【Epoch Times December 27, 2025】Long-serving federal prosecutor Joe Thompson estimates that the amount of taxpayer funds fraudulently diverted from Minnesota social welfare programs is “staggering,” possibly exceeding $9 billion.
This number is shocking. However, Joe Thompson, the first Assistant United States Attorney (AUSA) from Minnesota, believes the issue is not just about money. Others agree that the far-reaching effects of this large-scale fraud are profound and only beginning to surface.
“This is not just a matter of funds being misappropriated and wasted. This issue has led all of us to question, what kind of state do we live in?” Thompson said at a press conference on December 18. “I believe it has weakened the collective pride and confidence of our entire state.”
So far, Thompson and his team have filed lawsuits against dozens of alleged fraudsters in three different fraud cases, with the number of cases continuing to rise.
State Senator Eric Lucero expressed sorrow for the economic and emotional impact on Minnesota voters, saying, “We have become the epicenter of fraud and national disgrace here.”
Lucero and other Minnesota residents interviewed by The Epoch Times expressed that these scandals have dealt a heavy blow to the state. The chain reaction includes political and racial tension, state budget dilemmas, and rising taxes, raising concerns that those truly in need of public services may be deprived of them.
However, nearly all interviewees welcomed the recent national attention on the state, even if the attention is not flattering. They believe that with increased scrutiny, the state’s long-standing underlying issues are more likely to be exposed and addressed. Some interviewees suggested that certain features of Minnesota may have provided fertile ground for fraudulent activities.
Known as “The Land of 10,000 Lakes,” Minnesota has long been renowned for its beautiful natural landscapes, extensive parks, and friendly yet reserved population.
Interviewees told The Epoch Times that the “Minnesota Nice” mentality requires people not to ask too many questions when helping others—a situation that can easily be exploited by criminals.
“People running this system are easily fooled, and some may even be corrupt,” said Ed from northern Minnesota. He expressed concern about potential retaliation if his surname were to be disclosed.
Ed, who has lived in the state for decades, said, “Minnesota has a culture that doesn’t encourage questioning the motives of those seeking help or providing help.”
“They are willing to help everyone, with no consequences,” he said.
This attitude has made Minnesota a beacon for progressives. The state’s generous welfare programs reflect this. A study by the Center of the American Experiment, a public policy research institute based in Minneapolis, concluded that in 2023, welfare programs in Minnesota provided $46,000 in grants to each impoverished person in the state, ranking second in the nation after Massachusetts.
Many counties in Minnesota also practice sanctuary policies, including preventing local law enforcement from cooperating with federal immigration authorities.
Recently, the so-called “North Star State” has become a destination for “fraud tourism,” attracting many out-of-state individuals seeking easy money-making opportunities, as described by the prosecutor.
According to Thompson, two men from Pennsylvania, seemingly unrelated to Minnesota, have been charged with defrauding the state of $3.5 million in federal Medicaid funds. They are among the 13 individuals charged with defrauding the state housing stability program.
The state’s housing program allows the use of federal Medicaid funds to help address homelessness, particularly among the elderly and disabled. Following the lawsuits against the individuals involved in September, the state shut down the housing program at the end of October.
Many states in the U.S. have long struggled with fraud involving federal Medicaid funds, usually involving companies overcharging for services. However, Thompson stated that the fraud in Minnesota’s federal Medicaid program was conducted through shell companies, describing it as a “completely fraudulent scheme.”
“I believe this phenomenon is unique to Minnesota,” he stated.
Authorities anticipate additional charges related to the housing stability program and autism services scandal.
In a press release from the U.S. Attorney’s Office, since the exposure of these two scandals in September, two individuals running autism treatment centers are alleged to have “recruited” children to “qualify” for federal autism treatment reimbursement and paid kickbacks to the children’s parents.
According to the U.S. Attorney’s Office, one of the defendants, 28-year-old Asha Farhan Hassan, pleaded guilty on December 18 and is awaiting sentencing. The prosecutors alleged that she fraudulently obtained $14 million in autism services funds. Additionally, she is connected to the state’s largest fraud scandal, the “Feeding Our Future” scheme, involving nearly $250 million in child feeding funds, with an amount close to $500,000 involved.
Since 2022, 78 individuals associated with the nonprofit organization have been indicted, mostly Somalis, with dozens being convicted.
Prosecutors stated that “Feeding Our Future” and its subsidiaries falsely claimed to provide millions of meals to impoverished children. During the COVID-19 pandemic, the federal government relaxed requirements, providing an opportunity for criminals. The Department of Justice called “Feeding Our Future” the largest fraud case during the American epidemic.
Former Assistant U.S. Attorney Joe Teirab, who handled some of the cases in question, outlined the factors that fueled the fraud in the cases.
“These people are from a highly corrupt society. Add to that… a government relief system with almost no checks and balances—this is a perfect storm breeding highly corrupt elements,” he said.
Teirab was astonished to find that it was “so easy” to exploit the system in collecting evidence against the criminals.
He noted that the entities claimed to be able to provide food to tens of thousands of children in a single day, a number that was seemingly unbelievable. Their invoices “were all clearly falsified,” he stated.
Apart from the three major fraud types related to the housing stability program, autism services, and child feeding programs, a fourth scandal is emerging.
On December 18, law enforcement officials seized evidence related to the federal Medicaid program’s “Integrated Community Supports” initiative. The Department of Justice stated that these funds were meant to help people resolve health, safety, and household issues to enable them to live independently at home.
Investigators are looking into an organization that claimed to provide 12 hours of services per day to a man with severe mental illness. According to the press release from the U.S. Attorney’s Office, despite the allegedly thorough care services promised by the organization, the man was “found deceased in his apartment.” The press release did not disclose further details about the unnamed man’s death.
As of now, among the 87 federal Medicaid programs operating in Minnesota, authorities have identified 14 projects at risk for fraud. Officials are reviewing claims records of these projects since 2018, with claims totaling $18 billion. Thompson stated that “half or more” of these claims likely involve fraud, amounting to $9 billion.
Minnesota House Republicans warned on social media that considering Thompson’s estimate did not include the remaining 73 federal Medicaid programs, the estimate of $9 billion may be an understatement.
According to Minnesota Public Radio News reporting on December 19, Democratic Governor Tim Walz expressed that speculating on specific amounts “doesn’t help us.”
Walz stated that he sees the U.S. Attorney as a “partner” in holding criminals accountable. He believed that the Trump administration may have exaggerated the numbers for political reasons.
Thompson stated during the press conference that he disclosed the depth of the financial “iceberg” because the public has the right to know—and that “if we do not address the seriousness of the problem, we cannot solve it.”
The state governor proclaimed at an event on December 19 that regardless of the amount of fraud, “all this was happening on my watch, and I’m responsible for it. More importantly, I am going to fix the problem.”
In mid-December, he appointed an anti-fraud “czar” and ordered an independent audit of the 14 federal Medicaid programs at high risk for fraud in late October. To curb fraudulent activities and restore public trust, the order froze payments for a period of 90 days.
Concerns were raised by McKnights Senior Living magazine, a senior rights advocacy publication, regarding the fund freeze, suggesting that cutting funds could have “unintended consequences” for people.
State Senator Michael Holmstrom informed The Epoch Times on December 19 via text, stating, “The consequences of this fraud are beginning to affect our relevant institutions.”
He explained that a vocational rehabilitation service provider in his area informed him that “their clients, vulnerable adults served by these programs, are now paying the price,” experiencing issues such as mishandling and limited services.
“People are now worried that ‘our friends and neighbors across the state might struggle to get the care they need,'” Holmstrom said.
Nathaniel Olson, an advocate for the rights of 600,000 disabled individuals in the state, expressed at a hearing on December 17 that the members of his community are tired of the tribulations.
“The individuals from our group have had enough. We’ve had enough of this fraud,” he stated, expressing great concern for his disabled brother.
According to data quoted by Thompson, all of the fraudulent projects in Minnesota had one thing in common: they experienced sudden explosive growth.
From 2019 to 2020, the child feeding program expanded by 382%, reaching $70 million. In 2021, the program’s budget soared to $336 million. It was at that time that the Federal Bureau of Investigation (FBI) began investigating the “Feeding Our Future” child feeding program. A state oversight report from 2024 indicated that during this time, the Minnesota Department of Education, which managed the program, “did not investigate a number of complaints about the ‘Feeding Our Future’ program despite the large number and severity of these complaints.”
Thompson mentioned that the housing program initiated in 2021, with an annual projected cost of $2.5 million, had now skyrocketed to over $300 million. He added that the autism program in Minnesota had cost over $1 billion since its inception in 2018.
Thompson revealed that evidence recently uncovered showed that the “Community Supports” program under the federal Medicaid program, started in 2021 with an initial $4.6 million funding, has current funds “approaching nearly $180 million” despite ongoing efforts to control fraudulent activities.
The federal Medicaid program provides healthcare services for over 80 million Americans. Bill Glahn, a policy researcher at the Cato Institute in San Francisco, stated that the expenditure related to fraud in Minnesota seems to be impacting the state’s budget.
Initially, Minnesota had set a record fiscal surplus of nearly $18 billion in 2022. However, in the next two-year budget period (2028-2029), the state is projected to face a $3 billion deficit. Analysts anticipate that expenses will exceed revenues by $4.5 billion.
In a column dated December 17 titled “Fraud is baked into the state budget,” Glahn wrote that the increase in spending was the major reason for the budget’s woes and identified one spending category called “forecasted programs,” which paid social welfare funds related to many fraudulent losses in the state.
In light of Glahn’s reporting, the state Commissioner of the budget, Erin Campbell, responded that the fraudulent activities were encompassed in the spending figures as “increased spending.”
Glahn argued that based on a December 4 exchange, past fraudulent activities were now included in the expenditure figures. He added that the fraud was “incorporated into the spending baseline and is seen as something that will perpetuate.”
The rise in costs for social welfare programs had burdened taxpayers, as exemplified by Doug, a father of three children residing in the Twin Cities of Minneapolis-St. Paul. Doug, whose real name is withheld, noted that local governments continually raised taxes to fund projects. His property taxes had recently increased by 13%.
With taxes rising, Doug and his wife had to cut spending in recent years, including reducing Christmas gifts for their children. “We are now living paycheck to paycheck,” he remarked, even considering relocation to states with lighter tax burdens.
The fraud lawsuit in Minnesota began in 2022. An investigation published by the Manhattan Institute’s City Journal on November 19, 2025, titled “The Largest Funder of Al-Shabaab Is the Minnesota Taxpayer,” sparked public attention in recent weeks, leading to presidential action.
The investigation revealed that Somalis in Minnesota were transferring funds to their country, and the Al-Shabaab terrorist group was embezzling millions of hard-earned U.S. taxpayer dollars from these remittances.
President Trump condemned the activity, labeling Minnesota as a “hotbed for money laundering.” He terminated Temporary Protected Status for Somali immigrants, triggering investigations by multiple federal agencies. During a weeks-long operation, U.S. Immigration and Customs Enforcement (ICE) arrested over 400 illegal immigrants from various countries.
State Representative Walter Hudson highlighted that President Trump questioned who knew about the fraud and helped facilitate it. These individuals included insiders within the Somali community and outsiders.
Hudson told The Epoch Times, “The President stated the obvious—the fact that many in our state have turned a blind eye to this problem because we are afraid to speak the truth.”
Hudson stated that Somalis from third-world countries, unfamiliar with American bureaucracy, likely had assistance in committing the fraud, indicating that people wanted to see all enablers of fraud be prosecuted, not just individual criminals.
Hudson serves as a member of the Anti-Fraud Committee investigating the case. Committee Chair Representative Kristin Robbins remarked that she had spoken with numerous whistleblowers who were discouraged from revealing information on suspected Somali fraudsters. This was due to fear of being labeled “racist” or “Islamophobic.”
She informed The Epoch Times, “At the time, there was a cultural political correctness where people thought we were better off not talking about this. Because of this, fraud rapidly expanded and spiraled out of control.”
Robbins disclosed at a hearing on December 17 that whistleblowers do not trust the state Attorney General’s Office or the welfare department’s investigative bodies. Consequently, she planned to report to federal agencies, including Thompson’s office and the FBI, rather than state government bodies.
State Representatives Dave Pinto and Emma Greenman, both Democratic committee members among the eight, criticized Robbins for what they termed as partisan politics. As the state’s government agencies were controlled by Democrats, they accused her of engaging in divisive politics.
After Governor Walz issued his statement, the information sharing dispute escalated into a larger controversy.
“This claim is ridiculous. In election years, we expect political attacks,” stated Walz. He faced at least ten Republican challengers in his reelection bid, including Robbins. “But it’s unacceptable to suppress fraud information actively for political motives. If fraud exists, an investigation must be conducted immediately, not delayed, shifted, or turned into political theater.”
Robbins responded that Walz and other critics twisted the facts. She clarified in an article published on social media on December 21 that her committee did not cover up fraud to protect whistleblowers, calling it a “lie.”
Robbins mentioned that as the investigation progressed, voters consistently questioned whether stolen funds could be recovered. Thompson was trying to seize the assets of convicted fraudsters, but due to ongoing criminal appeals, the process could take years.
Recently, three customers from different ethnic backgrounds interviewed at the Karmel Mall of Somalia in Minneapolis expressed condemnation for the fraud. They discussed the impact of the scandal and the government’s response.
Young Somali man Shuaib Omar described that with Immigration and Customs Enforcement’s enforcement actions and the labeling of their community as fraudsters, fear and uncertainty had descended upon his community.
“However, fraud is fraud, no matter who does it—Somali, white American, Black American. Fraud is wrong, regardless of who you are,” he said.
Omar stated that these fraudsters have “ruined the well-being of all of us.” “Now, our entire community is being mistaken as bad people, which is not true,” he emphasized, noting that he has lived here since he was eight and loves America.
Awok Bol, a 45-year-old South Sudanese who has become a U.S. citizen, expressed being grateful for being able to come here.
Bol mentioned that newcomers were taking advantage of American hospitality to defraud the government welfare, which was wrong. “If someone invites you warmly into their home, you should take it with goodwill,” she said.
Mark Nelson, of African American descent, noted that seeing people coming to America and “sucking so much out of the government” made it unbearable for him.
Nelson, a homeowner himself, pointed out that he had noticed taxes rising significantly but believed they had not yet felt the full effects.
When asked about the reports regarding the fraud, he remarked, “Our government needs to know more about what’s going on and people’s needs—instead of letting a bunch of people in to destroy our funds.”
“I really want to blame this on the government because they haven’t been paying attention,” Nelson stated.
Cato Institute, headquartered in San Francisco, believed that federally funded projects managed by states were breeding grounds for fraud and waste.
In a recent report titled “Minnesota Fraud Illustrates Federal Aid Failure,” the institute mentioned that Minnesota’s mismanagement of federal funds exacerbated the state’s fraud problem and urged the Trump administration to end federal aid to states.
The institute noted, “If states funded their welfare programs independently, they would be more motivated to operate these programs efficiently and effectively.”
Thompson mentioned that regardless, “to completely eradicate such fraudulent behavior, relying solely on prosecutors is far from sufficient.”
“We are prosecuting cases that we can prosecute,” but even with round-the-clock effort, the scale of fraud “far exceeds the capabilities of prosecutors and law enforcement officers,” he stated.
Thompson asserted that ultimately, “regulatory bodies and other relevant personnel need to take action, conduct thorough investigations, and block the flow of funds. These funds have overwhelmed our systems and have made our prosecution capabilities inadequate.”