The Trump administration suspended small business loans to about 7,000 Minnesota borrowers due to suspected fraud.
HHS freezes Minnesota child care funds after fraud allegations
The federal Department of Health and Human Services has frozen all child care payments to the state of Minnesota, citing “blatant fraud” at the state’s child care centers.
The Trump administration has foreclosed on about 7,000 small business loans in Minnesota, the latest federal action in response to a fraud scandal that has engulfed the entire state.
Small Business Administration Administrator Kelly Loeffler said thousands of COVID-19 loans totaling $400 million were approved for alleged “fraudulent” borrowers. The federal loan stems from a program specifically aimed at supporting small businesses during the coronavirus pandemic.
“These individuals will now be banned from all SBA loan programs, including disaster loans,” Loeffler said in a statement regarding X. “We will also refer all cases to federal law enforcement for prosecution and repayment, as appropriate.”
Loeffler did not provide additional details about the borrowers or businesses whose loans are frozen. She added that these efforts would extend beyond Minnesota, writing, “This is just the first state.”
It was the latest step taken by the Trump administration to combat fraud that is said to be rampant in the state.
As part of the same enforcement activity, the DepartmentbeDue to an action taken by the Department of Health and Human Services, child care payments to the state of Minnesota have been frozen. Meanwhile, the Department of Homeland Security and the FBI recently announced they would step up investigations focused on alleged fraud involving taxpayer dollars in Democratic-led states.
The Biden administration has long investigated fraud in the state, including theft from the Medicaid program, leading to dozens of arrests and convictions. These efforts continued during President Trump’s second term.
In what prosecutors described as the nation’s largest coronavirus-era fraud scheme, dozens of Minnesota fraudsters defrauded more than $250 million from a federal funding program aimed at feeding hungry children through the nonprofit organization Feeding Our Future.
Federal prosecutors have charged more than 80 people with involvement in the scheme since 2022, most of them Somali-Americans. At least 60 suspects were convicted.
President Donald Trump has seized on the scandal in recent weeks to criticize his opponent, Minnesota Governor Tim Walz, as his 2024 Democratic vice presidential candidate. The president also criticized the state’s Somali community, calling local officials racist and un-American and at one point deriding them as “trash.”
White House press secretary Caroline Levitt said in late December that the administration was considering denaturalizing a Somali-American resident of Minnesota responsible for the fraud, a move aimed at stripping U.S. citizenship from people who illegally earned welfare tax dollars.
Mr. Walz, who is up for re-election this year, has gained increased attention and has taken several steps to combat fraud, including directing state agencies to step up efforts to identify and eradicate fraud.
In December, Walz announced a statewide fraud prevention program and appointed a former FBI agent to lead it. The former vice presidential candidate was called by congressional Republicans to testify about the corruption scandal before the House Oversight Committee in February.
Contributor: Joey Garrison
