James Comer is Chairman of the House Oversight Committee. | https://oversight.house.gov/chairman-james-comer/
The House Committee on Oversight and Government Reform convened a hearing titled “Oversight of Fraud and Misuse of Federal Funds in Minnesota: Part I” to examine allegations of large-scale fraud in Minnesota’s social services programs. According to federal prosecutors, an estimated $9 billion intended for children, autistic individuals, low-income residents, and Medicaid recipients was stolen by criminal networks. Lawmakers at the hearing highlighted that many fraudulent schemes were concentrated within Minnesota’s Somali community, with some funds reportedly diverted to terrorist groups overseas.
Chairman James Comer (R-Ky.) criticized state leadership, stating: “Federal prosecutors estimate these criminals have stolen at least $9 billion. The breadth and depth of this fraud is breathtaking. And I fear it is just the tip of the iceberg. Governor Tim Walz, Attorney General Keith Ellison, and Minnesota’s Democratic leadership have either been asleep at the wheel or complicit in these crimes. They failed Minnesotans and all Americans, handing millions of taxpayers’ money to fraudsters. They failed children and others in Minnesota. They failed their own state employees, some of whom have come forward as whistleblowers. How could they allow this massive fraud to go on for YEARS? This is why we are here. We must expose this theft of taxpayer dollars and hold everybody accountable who let it happen.The American people demand jail time for those who stole their hard-earned money and accountability for officials who sat by as resources were drained.”
Minnesota State Representative Kristin Robbins testified that warnings from whistleblowers and auditors went unheeded: “Tim Walz and his Administration have willfully turned a blind eye to crime, in the face of countless whistleblower and Auditor reports, as well as stories by local investigative journalists and Bill Glahn a fellow at Center of the American Experiment. These are actual crimes that must be punished. They are crimes against our moral values that erode trust in government. Governor Walz has known about fraud for years and failed to act.”
State Representative Marion Rarick described retaliation against employees reporting concerns: “I am a member serving on the Minnesota House Fraud Prevention and State Agency Oversight Policy Committee. I message with whistleblowers almost daily. Their message has been consistent. They are grateful for our attention to this fraud. They have explained that they live in a constant fear of retaliation... In 2019, employees alerted Minnesota DHS officials to sloppy contracting practices that were not legally compliant. They were later escorted out of the building.”
Federal agencies reported multiple efforts underway:
- The Department of Justice has charged 98 individuals in connection with these cases—85 identified as being of Somali descent—with 64 convictions so far.
- Over 1,750 subpoenas have been issued; more than 130 search warrants executed; over 1,000 witness interviews conducted.
- The Department of Homeland Security increased its presence in Minnesota for investigations across various facilities.
- The Department of Health and Human Services froze $185 million in funding pending additional documentation requirements from childcare providers.
Additional measures include audits at childcare centers, suspension or review of certain grant programs by other agencies, stricter eligibility rules for benefits programs nationwide, the launch of new reporting tools for suspected childcare-related fraud.
Chairman Comer cited an audit report suggesting intentional document backdating within Minnesota's Department of Human Services (DHS), along with grants awarded without proof work was performed: “Yesterday Minnesota’s office of the legislative auditor published an audit... It sounds like Governor Tim Waltz’s DHS may have been fabricating evidence by creating documentation after the fact to mislead auditors... one grantee who received nearly $680,000 from this agency for one month’s work could not provide any documentation or proof that any work was actually completed... Have you ever seen anything like this?”
Robbins responded: “Whistleblower reports show backdating and falsification... So clearly this has been a pattern at the agency and it’s unacceptable.”
Testimony indicated awareness among state leaders about ongoing fraud since at least 2009 through auditor reports; credible evidence regarding childcare-related schemes began surfacing between 2011–2013.
Majority Whip Tom Emmer (R-Minn.) asked about retaliation against whistleblowers exposing alleged misconduct:
“You all have an understanding that 1000 whistleblowers running an account on X have come forward to expose fraud in Minnesota state agencies... Is that accurate?”
“That is correct,” replied Rarick.
When pressed if these claims were politically motivated or credible:
“They’re completely credible, not politically motivated,” Rarick said.
Questions also arose regarding campaign contributions linked to implicated organizations following meetings with Attorney General Ellison.
Rep. Virginia Foxx (R-N.C.) referenced FBI findings showing some stolen funds used toward luxury purchases rather than public benefit programs: “According to the FBI, the $250 million in federal taxpayer money stolen was funneled into luxury cars, homes and lifestyles… Do you all believe the Walz administration serious pursued whistleblower reports?”
“I think the Walz administration seriously retaliated against whistleblowers,” Rarick responded.
Rep. Byron Donalds (R-Fla.) discussed how part of these funds allegedly ended up overseas via informal remittance systems known as Hawala networks—which can facilitate movement outside traditional banking channels—and potentially reached terrorist groups such as Al-Shabab:
Donalds asked Robbins whether U.S.-origin dollars had ended up supporting Al-Shabab.
“Yes,” Robbins answered.“We have plenty of evidence of that.”
The Committee announced ongoing efforts—including requests for documents from state officials—to investigate what members called widespread corruption within several social service agencies across Minnesota.
