Somali Fraud Swamped Minnesota on Walz’s Watch

The NY Times has thrown Minnesota governor Tim Walz under the bus over a massive and sprawling fraud scandal that federal prosecutors say siphoned over $1 billion from the state's social safety net programs - more than the entire state spends annually to run its Department of Corrections.

The fraud involved a series of schemes that federal authorities say took root over the past five years, many centered within Minnesota’s Somali diaspora, where individuals established companies that billed state agencies for services that were never performed. Prosecutors say 59 people have been convicted across various cases so far, in three separate plots.

Minnesota’s fraud scandal stood out even in the context of rampant theft during the pandemic, when Americans stole tens of billions through unemployment benefits, business loans and other forms of aid, according to federal auditors. - NYT

Federal prosecutors have emphasized the seriousness of the cases being prosecuted by career federal attorney Joseph H. Thompson - who warned that the scale of fraud threatens public confidence. “No one will support these programs if they continue to be riddled with fraud,” Mr. Thompson said. “We’re losing our way of life in Minnesota in a very real way.”

Feeding Programs and Expanding Fraud

The first public indication of a systemic problem emerged in 2022, when attorneys began prosecuting fraud related to pandemic-era child nutrition programs.

Prosecutors charged that Feeding Our Future, a Minneapolis nonprofit, partnered with dozens of local businesses to claim reimbursements for tens of thousands of nonexistent meals. The funds were allegedly used for luxury spending, including homes, vehicles, and international real-estate investments.

Investigators later determined that the problem extended beyond the food-assistance program. Two additional fraud schemes came to light last year, including inflated reimbursement claims for services to people at risk of homelessness and fraudulent autism-therapy certifications involving children recruited from Somali communities in Minneapolis.

One provider in the autism program, Asha Farhan Hassan, is accused of facilitating $14 million in fraud. Her attorney, Ryan Pacyga, said she entered the field with good intentions but eventually engaged in falsifying invoices and intends to plead guilty. Pacyga added that some defendants believed state agencies were enabling the fraud. “No one was doing anything about the red flags,” he said. “It was like someone was stealing money from the cookie jar and they kept refilling it.”

Political and Cultural Fault Lines

The cases have fueled debate about whether state officials hesitated to intervene due to concerns over accusations of racism or political backlash. A report by Minnesota’s Office of the Legislative Auditor found that threats of discrimination lawsuits influenced regulatory decisions, including early warnings issued by Feeding Our Future that challenging claims from minority-owned businesses would trigger litigation and public accusations.

Kayseh Magan, a former fraud investigator at the Minnesota attorney general’s office, said that pushback contributed to reluctance among Democratic officials. “There is a perception that forcefully tackling this issue might cause political backlash among the Somali community, which is a core voting bloc,” Mr. Magan said.

Amid the prosecutions, allegations even spilled into courtroom misconduct: defendants attempted to bribe a juror with $120,000 and a note asking, “Why, why, why is it always people of color and immigrants prosecuted for the fault of other people?”

Mr. Thompson argued that heightened racial sensitivities following the death of George Floyd in 2020 affected oversight and enforcement. “This was a huge part of the problem,” he said. “Allegations of racism can be a reputation or career killer.”

Walz’s Response

Walz (D), now in his second term and seeking a third, acknowledged that pandemic policies prioritized speed and accessibility of assistance. “The programs are set up to move the money to people,” Mr. Walz said. “The programs are set up to improve people’s lives, and in many cases, the criminals find the loopholes.”

And of course since Walz is seeking a third term next year and fraud has become a central theme in the upcoming governor’s race, he's introduced stricter measures, including:

• a task force to pursue fraud cases

• enhanced inter-agency data-sharing

• new technology — including AI — to detect suspicious billing

Community Impact and Racial Tensions

The fallout has reverberated sharply within Minnesota’s Somali community of roughly 80,000 residents. Many say the scandals have cast suspicion on innocent families and entrepreneurs. Rep. Ilhan Omar, whose district includes Minneapolis, urged Minnesotans not to generalize wrongdoing. “We do not blame the lawlessness of an individual on a whole community,” she said.

Except - as Somali-American professor Ahmed Samatar of Macalester College argues, the scandal demands honest reflection.

Dr. Samatar said that Somali refugees who came to the United States after their country’s civil war were raised in a culture in which stealing from the country’s dysfunctional and corrupt government was widespread.

Minnesota, he said, proved susceptible to rampant fraud because it is “so tolerant, so open and so geared toward keeping an eye on the weak.” -NYT

Some Somali social-service providers have criticized the increased scrutiny, with the Minnesota Somali Community Center asserting that heightened enforcement has left legitimate organizations feeling “criminalized and intentionally targeted.”