Investigation Details Expansive Somali Fraud Schemes in Minnesota

A sweeping City Journal investigation reports that a series of massive fraud schemes inside Minnesota’s welfare system have been driven in significant part by networks involving members of the state’s Somali community, with some illicit funds allegedly flowing overseas to Somalia and ultimately benefiting the extremist group Al-Shabaab, according to multiple law-enforcement sources cited by the outlet.

The report outlines what federal prosecutors describe as unprecedented levels of fraud in several major state and federal programs—including Housing Stabilization Services (HSS), Feeding Our Future, and the Early Intensive Developmental and Behavioral Intervention autism program. Acting U.S. Attorney Joseph Thompson has said much of the HSS program was “purely fictitious,” operated through shell companies that billed Medicaid for services never provided.

A number of individuals indicted or charged in these schemes are members of Minnesota’s Somali community, according to the U.S. Attorney’s Office and reporting by City Journal. Prosecutors allege that operators in these networks inflated bills, fabricated client lists, created sham organizations, and used cash kickbacks to enroll participants.

Beyond the fraud itself, City Journal reports that law-enforcement officials tracking illicit money flows have raised concerns that substantial amounts of stolen funds moved through informal Somali “hawala” money-transfer systems and that a portion of those transfers ultimately benefited Al-Shabaab. Several former federal investigators cited by the outlet say that money sent from Minnesota to Somalia frequently passes through regions controlled or taxed by the group, enabling it to skim funds.

One former Joint Terrorism Task Force official told City Journal that “every cent” moving through certain Somali remittance channels risks indirectly supporting Al-Shabaab, whether intentionally or not. Another retired investigator said U.S. sources learned that some Minnesota-based operators routing money abroad were themselves receiving state welfare benefits.

While federal officials have not publicly confirmed these specific claims, City Journal reports that investigators believe welfare fraud, remittances, and clan-based money networks have created vulnerabilities that extremist groups abroad may exploit.

The report also notes prior terrorism-related cases linked to Minnesota’s Somali community, including a decade-old wave of ISIS recruitment documented in federal court and previously covered by City Journal.

With more than two dozen fraud cases emerging since 2019, the investigation suggests the total losses may reach into the billions. As additional indictments are expected, the issue is already shaping Minnesota’s 2026 gubernatorial race, where Republican candidate Kristin Robbins has centered her campaign on welfare oversight. Gov. Tim Walz, seeking a third term, has faced mounting criticism over the state’s failure to detect or stop the fraud earlier.

By: Politics406 staff