By AML Intelligence Correspondents
THE U.S. Treasury will recover funds stolen in a social services fraud scheme in Minnesota, prosecuting those responsible, according to Secretary Scott Bessent.
Bessent, in remarks prepared for a speech to the Economic Club of Minnesota, said officials are tracking those who stole funds in a social services fraud scheme. He said the Treasury would also probe similar fraud in other states.
“Minnesota is ground zero for what may be the most egregious welfare scam in our nation’s history to date. Under Governor Tim Walz, billions of dollars intended for families in need, housing for disabled seniors, and services for children were diverted to benefit fraudsters,” Bessent said.
His comments came as the U.S. Justice Department said it was sending additional federal prosecutors to Minnesota. The prosecutors will assist the U.S. attorney’s office with ongoing investigations into alleged fraud involving federal welfare and benefits programmes.
At least 77 people have been charged, many from the Somali community, with siphoning COVID relief funds that were intended to provide meals to schoolchildren.
The fraud has cost taxpayers hundreds of millions of dollars, Bessent said, including money sent to Somalia through money services businesses rather than formal banks.
Minnesota fraud
U.S. Attorney General Pam Bondi said that the department “will deliver severe consequences in Minnesota.” She added that it stood “ready to deploy to any other state where similar fraud schemes are robbing American taxpayers.”
The move coincided with a House Oversight Committee hearing in Washington on Wednesday examining the allegations. The claims have largely focused on organisations linked to the state’s Somali community.
The issue gained national attention after an influencer published a video that went viral online. The footage purported to show child care facilities across Minnesota that had received state and federal funding despite not being operational.
Following the video’s release, the FBI opened an investigation late last month. Separately, the Department of Health and Human Services announced it was freezing federal child care payments to the state.
Minnesota’s Department of Children, Youth, and Families disputed the claims. The agency said on Friday that investigators found the facilities referenced in the video were operating normally. “Children were present at all sites except for one — that site, was not yet open for families for the day when inspectors arrived,” it said.
The Justice Department has conducted multi-year investigations into alleged fraud across several federal benefits programmes in Minnesota. Authorities have said the cases involve hundreds of millions of dollars in stolen funds.
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