An overview of the sprawling fraud scandal that's gripped Minnesota
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In January 2022, FBI agents raided the offices of Twin Cities nonprofit "Feeding Our Future," whose founder would later be convicted on fraud charges. Photo: Elizabeth Flores/Star Tribune via Getty Images
A long-simmering scandal in Minnesota boiled over Monday when Gov. Tim Walz abruptly dropped his re-election campaign amid mounting questions about the state's ability to weed out fraud in multiple safety-net programs.
The big picture: Almost overnight, pressure from the Trump administration turned a state scandal that has periodically dominated Minnesota headlines for at least six years into national news.
- While some right-wing outlets' most recent claims about the fraud have been challenged, the crux of the scandal comes from a drumbeat of warnings by federal prosecutors and non-partisan watchdogs: that "inadequate" state oversight left multiple programs vulnerable to "industrial scale" waste and abuse.
Catch up quick: The crisis prompted the Trump administration to cite fraud concerns as it moved to freeze all federal child care funding to Minnesota and ordered an ICE enforcement surge to target the state's Somali community.
- In Walz's statement announcing his decision not to run for re-election, the governor said his administration is "taking fast, decisive action to solve this crisis" — and said Republicans' "political gamesmanship is only making that fight harder to win."
- "We cannot effectively deliver programs and services if we can't earn the public's trust," the statement read. "That's why, over the past few years, we've made systemic changes to the way we do business."
School meal program
Zoom in: For the last several years, most attention in Minnesota has focused on what prosecutors called the largest-ever case of pandemic-aid fraud: a sprawling scheme to bilk a federally funded school meals program.
- With program rules loosened to ensure children didn't starve during COVID, prosecutors say fraudsters billed for at least $250 million-worth of meals that they did not serve. To date, more than 70 defendants have pleaded guilty or been convicted.
Friction point: Walz administration officials have long maintained they tried to intervene to stop potentially fraudulent meal payments, but court challenges stymied their efforts.
- But Minnesota's independent Legislative Auditor has disputed their argument, concluding in a 2024 report that the state's Department of Education "failed to act on warning signs" — and could've legally intervened to ensure money stopped flowing.
Zoom out: But allegations that Minnesota's generous social services programs were being misused long predated the school meals scandal — and since then, even more programs have come under fire.
Child care centers
In December 2025, Vice President Vance and FBI Director Kash Patel amplified a viral video featuring YouTuber Nick Shirley, who questioned the legitimacy of several Somali-run day care facilities in the Twin Cities.
- Minnesota House Speaker Lisa Demuth — a Republican gubernatorial candidate — later said her caucus helped guide Shirley to these facilities, noting some of these "apparently vacant sites" had come up during legislative hearings.
Yes, but: State investigators have since reported the nine facilities Shirley targeted are "operating as expected," with children present "at all sites except one," which wasn't open during inspectors' visit.
Between the lines: The program highlighted in Shirley's video — the Child Care Assistance Program (CCAP) — was flagged in a 2019 independent audit for issuing $71.6 million in potentially fraudulent payments.
The intrigue: The child care program was also highlighted in a November story from a different right-wing outlet, City Journal, which claimed child care program funds were being funneled to a Somali terrorist organization.
- That claim also swirled around CCAP during a 2019 state audit. At the time, investigators could find "no evidence" that the funds were diverted for terrorist use, and no terrorism-related charges have been filed since in connection with the program.
- A key source for the City Journal story has also disputed the outlet's reporting, according to the Star Tribune.
Housing stabilization
In August, the Walz administration shut down a program that used Medicaid dollars to help vulnerable populations cover housing costs after unearthing "credible allegations of fraud" against 77 providers.
- "This action is necessary to … protect the fiscal integrity of Minnesota's Medicaid program," a state official wrote at the time.
- Prosecutors have since filed charges accusing 13 people of submitting fake reimbursement claims through the program, using lists of names of potential beneficiaries they acquired from addiction treatment centers.
Autism centers
Explosive growth in spending on the state's Medicaid-funded autism treatment programs caught federal investigators' attention in 2024, the Minnesota Reformer reported.
- One defendant, Asha Hassan, has already pleaded guilty. Prosecutors had accused Hassan of employing technicians who weren't qualified to treat autism and "fraudulently inflating" claims for Medicaid reimbursement.
- Hassan was also charged with fraud related to the school meals program, for which the DOJ said she received $465,000.
- Prosecutors have also charged a second defendant, Abdinajib Hassan Yussuf. They say Yussuf ran a similar autism treatment scheme as Hassan's.
Flashback: Reporters questioned the explosive growth in these programs' cost before charges were filed.
- When the Reformer pointed to the autism program's ballooning price tag in 2024, the state official in charge responded by noting the rise was consistent with cost increases in the housing stabilization program — the same program the Walz administration would later shut down over similar fraud concerns.
- KSTP cameras captured Axios' Torey Van Oot questioning Walz at a press conference about rising costs in the Medicaid-funded autism program. "We always investigate, and those people go to jail," Walz responded.
