MINNEAPOLIS — U.S. Treasury Secretary Scott Bessent blamed Minnesota Gov. Tim Walz for hundreds of millions of taxpayer funds lost to fraud, adding on Jan. 9 in a call with reporters while in the Twin Cities that the Trump administration is launching a series of steps to root out fraud and hold fraudsters accountable.

It comes as Minnesota has been the epicenter of national scrutiny over massive fraud in social services programs that could total millions of dollars. Then a viral video from a conservative influencer accusing day care centers of fraud in an unsubstantiated claim drew national attention and spurred Minnesota officials to investigate 55 day care providers this month.

On Friday, Bessent told about 50 reporters over Zoom from the Twin Cities that he’s “optimistic that we are going to put an end to this waste, fraud and abuse, that we are going to have recoveries for the American people, and that we are going to hold people accountable, set an example, and make sure that federal aid gets to the people it was intended for.”

The Walz administration has taken steps in the past several months to guard against fraud, including hiring a former FBI agent to lead prevention, shutting down a program susceptible to fraud and halting payments in 14 Medicaid programs.

In response to Bessent’s comments, Walz’s office said in a statement that “the governor has been combatting fraud for years while the President has been letting fraudsters out of jail.”

“The governor has hired inspectors general, while the president has fired them. The governor has made systemic, bipartisan changes throughout state government to fix the problem while the President’s administration flies in when they realize they can score cheap political points,” a Walz spokesperson added. “Since the governor announced he was leaving the race, the president’s administration has suddenly acknowledged that fraud is a nationwide problem, including in red states like Ohio.

“Walz knows that fraud is real and has been fighting it for years. We welcome federal assistance. We don’t welcome political piling on,” she added.

Bessent said he met with leaders of local financial institutions earlier in the day and said the Treasury Department’s Financial Crimes Enforcement Network and the IRS are investigating whether institutions have complied with their legal obligations to detect and report suspected money laundering — and took aim at the role of people from Minnesota’s Somali community in widespread fraud.

In the Feeding Our Future case, which involved dozens of Minnesotans defrauding a federal meals program meant to feed kids after school and during the summer, most of those charged since 2022 were of East African descent. Although the leader of the nonprofit at the center of the case, Aimee Bock, is white.

Then, conservative influencer Nick Shirley accused Somali-owned day cares of fraud in his viral YouTube video, questioning whether any children were there, though state regulators found children at all but one that hadn’t opened yet for the day. It’s led to increasing harassment and threats to local Somali businesses and President Donald Trump disparaging Minnesota’s Somali community.

Bessent said Friday that “our citizens have a right to know that their tax dollars are not being diverted to fund acts of global terror or to fund luxury cars for fraudsters.”

A conservative website claimed that Minnesota fraudsters who have bilked government programs sent stolen money back to Somalia, where it was obtained by the terrorist group al-Shabab. But there is scant evidence to support that and a key source of the website’s story claims he was misquoted.

“At Treasury, we are thoroughly investigating the fraud, including funds sent to Somalia through money service businesses which provide financial services outside of a formal bank,” Bessent said. “These funds could have potentially been diverted to the terrorist organization al-Shabab. We have traced where the money went and are examining it.”

Bessent outlined several initiatives the Treasury Department is taking to target fraud in Minnesota. Those protocols, he said, “will serve as a genesis and a launching pad for investigations into other states.”

Those include:

Officials in Walz’s office said Friday that he has taken comprehensive and coordinated steps, going back to 2022, to combat fraud and prevent it.

On Jan. 5, when Walz announced he would no longer seek a third term in office, he said Minnesotans should be concerned about fraud and that his administration had worked to improve program integrity. But he said “political gamesmanship” from Republicans is making it more difficult, and he criticized leaders in Washington as “opportunists who are willing to hurt our people to score a few cheap points.”

He added then: “There’s more to do. A single taxpayer dollar wasted on fraud should be intolerable. And while there’s a role to play for everyone — from the Legislature to prosecutors to insurance companies to local and county government — the buck does stop with me."

Walz said his administration has been taking decisive action to solve the crisis and criticized Trump for “demonizing our Somali neighbors and wrongly confiscating child care funding that Minnesotans rely on.”

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