Politics
NEW: Trump Admin Launches Investigations Into Companies At Center Of Minnesota Welfare Fraud
The U.S. Small Business Administration (SBA) has initiated an investigation into alleged fraud involving federal COVID-19 relief funds distributed to Minnesota-based organizations and individuals.
The probe, which was announced by SBA Administrator Kelly Loeffler on December 3, 2025, forms part of a broader wave of federal inquiries launched by the Trump administration into the state’s handling of public assistance programs. The investigations highlight longstanding concerns over the misuse of taxpayer dollars in social services, particularly within Minnesota’s nonprofit sector.
The SBA’s focus centers on Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loans (EIDL), emergency measures enacted during the pandemic to support small businesses and nonprofits. According to a statement from Loeffler, preliminary reviews identified at least $1 million in such loans disbursed to entities and executives linked to prior fraud convictions.
These funds overlapped with state and federal grants implicated in schemes that defrauded child nutrition programs and other welfare initiatives. The probe aims to verify loan eligibility, including citizenship status, nonprofit legitimacy, and compliance with federal requirements.
Loeffler emphasized an examination of “the network of Somali organizations and executives” connected to these irregularities, expanding the scope to encompass related nonprofits across Minnesota. As of December 5, 2025, the SBA reported ongoing efforts to trace additional disbursements, with the investigation described as statewide in reach.
The SBA probe aligns with broader Trump Administration directives to investigate public welfare fraud in Minnesota, much of which has been tied to the state’s sizable Somali population. This past Tuesday, Treasury Secretary Scott Bessent ordered a probe into whether misappropriated funds from Minnesota programs reached al-Shabaab, a Somalia-based, Al Qaeda-affiliated terrorist group designated by the U.S. Department of State.
That probe was launched after multiple national security officials alleged that millions of dollars in looted funds had been wired to the group. The Department of Homeland Security and the U.S. Department of Transportation have also initiated inquiries, with the latter threatening to withhold $30 million in highway funding over issues with commercial driver’s licenses issued to non-citizens.
The SBA investigation builds on a series of public welfare fraud cases that have disproportionately involved members of Minnesota’s Somali-American community, estimated at over 80,000 residents, many of whom arrived as refugees in the 1990s and 2000s. Federal authorities attribute much of the activity to lax oversight in programs like the Federal Child Nutrition Program and housing assistance, which saw budgets expand rapidly during the COVID-19 era.
Over the past five years, law enforcement has documented fraud in sectors including child nutrition, autism therapy billing, and rental subsidies, with losses exceeding $1 billion across at least three major plots.
As of November 2025, federal prosecutors reported 59 guilty verdicts tied to these schemes. A landmark case involves Feeding Our Future, a nonprofit that claimed to serve meals to thousands of children but instead funneled funds to personal expenses.
In June 2024, five defendants were convicted on charges including wire fraud, money laundering, and bribery. Abdiaziz Shafii Farah of Savage, Minnesota, received convictions on 23 counts, including conspiracy to commit wire fraud and false statements in a passport application, while Abdimajid Mohamed Nur of Shakopee faced convictions for wire fraud and laundering proceeds from a $40 million sub-scheme.
Overall, more than 75 individuals have been charged in the Feeding Our Future matter alone, with sentences ranging from probation to over a decade in prison.
Additional convictions stem from related welfare frauds. In housing assistance schemes, providers billed for nonexistent services, with one case yielding guilty pleas from two of eight defendants charged in 2025 for defrauding $14 million.
Autism therapy fraud involved false claims totaling millions, leading to multiple guilty pleas.
