Minnesota-Based ‘Anti-ICE Relief Fund’ Shut Down Due To Rampant Fraud

Hennepin County, Minnesota — which encompasses the city of Minnesota — has ended its Small Business Recovery Fund after officials flagged a majority of applications for potential fraud.

The $2 million program, approved this past May by the county board and the Hennepin County Housing and Redevelopment Authority, was created to assist brick-and-mortar small businesses affected by Operation Metro Surge, a federal immigration enforcement operation that began December 1, 2025.

The fund offered one-time grants of $3,000 to $10,000 to cover two months of commercial rent or mortgage payments. Eligibility required a locally owned for-profit business with a physical location in the county, at least three months of prior operations, annual revenue between $25,000 and $4 million, and a demonstrated revenue decline of 30 percent or more from December 1, 2025, to February 28, 2026, compared with a similar earlier period.

NextStage, a nonprofit “community-based lender,” administered the grants. Applications opened on March 18 and closed on March 25.

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🇺🇸 A Minnesota relief fund for businesses hurt by ICE operations has been shut down after 200+ of roughly 300 applications were flagged for potential fraud.

Hennepin County had set aside $2 million for businesses affected by Operation Metro Surge, but only 82 applicants were… pic.twitter.com/Zep7csJrUu

— NewsForce (@Newsforce) September 19, 2026

The county received about 300 applications. After a review that included document checks, in-person site visits, and added scrutiny for possible AI-generated materials, officials approved just 82 applications and distributed approximately $500,000.

More than 200 applications were flagged for potential fraud. Issues identified included applications that appeared copied or generated by artificial intelligence and submitted for multiple businesses, businesses that did not exist when inspectors visited, use of real business details with incorrect owner or contact information, and inflated expense claims.

County officials stated that no funds were paid out on the flagged applications. “We caught the fraud before we spent any money,” Hennepin County Commissioner Jeffrey Lunde said.

“Clearly, fraud and people who want to commit it are still very active, as they do not fear the penalty. Thanks to county staff and our partner, we were able [to] thwart these efforts by devoting more time and effort to tighter oversight, in-person inspections and increased scrutiny,” he added in a separate statement.

The Hennepin County Sheriff’s Office was asked in June to examine the applications for possible criminal activity. Investigators requested relevant documents the following month and stated that they would begin a formal investigation once those materials arrived.

Lunde has stated that prosecutors should pursue cases and that the legislature may need to review whether existing laws adequately address attempted fraud.

The remaining $1.5 million is being redirected, with up to $1 million for what the county described as flexible, low-barrier financing such as working capital, inventory, improvements, and expansion, and about $500,000 for financial, legal, and marketing consulting and promotional support. Officials plan an after-action review of grant procedures, including whether in-person visits should become standard.

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