MINNEAPOLIS—The “staggering” amount of taxpayer dollars siphoned from Minnesota’s social welfare programs by fraud could exceed $9 billion, longtime federal prosecutor Joe Thompson estimates.

Yet Thompson, first assistant U.S. attorney in his native state, said the costs extend beyond that eye-popping amount.

“It’s not just about the money that’s been stolen and wasted. This is a problem that’s caused all of us to question what kind of state we live in,” Thompson said during a Dec. 18 news conference. “I think it’s eroded our sense of collective statewide self-esteem and confidence.”

Along with a small staff, Thompson has led prosecutions against dozens of alleged fraudsters in three distinct schemes thus far—and counting.

Lamenting the financial and emotional impact on his constituents, state Sen. Eric Lucero said, “We’re the epicenter of fraud and national embarrassment.”

Lucero and other Minnesotans who spoke to The Epoch Times say the scandals have rocked their state to its core. The ripple effects include political and ethnic tensions, state budget woes, soaring taxes, and fears that people who truly need services will be deprived of them.

Yet nearly all of the interviewees said they welcome the recent national attention—even if it’s unflattering. They believe it increases the likelihood that long-ignored underlying problems will be exposed and remedied. And, according to some, characteristics that define the state may have cultivated fertile ground for fraud to fester.

‘Unique’ to Minnesota

Marketed as “The Land of 10,000 Lakes,” Minnesota has long touted its natural beauty, networks of parks, and the friendly-yet-reserved attitude of its people.

That “Minnesota Nice” ethos calls for helping others without asking too many questions—a situation that bad actors can easily exploit, interviewees told The Epoch Times.

“The people running the system are gullible, and some may be corrupt,” said Ed, a northern Minnesotan who fears backlash if his last name were publicized.

As a man who has lived in the state for decades, Ed said “the Minnesota culture” discourages people from questioning the motives of those who seek help—or those offering to provide it.

“There’s a willingness to help everybody—without any consequences,” he said.

This attitude made the state a beacon for progressives. It also manifests in generous welfare benefits. In 2023, those programs doled out $46,000 for each person in poverty in Minnesota—the nation’s second-highest amount, behind Massachusetts. That’s according to an analysis by the Center of the American Experiment, a Minneapolis-based public-policy research group.

Many Minnesota counties also employ sanctuary policies, including blocking local law enforcement from cooperating with federal immigration authorities.

And lately, the North Star State has become a destination for “fraud tourism,” Thompson said, attracting out-of-staters who seek easy money.

A pair of Pennsylvania men, with no apparent Minnesota connections, “came here not to enjoy our lakes, our beautiful summers, our warm people,” the prosecutor said. “They came here because they knew and understood that Minnesota was a place where taxpayer money could be taken with little risk and few consequences.”

Those defendants are accused of cheating the state out of $3.5 million in fraudulent Medicaid payments, Thompson said; they are among 13 people charged thus far with scamming the state’s Housing Stabilization Services program.

The housing program tapped into Medicaid dollars with the intention of preventing homelessness, particularly among the elderly and disabled. The state shut down the program at the end of October, following an initial wave of charges levied against suspects in September.

Medicaid fraud is a problem in many states, and it typically involves companies overcharging for services. But Thomspon said Minnesota’s Medicaid fraudsters are running “programs that are just entirely fraudulent,” via shell companies.

“I think that’s unique to Minnesota,” he said.

Program Flaws ‘Easy’ to Exploit

Additional charges are expected in relation to the housing-stabilization program and in an autism-services scandal.

Since both of those scandals broke in September, two people who ran autism-therapy centers have been accused of “recruiting” children, getting them “qualified” for federal autism-therapy reimbursements, and paying kickbacks to the children’s parents, a news release from the U.S. Attorney’s office said.

One of the defendants, Asha Farhan Hassan, 28, is awaiting sentencing after admitting guilt on Dec. 18, according to the U.S. Attorney’s office. Prosecutors say she fraudulently reaped $14 million in autism-services payments, and also snared nearly a half-million dollars in the state’s largest fraud scandal: A $250 million meals-for-children racket known as “Feeding Our Future.”

Since 2022, 78 people—mostly Somalis—tied to that nonprofit organization have been charged; dozens have been convicted.

Feeding Our Future and its affiliates falsely claimed to serve millions of meals to needy children, prosecutors said. During the COVID-19 pandemic, the federal government relaxed requirements, opening the door for opportunists. Feeding Our Future is the nation’s largest pandemic-era fraud scheme, the Justice Department has said.

A former assistant U.S. attorney who worked on some of those cases, Joe Teirab, outlined fraud-fueling factors in that case.

“You have folks coming from a society with high levels of corruption,” he said. “You mix that with … a government-handout system that has almost no checks and balances—and that’s just … a perfect storm for high levels of corruption.”

As Teirab gathered evidence against offenders, he was surprised to see “how easy it was” to take advantage of the system.

Sites claimed to feed ridiculously high numbers of children, he said—thousands in a single day. Their invoices “were just so obviously made-up,” he said.

In addition to the three major types of fraud that have led to charges, a fourth scandal is unfolding.

On Dec. 18, officers seized evidence in Medicaid’s Integrated Community Supports program. That money is supposed to assist people with “health, safety, and household tasks” so they can live independently in their homes, the Justice Department stated.

Investigators are probing one provider that “claimed to be providing 12 hours of services a day” to a man with severe mental illness. He “was found dead in his apartment,” despite the purported level of care, the U.S. attorney’s news release said. No further details were released about the unnamed man’s death.

Funds Frozen, Scrutinized

So far, among the 87 Medicaid programs Minnesota runs, authorities have identified 14 programs at risk for fraud. Officials are combing through $18 billion worth of claims in those programs, dating back to 2018. “Half or more” could be fraudulent, Thompson said, which amounts to $9 billion.

Considering that Thompson’s figures exclude the remaining 73 Medicaid programs, his $9 billion estimate may be low, Minnesota House Republicans warned in a post on X.

Gov. Tim Walz, a Democrat, said “it doesn’t really help us” to speculate about the dollar amounts, according to a Dec. 19 report in MPR News.

The governor said he considers federal prosecutors to be “partners” who hold criminals accountable. Walz also said President Donald Trump’s administration may be encouraging inflated estimates for political reasons, the outlet reported.

Thompson, during his news conference, said he was disclosing the depth of the financial “iceberg” because the public deserves to know—and because “we can’t solve the problem until we grapple with the size of it.”

Regardless of the amount of fraud, Walz said at an event Dec. 19, “This is on my watch. I am accountable for this, and more importantly, I am the one that will fix it.”

He appointed an anti-fraud “czar” in mid-December and in late October ordered an independent audit of the 14 fraud-prone Medicaid programs. The order froze payments for up to 90 days, aiming to stop fraud and restore public trust.

Senior advocacy newsletter McKnights Senior Living expressed concern that people might suffer “unintended consequences” from the funding cutoff.

State Sen. Michael Holmstrom told The Epoch Times via text on Dec. 19: “The fallout from this fraud has already begun to impact our agencies.”

A vocational rehabilitation provider in his district told him that “their clients, the vulnerable adults these programs are meant to serve, are now paying the price,” with processing errors and restricted services, he said.

Now people are worried that “our friends and neighbors across the state could struggle to get the care they need,” Holmstrom said.

Nathaniel Olson, an advocate for the state’s 600,000 people with disabilities, told state lawmakers during a Dec. 17 hearing: “My people are done suffering. We’re done with this fraud.” He also said he is “very scared” for his younger brother, who has a disability.

State Budget Woes, Tax Increases

Minnesota’s fraud-ridden programs all have one thing in common: sudden, explosive growth, according to figures Thompson cited.

The meals-for-kids program expanded by 382 percent from 2019 to 2020, reaching $70 million; in 2021, it spiked to $336 million. That was when the FBI began probing Feeding Our Future. In the intervening years, the Minnesota Department of Education, which administered the program, “did not investigate some complaints about Feeding Our Future, despite their frequency or seriousness,” a 2024 state oversight report found.

The housing program, which started in 2021, was expected to cost $2.5 million per year, but costs have soared above $300 million total, Thompson said. He added that the autism program has cost Minnesota more than $1 billion since its inception in 2018.

The “community supports” program—in which evidence was just seized—started with $4.6 million in 2021. Now it’s “on pace for nearly $180 million despite the efforts to get a handle on the fraud in recent months,” Thompson said.

Medicaid covers more than 80 million Americans for health-related support. It is jointly funded by federal and state governments.

In Minnesota’s case, fraud-related expenditures appear to be hitting the state budget, according to Bill Glahn, a policy fellow for Center of the American Experiment.

After boasting a record surplus of nearly $18 billion in 2022, the state is now facing a $3 billion deficit in its next two-year budget period, 2028–29; state analysts expect spending to exceed revenues by $4.5 billion.

One line-item, “forecasted programs,” is driving much of the increased spending; it refers to social welfare payments that are tied to many of the state’s fraud losses, Glahn wrote in a Dec. 17 column.

However, the word “fraud” is absent from the state’s 97-page budget for that period.

When a TV reporter asked how money lost to fraud might be represented in those numbers, budget commissioner Erin Campbell replied, “It would show up in ‘increased spending’” in budget forecasts.

Based on that Dec. 4 exchange, “past fraud is now just baked into the spending numbers,” Glahn wrote, adding that fraud therefore is “incorporated into the spending baseline, treated as if it will continue forever.”

The costs of increased social programs are hitting taxpayers such as Doug, a Twin Cities-area father of three who requested anonymity.

Local governments have been enacting tax increases to help fund programs that the state requires, he said, noting his property taxes just went up 13 percent.

Because of increasing taxes, Doug and his wife have had to cut back on expenses for the past couple years, including buying fewer Christmas gifts for their children. “We’re scraping, you know,” he said. The family has considered moving to a state with a lower tax burden.

National Stage, Local Reactions

The fraud prosecutions, which began in 2022, gained widespread public attention and presidential action in recent weeks after City Journal, a publication of the Manhattan Institute, published an investigative report in November.

The article alleged that Somalis in Minnesota were sending money back to their homeland—and that al-Shabaab terrorists were skimming millions of U.S. taxpayer dollars from those transfers.

Trump denounced Minnesota as “a hub of fraudulent money laundering activity.” He ended a temporary deportation shield for Somalis, and multiple federal agencies launched investigations. A weeks-long Immigrations and Customs Enforcement (ICE) operation produced more than 400 arrests of illegal immigrants from multiple countries.

Trump also raised questions about who knew about the fraud and enabled it—both inside and outside the Somali community, state Rep. Walter Hudson noted.

The president “spoke to the obvious truth that many of us here in the state have been dancing around for too long, because we’re afraid to say it,” Hudson told The Epoch Times

Somalis, who come from a Third World country and are unfamiliar with American paperwork, surely must have had help setting up their fraud schemes, Hudson said. That’s why people want to see prosecutions of anyone who enabled the fraud, not just individual offenders.

‘Political Correctness’ and ’Political Theater’

Hudson serves on an anti-fraud committee that is digging for answers. Its chair, state Rep. Kristin Robbins, said she has spoken to multiple whistleblowers “who said they were told not to say anything [about Somalis’ suspected fraud] because that would be ‘racist’ or ‘Islamophobic.’”

“There was, like, a cultural sort of political correctness, that we'd better not talk about it,” she told The Epoch Times. “And that’s why it was allowed to balloon and mushroom out of control.”

Whistleblowers do not trust the state Attorney General’s office or the welfare department’s investigative arm, she said during a Dec. 17 hearing. Thus, Robbins said, she informs federal authorities including Thompson’s office and the FBI instead of state agencies.

Reps. Dave Pinto and Emma Greenman, two of three Democrats on the eight-member committee, faulted Robbins for that. They accused her of playing partisan politics because the state agencies are under Democrats’ purview.

The information-sharing dispute evolved into a bigger controversy after the governor issued a statement.

“This is outrageous. I expect political attacks in an election year,” said Walz, whose reelection bid faces at least 10 Republican challengers, including Robbins. “What is unacceptable is actively withholding information about fraud and blocking investigations in order to advance a political agenda. If there is fraud, it needs to be investigated immediately—not sat on, redirected, or used for political theater.”

Robbins says Walz and other critics are mischaracterizing the situation. Her committee is not “covering up fraud” by protecting whistleblowers, she wrote in a Dec. 21 X post, adding, “This is a lie.”

As the investigations continue,  Robbins said constituents keep asking whether the stolen funds can be recouped. Prosecutors are trying to seize assets of the convicted fraudsters, but that process could take years while criminal appeals continue.

Fraudsters ‘Ruined Everything’

A trio of shoppers at the Karmel Mall of Somalia in Minneapolis—each of a different ethnicity—all condemned the fraud in interviews with The Epoch Times recently. They also discussed the impact of the scandal and government actions.

Shuaib Omar, a young Somali man, described a sense of fear and uncertainty gripping his community because of the ICE enforcement and labeling of their group as fraudsters.

“But fraud is fraud, no matter who does it—Somali, white American, black. Fraud is wrong, no matter who you are,” he said.

The fraudsters “have ruined everything for the rest of us,” Omar said. “Now we’ve got this image of a whole community being bad people, which isn’t true.” He also asserts that he loves America, his home since he was 8.

A native of South Sudan, Awok Bol, 45, said she became a naturalized citizen and is “thankful to be here.”

It’s wrong for newcomers to abuse Americans’ hospitality by defrauding government programs, Bol said. “If somebody welcomes you in his home, you should be nice,” she said.

Mark Nelson, who is of African American heritage, said he can’t stand seeing people come into America and “siphon so much out of the state.”

Nelson is a property owner, and he said he has noticed significant tax increases but “I don’t think we’ve felt the full force of it yet.”

Asked to react to reports about the fraud he said, “Our government should be more aware of what’s going on, and the needs of the people—and not let one group of people come in and demolish our funds.

“I really want to blame it on the government, for not keeping their eyes open,” Nelson said.

Possible Solutions on Horizon

Federally funded programs that states administer are breeding grounds for fraud and waste, the Cato Institute argues.

“Lax state administration” of federal funds worsened Minnesota’s fraud problems, a recent Cato report said, urging the Trump administration to end federal-to-state aid programs.

“If state governments funded their own handout programs, they would have more incentive to run them lean and efficiently,” the institute said.

In any case, Thompson says “it’s going to take more than just prosecutors” to eradicate the fraud.

“We’re prosecuting what we can,” he said, but the extent of the fraud is “far beyond the capability of a group of prosecutors and law enforcement agents,” even with around-the-clock dedication.

Ultimately, action will be needed from “regulators and other people looking into the problem and stopping the flow of money which has overwhelmed our system and overwhelmed our ability to prosecute,” Thompson said.