By Janice Hisle
Contributing Writer
The U.S. Department of Labor has deployed a specialized “strike team” to Minnesota to see whether fraudsters stole from the Unemployment Insurance Program, amid the accusations of widespread fraud in the state.
The Labor Department “noted concerns that recent reports of fraud, waste and abuse might compromise the integrity of [the Unemployment Insurance] program,” a news release from the department said.
In a letter to the Minnesota Department of Employment and Economic Development, Labor officials also asked the state to provide “critical documents” to the investigative team, according to the release.
In the release, Labor Secretary Lori Chavez-DeRemer said, “I am appalled at what we are hearing about potential fraud coming from numerous benefits programs in Minnesota.”
The onsite strike team will search for any sign of “related abuse” of unemployment funds and will report its findings to Chavez-DeRemer, she said in the release.
“Our mission to protect American workers remains unchanged, and I will not allow malicious actors to destroy the integrity of this trusted program,” she said.
Staff from the Employment and Training Administration’s regional offices make up the strike team, according to the release.
With its announcement of the new probe, the Labor Department becomes the latest federal entity investigating alleged fraud in Minnesota. Federal prosecutors say that networks of fraudsters stole from a wide range of government benefit programs, including those intended to feed the hungry, house the homeless, and care for autistic children.
They have also said that the alleged fraud in Minnesota over the past few years could amount to billions of dollars.
Amid national publicity over the scandals, Minnesota Gov. Tim Walz announced on Dec. 12 that he had named a new “anti-fraud czar.” Tim O’Malley, a former judge and FBI agent, is now the state’s “director of program integrity.”
How Other Federal Agencies Are Responding
That state action follows multiple federal interventions in addition to ongoing Justice Department and FBI probes that have already produced dozens of indictments and convictions since 2022. They have worked alongside the Department of Health and Human Services’ Office of Inspector General.
On Dec. 1, the Treasury Department and IRS began probing allegations that Somali welfare fraudsters in Minnesota were transferring stolen money to their native land, where al-Shabaab terrorists allegedly took a slice of those funds. On Dec. 12, Treasury Secretary Scott Bessent announced new restrictions on money transfers from the United States to Somalia. Minnesota is home to America’s largest enclave of Somalis.
In another probe, Kelly Loeffler, administrator of the Small Business Administration, unveiled $1 million in “loans that were granted to individuals indicted as part of the broader billion-dollar pandemic fraud scheme in Minnesota,” she said in an X post on Dec. 4.
“We continue to investigate these organizations and executives to determine their citizenship status, the legitimacy of their nonprofit work, and other requirements for loan eligibility. The fraud in this state runs deeper than was ever previously reported. SBA is working around the clock to get answers and make taxpayers whole,” she said.
By Dec. 6, Loeffler said, an additional $1 million in those loans had been found, and she said her agency would expand the probe statewide, beyond those already charged in alleged Minnesota fraud scandals.
“It appears that this fraud ring is being perpetrated across all types of government assistance,” she told Fox News.
In addition, the Centers for Medicare & Medicaid Services has threatened to cut off all funding to Minnesota if officials fail to comply with corrective action and reporting requirements.
Meanwhile, the House Oversight Committee is investigating whether Walz or other top Minnesota officials ignored fraud reports from whistleblowers — or covered them up. The committee told Walz and Minnesota Attorney General Keith Ellison they must provide a variety of records by Wednesday.
