Washington (Somalia Today) — US Treasury Secretary Scott Bessent said Tuesday that his department has opened an investigation into allegations that fraudsters in Minnesota may have funneled proceeds from massive public schemes to the Al-Shabaab militant group in Somalia.
The announcement sharpens a political row over welfare abuse and terrorism, tying the issue directly to the administration’s criticism of Minnesota Governor Tim Walz.
Writing on X, formerly Twitter, Bessent said he ordered the probe to determine if “hardworking Minnesotans’ tax dollars may have been diverted to the terrorist organization Al-Shabaab.”
He blamed the potential diversion on “feckless mismanagement” by the Biden administration and Walz, and pledged swift Treasury action to ensure US taxes do not bankroll “acts of global terror.”
The inquiry follows intense pressure from Republicans and conservative media who cite a recent City Journal article.
That report alleged that fraudsters funneled stolen welfare funds through informal transfer networks to Al-Shabaab, an Al-Qaeda affiliate. It cited unnamed sources but offered no public documentation tracing specific transactions to the group.
President Donald Trump has seized on the claims to attack Walz, calling Minnesota — home to the largest US Somali community — a “hub of fraudulent money laundering activity.”
He also threatened to end legal protections for Somali nationals, telling rallies that “Somalians are ripping off our country.”
Scant evidence
Minnesota sits at the center of some of the largest US pandemic-era fraud cases.
Federal prosecutors have charged scores of defendants in schemes targeting housing assistance and the “Feeding Our Future” child nutrition program, with authorities estimating losses of more than $1 billion.
Prosecutors say conspirators created shell companies and fake meal sites, then submitted inflated invoices for children who never received food.
Court evidence shows they spent the proceeds on luxury cars, real estate, and overseas investments, according to trial verdicts and earlier federal charges.
Prosecutors have won guilty pleas or convictions against dozens of defendants, but they have not brought terrorism-financing charges.
A 2024 state review found that the Minnesota Department of Education failed to police the program properly.
The department “created opportunities for fraud” by failing to recognize warning signs and by not exercising its full authority to hold the nonprofit to account, according to the audit report.
Even so, public evidence linking these crimes to terrorism remains thin.
Andy Luger, the US attorney leading the prosecutions, stated last week that the defendants “were looking to get rich, not fund overseas terrorism.” A Star Tribune analysis also described proof of knowingly funding terrorists as “scant.”
Earlier claims also failed under closer review. A 2019 state audit, ordered after reports alleging terror links to childcare fraud, found no evidence that funds reached extremist organizations.
Community concerns
Governor Walz supports a review of where stolen funds went, but urges caution on the terrorism narrative.
“I think it’s the right thing to do,” Walz told reporters about the inquiry, while adding: “I don’t know if they’ll find the connection.”
Walz expanded his defense Sunday in an NBC News interview recap. He said criminals are “attracted” to Minnesota’s generous social programs but argued that prosecutors are “going after them” and that the state is tightening oversight.
He warned against “demonizing an entire community on the actions of a few,” calling broad attacks on Somali Minnesotans “lazy.”
A separate Politico article noted that Walz and Senator Amy Klobuchar both pushed back on Trump’s portrayal of the state.
Somali-American leaders fear that tying fraud so closely to terrorism will stigmatize their community and disrupt legitimate remittances to families in the Horn of Africa.
Many defendants in the fraud cases are Somali-American. Still, community leaders say that fact has fueled unfair generalizations, noting that many Somali families were also victimized or pulled into sham businesses.
The Treasury Department has set no timeline for the investigation.Â
