Federal Investigation Launched Into Alleged Terror Funding From Minnesota Welfare Fraud
Federal investigators are examining a troubling claim: taxpayer money intended for Minnesota’s welfare programs may have funneled into the hands of the al-Qaeda-linked group Al-Shabaab. This inquiry, initiated by U.S. Treasury Secretary Scott Bessent, follows alarming reports of significant fraud in state-run welfare programs and questions the effectiveness of oversight under Governor Tim Walz.
“At my direction, @USTreasury is investigating allegations that under the feckless mismanagement of the Biden Administration and Governor Tim Walz, hardworking Minnesotans’ tax dollars may have been diverted to the terrorist organization Al-Shabaab,” Bessent stated in a public announcement. The investigation has drawn widespread bipartisan attention since it was made public.
A recent report from the Manhattan Institute’s City Journal highlights how both state and federal funds, designated for essential public benefits—like housing support, childcare, and food aid—have allegedly been misappropriated through fraudulent billing practices. Investigators suspect that a portion of these funds may have reached terrorist organizations overseas, facilitated by informal money transfer networks known as hawalas, especially in Somalia, which is heavily influenced by Al-Shabaab.
This situation has led to pressing national questions. A tweet following the report encapsulated concerns: “Could some of the money stolen in one of Minnesota’s fraud cases have gone to a terrorist group? That’s what the federal government is now investigating.”
Fraud schemes reportedly thrived between 2020 and 2022 during the expansion of COVID-related funding initiatives, including the notorious Feeding Our Future scandal. Fraudsters allegedly created fictitious invoices for services that were never rendered, claiming to provide meals for thousands of children who were not in school. Out of nearly $1 billion in funds disbursed, investigators believe a significant portion went unspent for its intended purpose. The U.S. Department of Justice has secured numerous convictions against those charged, highlighting the extent of wrongdoing.
Whistleblower accounts and internal audits paint a grim picture. Many participants in these schemes were reportedly active recipients of welfare benefits, collecting assistance while sending substantial remittances abroad. Glenn Kerns, a retired federal terrorism investigator, stated, “We had sources going into the hawalas to send money… all these Somalis sending out money are on DHS benefits.”
Based on several confidential sources, some remittances have reportedly found their way to Al-Shabaab, which controls many financial operations within southern and central Somalia. A former counterterrorism official remarked, “Every cent that is sent back to Somalia benefits Al-Shabaab in some way.” Another source bluntly added, “The largest funder of Al-Shabaab is the Minnesota taxpayer.”
Multiple U.S. agencies are currently collaborating on the matter, including the Treasury Department’s Office of Terrorism and Financial Intelligence and the U.S. Attorney’s Office in Minnesota. Their efforts focus on clarifying the scale of money diverted to international criminal organizations, encompassing terrorism finance.
The financial movements observed fit into familiar patterns in remittance practices among diaspora populations. Hawala networks—informal and often unregulated—allow cash deposits in one location, with recipients accessing funds in another without bank involvement. While legitimate in many cases, these networks pose risks for exploitation, particularly where oversight is lacking.
The World Bank estimates that nearly 40% of Somali households rely on international remittances. In regions controlled by terrorist groups like Al-Shabaab, the influx of funds provides scarce hard currency and operating resources, difficult to obtain under stringent global sanctions.
Republican leaders have sharpened their focus on Governor Walz, suggesting his administration’s missteps have enabled such fraud to flourish. House Oversight Committee Chairman James Comer stated the fraudulent activities occurred “under Governor Walz’s nose,” warning that “criminals—including Somali terrorists—stole nearly $1 billion from programs meant for vulnerable American families.”
Critics have also cited the Walz administration’s response to whistleblower allegations. Reports from early 2024 detailed retaliation against numerous Department of Human Services employees who voiced concerns regarding suspicious transactions. A whistleblower reported instances of “monitoring, threats, repression,” with some facing suspension or dismissal.
Governor Walz has defended his administration’s actions, asserting that he attempted to halt payments while citing legal challenges and court restrictions. “There’s a big difference between fraud and corruption,” he said in an appearance on NBC’s Meet the Press, referencing former President Trump. However, this statement has not quelled criticism. Trump himself pointed to failures in immigration and welfare management, asserting, “Somalians have caused a lot of trouble… What the hell are we paying money to Somalia for?”
The scale of the fraud implicates deeper issues beyond isolated white-collar crime. Evidence now suggests these fraudulent operations may have inadvertently supported one of East Africa’s most dangerous terrorist groups, heightening concerns about domestic security and the integrity of federal-state cooperation within welfare systems.
While the investigation continues, its ramifications are becoming evident. The intersection of fraud, terrorism financing, and government inaction reflects a failure that transcends bureaucratic and political realms. With over $1 billion in taxpayer funds reported missing and ongoing Al-Shabaab attacks in Somalia and Kenya, the need for substantive reform is increasingly apparent.
As stated by a federal counterterrorism source paraphrased in the Manhattan Institute’s report, “Minnesota’s generosity has become Somalia’s war chest.”
A recent tweet that highlighted the investigation underscored the escalating concerns: “🚨 BREAKING: The local news in Minnesota is now reporting that Scott Bessent is INVESTIGATING Tim Walz overseeing taxpayer dollars going to a Somalian terror group… This is getting REALLY bad for Tim.”
As accusations mount and scrutiny intensifies, the potential political ramifications for Walz and the Biden administration may be significant. The inquiry into the fate of those taxpayer dollars—and the accountability for those involved—has only just begun.
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