Minnesota has found itself at the epicenter of a political maelstrom as federal investigators unravel a complex web of welfare fraud schemes that have taken root under the watch of Governor Tim Walz's administration. The sprawling investigations, which now encompass a variety of state programs, have revealed that portions of the ill-gotten gains were funneled through intricate overseas money-transfer networks to the Islamic terrorist group Al-Shabaab.
The allegations have cast a harsh spotlight on the state's welfare system, which critics claim was marred by a glaring lack of oversight. A significant portion of the fraud involved "hawalas," informal financial networks that facilitate cross-border money transfers with scant documentation. According to a City Journal report, "untold millions" have been siphoned through these channels, with a confidential source alleging that "the largest funder of Al-Shabaab is the Minnesota taxpayer."
One of the most alarming cases centered on the state's Medicaid Housing Stabilization Services program, launched in 2020 to aid vulnerable Minnesotans in securing housing. What was initially projected to cost $2.6 million skyrocketed to over $21 million within a year. The program was abruptly terminated on October 31 after "credible allegations of fraud" emerged, drawing immediate federal scrutiny. Subsequently, federal prosecutors indicted eight individuals accused of operating sham businesses to divert public funds for personal gain. Then-acting U.S. Attorney Joseph Thompson described the scale of the scheme as "unique," with many companies being entirely fictitious, set up solely to defraud the system.
This revelation came as the state was still reeling from the Feeding Our Future scandal, a COVID-era scam that defrauded $250 million and stands as one of the largest in U.S. history. The scheme involved falsified meal counts and attendance records to misappropriate federal nutrition funds, which were later lavished on luxury cars, international real estate, and other personal expenses. Abdullahe Nur Jesow's recent guilty plea marked the 56th defendant to admit involvement, with prior political pressure and accusations of racism having impeded earlier investigations into the nonprofit's dealings.
Another disturbing discovery was made in the state's Early Intensive Developmental and Behavioral Intervention program. Asha Farhan Hassan, already implicated in the Feeding Our Future case, was charged with masterminding a separate $14 million fraud. Parents were allegedly incentivized with monthly kickbacks to enroll their children in autism therapy services, sometimes without a legitimate diagnosis. Medicaid spending on autism services in Minnesota ballooned from $3 million in 2018 to a staggering $399 million in 2023, coinciding with a dramatic increase in the number of service providers. The rapid expansion of this sector provided fertile ground for fraud to flourish undetected.
The overseas money-transfer networks uncovered during the investigations have added a layer of complexity and concern. Retired terrorism investigator Glenn Kerns noted that substantial sums were being sent from U.S. cities, including Minneapolis, to Somalia via hawalas. He highlighted that the funds originated from individuals on DHS benefits, pointing to a systemic misuse of welfare. A former Joint Terrorism Task Force official echoed this sentiment, stating that almost every dollar sent to Somalia ultimately benefits Al-Shabaab.
With more arrests on the horizon, Republicans are seizing on the scandals to demand systemic reform and accountability. Gubernatorial candidate Kristin Robbins has vowed to implement aggressive oversight measures, while former state Senator David Gaither has indicated that the investigations have only scratched the surface. These scandals are poised to become a defining issue in the 2026 gubernatorial race, with significant implications for the state's political landscape.
