Investigators say losses could touch half of $18 billion sent to Minnesota-run services since 2018, with new cases beyond pandemic meal aid. More than 90% of the perpetrators are Somali or Kenyan.
ST. PAUL, MN — Federal authorities said Friday that fraud tied to Minnesota’s social-services safety net has spread well beyond the pandemic-era child nutrition scheme, with investigators now examining 14 programs and estimating that as much as half of $18 billion sent since 2018 may have been stolen.
Officials say the investigation has moved from a single nonprofit to a broader map of shell companies, clinics and housing providers that billed for care never delivered or padded claims. First Assistant U.S. Attorney Joe Thompson called it “industrial-scale” theft and said the widening probe is producing fresh charges and financial tracing overseas. The U.S. Treasury Department is separately tightening oversight of money services businesses linked to the case. The expansion matters because the programs at issue serve vulnerable Minnesotans — children, recovering addicts and people with disabilities — and any diverted dollars mean services not provided. The immediate stakes include new arrests, asset seizures and policy changes to choke off future fraud.
Investigators said the current phase grew out of the 2022 case around a nonprofit that claimed to feed children during COVID-19 but, prosecutors say, siphoned off hundreds of millions of dollars. Since then, more than 50 people have been convicted, including ringleaders in related schemes. Thompson said this year’s leads pushed agents into other program areas, where they found clinics inflating Medicaid therapy hours, recruiters paid with kickbacks, and housing operators billing for clients who were not in care. “This was industrial-scale fraud,” Thompson said, adding that some of the money moved through networks built during the pandemic and persisted after emergency rules ended.
Authorities detailed new charging activity tied to housing services and said separate reviews are underway in a third disability-support program. Financial records show portions of the proceeds moved overseas, including to Kenya and Turkey, according to investigators, who emphasized there is no evidence the transfers funded terrorism. The Treasury Department, led by Secretary Scott Bessent, plans a geographic targeting order that will require enhanced reporting by certain money transmitters and will deploy Financial Crimes Enforcement Network staff to scrutinize suspicious flows. Prosecutors said they are coordinating with IRS criminal investigators and Health and Human Services auditors to match claim files, payroll data and bank movements, and they warned that additional indictments are likely.
The scandal’s roots remain most visible in the pandemic meal-aid case. In August, a Minnesota man received a 28-year federal sentence and nearly $48 million in restitution for orchestrating false meal claims and laundering the proceeds through luxury purchases and overseas property. Earlier trials produced convictions for several defendants and exposed an attempt to bribe a juror with $120,000 in cash, which led to separate charges. While that case drew national attention, the broader review now encompasses autism therapy billing, supportive-housing reimbursements and other Medicaid-funded services where paperwork can mask whether services occurred. State leaders have responded with audits and a new fraud-prevention director, moves that will be tested as federal cases advance.
Prosecutors said new defendants in the housing-services matter have made initial appearances or will do so in the coming days in U.S. District Court in Minnesota. Agents are pursuing forfeiture of real estate, vehicles and bank balances tied to the newer schemes, with restitution orders expected in future sentencings. Treasury’s reporting order is expected to run for a limited period and could be renewed based on results, officials said. Investigators are also comparing claim spikes during 2020–23 with service logs and badge swipes at clinics to quantify losses. Thompson said his office will continue charging cases in waves as evidence is validated and grand juries return indictments.
The expansion has stirred political reaction in Minnesota and Washington. Supporters of tougher oversight say the findings show emergency-era safeguards were too loose and that criminal networks adapted across programs. Community leaders have urged caution about stereotyping residents linked to money wiring or nonprofit work, noting that many whistleblowers came from inside those communities. Outside the courthouse this week, a local pastor said the investigation should “protect the needy without smearing the innocent,” while a clinic worker who asked to be identified by first name only said staff were “frustrated that bad actors made everyone look suspect.” Officials said tip lines and audits remain active, and that most providers are complying with document requests.
As of Friday, federal agents were executing additional subpoenas and tracing international transfers while Treasury finalized its targeted reporting order. Prosecutors said further charging documents could be unsealed as soon as next week. The investigation into a third disability-support program is ongoing, and authorities said they will provide an update when the next round of cases is filed.
Author note: Last updated December 19, 2025.