“A decent amount” of Minnesota’s tax money “almost certainly ended up in the hands of Al-Shabaab,” a source from the US Attorney’s Office told state outlet KSTP on Sunday.
This follows a collection of reports, including an explosive investigation by the Manhattan Institute’s City Journal, which revealed that Minnesota’s Somali community has sent millions of tax funds to Somalia via hawala networks, much of which has ended up in the hands of Al-Shabaab.
Hawala is an underground banking system based on trust that operates across much of the Middle East, South Asia, East Africa, and parts of Europe. It is conducted outside traditional banks, based on personal networks and verbal agreements, without written records.
Al-Shabaab is a Sunni Islamist terror movement based in Somalia, which has been aligned with al-Qaeda since 2012. The US attorney source said that “Al-Shabaab controls much of Somalia and imposes a tax on all financial activity in the areas it controls.”
An estimated $1 billion has been stolen under Minnesota Gov. Tim Walz's administration. Much of the fraud has occurred through the Feeding Our Future (FOF) welfare scheme, as well as Housing Stabilization Services (HSS) and several others. Of this billion-dollar figure, millions are reportedly now in the hands of the Somali terrorist group.
Joe Thompson, who was the acting US Attorney for the Minnesota District at the time of the alleged theft, said in August 2025 that the “vast majority” of the HSS program, which was designed to help seniors and addicts obtain secure housing, was fraudulent.
Following this, on September 18, 2025, Thompson filed criminal indictments for six Somalis in Minnesota for fraud relating to the HSS program. Most of the approximately 70 defendants in the $250m. FOF fraud schemes are from Minnesota’s Somali community.
According to Thompson, many of the fraud schemes ran out of “dilapidated storefronts or rundown office buildings” and targeted people who had just been released from rehab, having them sign them up for services that were never provided.
“I have spent my career as a fraud prosecutor, and the depth of the fraud in Minnesota takes my breath away,” said Thompson.
The Feeding Our Future con has been ongoing since 2020, when Minnesota officials raised concerns about the nonprofit’s rapid growth. Having opened in 2016, it was receiving $200m. in federal funding by 2021. The organization subsequently filed a lawsuit alleging racial discrimination.
On November 20, the US Attorney’s Office announced that a 77th individual had been added to the defendants of the $250m. FOF scheme.
In total, about 28 sting operations have arisen in the state since 2019, according to Thompson in August. Two former FBI officials told City Journal that most of the biggest fraud rings have been perpetrated by members of the Somali community.
According to reports, Somalia’s economy is heavily reliant on remittances from its diaspora. In 2023 alone, Somalis abroad sent home $1.7 billion – more than the Somali government’s budget for that year. Minnesota has the largest Somali population in the US, with about 79,449 people, according to Minnesota Compass 2025. There are about 150,000 to 200,000 Somalis across the country.
Glenn Kerns, a retired Seattle Police Department detective who spent 14 years on a federal Joint Terrorism Task Force, told City Journal that the Somalis ran a money network spanning from Seattle to Minneapolis, and were routing significant amounts of cash on commercial flights from the Seattle-Tacoma International Airport to the hawala networks in Somalia.
One of these networks, Kerns discovered, sent $20m. abroad in a single year.
Kerns himself investigated the hawalas in Somalia that were receiving the money transfers, discovering from sources on the ground, he said, that significant funds were being sent from America to Al-Shabaab networks in Somalia.
Aside from welfare cons, there has also been significant immigration fraud among the Somali immigrants in Minneapolis. The US Citizenship and Immigration Services announced earlier this month that marriage fraud, forged documents, and other issues were prolific.
Reactions to the reports
After learning of the fraudulent money laundering, US President Donald Trump announced on Saturday that he was immediately terminating the Temporary Protected Status program for Somalis in Minnesota.
“Somali gangs are terrorizing the people of that great state, and billions of dollars are missing. It’s over!” wrote the president.
Minnesota Rep. Kristin Robbins blamed Walz for “turning a blind eye” to fraud and criminals who manipulated the system.
Over the weekend, Minnesota’s entire GOP congressional delegation wrote a letter to Minnesota District US Attorney Daniel Rosen, Attorney-General Pam Bondi, and Homeland Security Secretary Kristi Noem, demanding a full federal inquiry into the Somali sting operations.
In the letter, Congress members Tom Emmer, Pete Stauber, Michelle Fischbach, and Brad Finstad called for an investigation into the “improper handling of fraud by Gov. Walz” and into how the tax money ended up in the hands of a terrorist group.
“It is bad enough that those individuals are defrauding our state, taking services and funds away from children and the most vulnerable, but now there is good reason to believe that Minnesota’s taxpayer dollars are going straight into terrorists’ hands,” read the letter.