By Janice Hisle and Jack Phillips
Contributing Writers
Federal agents fanned out in Minneapolis on Monday for a “massive investigation on child care and other rampant fraud,” Homeland Security Secretary Kristi Noem said.
Noem posted the update about U.S. Immigration and Customs Enforcement actions on X and said “more coming.”
The post shows agents wearing jackets with large white letters, “HSI,” for Homeland Security Investigations, which is part of ICE — interviewing people at storefronts.
Homeland Security posted a separate notice saying that agents were “going DOOR TO DOOR at suspected fraud sites.”
“The American people deserve answers on how their taxpayer money is being used and ARRESTS when abuse is found. Under the leadership of @Sec_Noem, DHS is working to deliver results,” a Monday X post said.
About $9 billion has been lost to fraudulent claims in Minnesota’s federal-assistance programs, federal authorities have estimated. Dozens of people have been arrested, charged and convicted since 2022 in at least three major scandals, with more arrests expected as additional scandals are probed, federal prosecutors have said.
In other recent action, the Small Business Administration announced it was cutting off $5.5 million in federal funds because Minnesota state officials haven’t effectively safeguarded federal tax dollars, said Kelly Loeffler, the head of the agency.
Although the scandals are now drawing national attention, concerns over programs being defrauded on a large scale date back to at least 2018. Some whistleblowers raised alarms as early as 2009.
Minnesotans said that contributing factors include the state’s generous, progressive social-welfare policies, lax enforcement, and the “Minnesota Nice” attitude: A willingness to help others with few questions asked.
In addition, whistleblowers said they were reluctant to come forward because they suffered retaliation and claims of “racism” or “Islamophobia” for reporting allegations against Somali immigrants, who are Black and Muslim.
Patel: FBI Surged Resources to Minnesota Early in Investigation
FBI Director Kash Patel on Sunday confirmed that his office had surged resources to Minnesota to investigate claims of fraud exploiting federal services and programs.
Federal officials have so far indicted 78 people and convicted 57 individuals in a $250 million fraud scheme in Minnesota, Patel said in a post on X. Charges included wire fraud, money laundering, conspiracy and more.
“The FBI is aware of recent social media reports in Minnesota,” Patel wrote. “However, even before the public conversation escalated online, the FBI had surged personnel and investigative resources to Minnesota to dismantle large-scale fraud schemes exploiting federal programs. Fraud that steals from taxpayers and robs vulnerable children will remain a top FBI priority in Minnesota and nationwide.”
The FBI director also said that the recent arrests are “just the tip of a very large iceberg.”
“We will continue to follow the money and protect children, and this investigation very much remains ongoing. Furthermore, many are also being referred to [immigration] officials for possible further denaturalization and deportation proceedings where eligible.”
The fraud scheme, Patel wrote, resulted in the stealing of “federal food aid meant for vulnerable children during COVID” including “sham vendors, shell companies, and large-scale money laundering tied to the Feeding Our Future network.”
“These criminals didn’t just [engage] in historic fraud, but tried to subvert justice as well,” he said.
Patel noted a case in which a defendant and others have been “charged for attempting to bribe a juror with $120,000 in cash.”
“Those responsible pleaded guilty and were sentenced, including a 10-year prison term and nearly $48 million in restitution in related cases,” he said.
The FBI chief’s announcement was made after a viral video posted online showed a day care in Minneapolis that allegedly obtained millions of state-backed funding, even though it was largely inactive. Some Republican lawmakers, including Rep. Tom Emmer, R-Minn., called for Democratic Minnesota Gov. Tim Walz’s office to investigate.
Vice President JD Vance called the fraud allegations in the state “a microcosm of the immigration fraud in our system.”
“Politicians like it because they get power. Welfare cheats like it because they get rich,” Vance wrote on X on Saturday. “But it’s a zero sum game, and they’re stealing both money and political power from Minnesotans.”
Joe Thompson, first assistant U.S. attorney, told reporters earlier this month that the scale of fraud in Minnesota-run programs is astronomically high. Fraud was found in programs involving services such as child nutrition, housing services, and autism, he said.
“I’m sure everyone is wondering how much of this $18 billion was fraud,” Thompson told reporters. “That’s the $18 billion question.”
In response to the investigations, Walz in October ordered a third-party audit and paused payments to the 14 programs for 90 days. One program has since been shut down entirely. Walz says the state aggressively increased resources for fraud detection and prevention and recently appointed a statewide director of program integrity to oversee those efforts.
Aside from Patel’s statement, the White House has sounded the alarm for fraud among Minnesota’s Somali community. On Thanksgiving, President Donald Trump described the state as “a hub of fraudulent money laundering activity” and noted that he was terminating Temporary Protected Status for Somalis in Minnesota.
Walz has been critical of Trump and the White House’s statements about Somalis in his state, saying in an NBC interview in late November that administration officials are “demonizing an entire community.”
The Associated Press contributed to this report.
