabab, a terrorist organization in Somalia. That claim emerged in 2018, but there has been no solid evidence to substantiate it, and none of the federal fraud cases have featured a link to terrorism.

Over the last few days, in response to the shooting of National Guard members in Washington, Mr. Trump has again spoken of Somalis in Minnesota, saying they were “ripping off our country.”  In Minnesota, Mr. Trump’s remarks deeply unsettled Somalis.  Dozens came to a Somali mall in Minneapolis over the weekend for a potluck and interfaith gathering, where faith leaders decried Mr. Trump's statements. And in a news conference on Monday, Democratic elected officials pointed to contributions Somali leaders have made to Minnesota’s political, economic and cultural spheres. Several Somali Americans serve in the State Legislature and other offices, while others have been honored for their entrepreneurship.  “We do not blame the lawlessness of an individual on a whole community,” Representative Ilhan Omar, a Democrat who was born in Somalia and whose district includes Minneapolis, told reporters.

Somali residents were initially concentrated in a neighborhood near downtown Minneapolis with high-rises and Somali-run restaurants and shops, but over the years many have moved to the suburbs and elsewhere in the state.  Their experiences have been challenging at times as many in the community contended with poverty, unemployment and language barriers. In recent years, some Somali Americans say the community has been broadly blamed over crime and links to terrorist groups. 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.  “American society and the denizens of the state of Minnesota have been extremely good to Somalis,” said Dr. Samatar, who is Somali American.  Dr. Samatar said that 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.”

Others in the community have criticized steps state agencies have taken to tighten oversight of programs. The Minnesota Somali Community Center, a nonprofit organization that provides resources to Somalis, recently issued a statement saying that many social services providers were now at risk of closure and feeling “criminalized and intentionally targeted.”  Still, other 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.”