U.S. Treasury Secretary Scott Bessent announced on Monday that his department has opened a federal investigation into allegations that Minnesota taxpayer money may have been illegally diverted to the terrorist group Al-Shabaab. The claims suggest the misuse occurred during the Biden administration and under Minnesota Governor Tim Walz’s leadership. Bessent said the accusations were serious enough to require immediate action, noting that his team would move quickly to uncover the truth and keep Americans informed as the investigation progresses.
Governor Walz’s office responded by saying he has already expressed support for a full investigation if any evidence exists that Minnesota funds were connected to Al-Shabaab. Walz previously stated that any such link should be thoroughly examined.
The controversy stems from a recent report by researchers Ryan Thorpe and Christopher F. Rufo from the Manhattan Institute. Their investigation looked into fraud affecting Minnesota’s Medicaid Housing Stabilization Services program, Feeding Our Future, and several related organizations. According to their findings, the fraud was significant and involved individuals within Minnesota’s Somali community, though the report focused on financial misconduct rather than communities at large. Their work centered on tracking how stolen money moved and whether any of it ended up overseas.
The report highlighted concerns raised by some federal counterterrorism sources, who claimed that millions of dollars obtained through fraud were transferred to Somalia. From there, the money allegedly passed through a system of informal money traders known as hawalas. This traditional financial network is commonly used by Somali families to send money home, as formal banking systems can be difficult to access. Remittances are a major part of Somalia’s economy, with about 40 percent of Somali households depending on money from relatives abroad. In 2023 alone, the Somali diaspora reportedly sent $1.7 billion back home — an amount larger than Somalia’s entire government budget for the year.
Thorpe and Rufo’s report, along with comments from unnamed law enforcement sources, suggested that some of the stolen funds moved through these hawala channels and eventually reached Al-Shabaab, an extremist group connected to al-Qaeda. A former official from the Minneapolis Joint Terrorism Task Force claimed that the group benefits, directly or indirectly, from the constant flow of remittances heading into Somalia. However, this viewpoint reflects the perspective of certain investigators and has not yet been independently verified by government agencies.
Retired Seattle Police detective Glenn Kerns, who worked for years on a federal Joint Terrorism Task Force, told the researchers that he had previously observed similar money movements in Washington state. He said that investigators found individuals receiving government assistance while also sending frequent money transfers to Somalia. Kerns described a network where cash was routed through hawalas and sometimes even transported on commercial flights. His statements were presented in the report as part of the larger pattern investigators are examining.
One confidential source cited in the report claimed that Minnesota taxpayers had become one of the “largest funders” of Al-Shabaab — an allegation that is now at the center of the Treasury Department’s investigation. Federal authorities emphasized that the goal of the probe is to determine whether taxpayer-funded programs were exploited and whether any wrongdoing can be proven.
The Treasury Department has not yet released details about its investigative steps or a timeline for completion, but Bessent said that sharing updates with the public will be a priority as the process continues.
