On Friday, January 9th, US Treasury Secretary Scott Bessent announced a series of new measures to continue investigating serious welfare fraud issues in Minnesota and to recover taxpayer funds that have been misused.
Currently, Bessent is visiting Minnesota. During a press conference on Friday, he stated that President Trump has instructed federal authorities to hold the Minnesota government accountable for welfare fraud issues.
According to the statement released by the Treasury Department on Friday, there is a considerable scale of fraud in Minnesota, with multiple fraud groups suspected of embezzling billions of dollars through programs related to social services and child nutrition. These funds were allegedly used to purchase real estate, luxury goods, vehicles, airplanes both within the US and internationally, and to pay for international flights and other luxury expenditures.
The specific measures announced by the Treasury Department to combat fraud include:
– FinCEN launching a cash flow investigation: The Financial Crimes Enforcement Network (FinCEN) has issued investigation notices to four “money services businesses” in Minnesota, requiring them to lawfully provide information to trace suspicious fund flows.
– The IRS establishing a fraud special task force: The IRS will audit financial institutions involved in money laundering and has formed a new task force specifically targeting abuse related to COVID relief and 501(c)(3) tax-exempt organizations.
– Issuing Geographic Targeting Orders (GTO) to enhance supervision: FinCEN has implemented new regulations in Hennepin and Ramsey counties in Minnesota (including Minneapolis and St. Paul), requiring local banks and money transfer companies to report more recipient information for funds transferred overseas to aid in tracking international fund flows.
– FinCEN significantly lowering the reporting threshold, requiring reporting for foreign exchange transactions over $3,000 instead of the common $10,000 threshold.
– Issuing new Financial Institution Alerts: FinCEN has issued alerts to all financial institutions in the US, providing “red flag indicators” to identify and report fraud in child nutrition programs to facilitate early detection and interception of fraudulent fund flows.
– Strengthening law enforcement training: FinCEN has provided on-site training for federal and local law enforcement officers in Minnesota on how to identify and report suspicious activities from financial data.
Secretary Bessent stated on Friday that “Minnesota will be the starting point for the nationwide promotion of anti-fraud mechanisms” and mentioned that a similar mechanism had been used at the southern border to track funds of Mexican drug trafficking groups.
“Under the leadership of Democratic Governor Tim Waltz, welfare fraud has become rampant,” he said. “Billions of dollars intended for feeding hungry children, caring for elderly people with disabilities, and providing services to impoverished children have been misappropriated, flowing into the pockets of Somali fraud syndicates.”
The US Treasury Secretary has vowed to hold those responsible accountable and restore accountability to bring Minnesota back on the right track.
Bessent emphasized, “Fraudsters in Minnesota have stolen at least $300 million that was meant to help underprivileged children. We must prevent such large-scale fraud from happening again.”
“We are thoroughly investigating this fraud case, including money transfers to Somalia through non-traditional financial institutions,” the Secretary added. “These funds could potentially have been diverted to the terrorist group Al-Shabaab. We have traced the flow of funds and are conducting an investigation.”
Waltz, the Democratic vice presidential candidate in 2024, and his supporters claim that the investigation into Somali immigrants’ exploitation of federal welfare for fraudulent activities began during the Biden administration.
In September 2022, the Department of Justice under Biden initiated legal action against conspirators involved in the $250 million fraud scheme called “Feeding Our Future.” In this case, a fraud group primarily composed of Somali American individuals misappropriated federal funds to run a non-existent child nutrition program. The 78th defendant in the case was indicted in late November 2025, with at least 56 defendants having pleaded guilty before that.
Waltz announced his withdrawal from the gubernatorial reelection campaign on Monday. In recent months, Waltz’s approval ratings have steadily declined, as scrutiny from the federal government and media on state government program fraud cases intensified, causing tension within the Democratic party and calls for his resignation.