Investigation: Alleged Minnesota Fraud Schemes Routed Millions to Al-Shabaab

A new investigation by reporters Ryan Thorpe and Christopher F. Rufo of the Manhattan Institute alleges that fraud across several Minnesota programs funneled millions of dollars through informal remittance channels to Somalia, where some of the funds reportedly reached the al Qaeda‑linked militant group Al-Shabaab.

The report traces suspicious payouts from programs including the state’s Medicaid Housing Stabilization Services (HSS) and the Feeding Our Future nonprofit. Federal counterterrorism sources cited in the investigation told the reporters that stolen funds were sent to Somalia via hawala networks — informal money-transfer systems common in the region — and that portions of those flows were linked to Al-Shabaab finances.

What investigators found

Thorpe and Rufo report that remittances from the Somali diaspora are a major financial inflow to Somalia: roughly 40% of Somali households reportedly receive money from abroad, and the diaspora sent about $1.7 billion in 2023 — a sum the authors note exceeded Somalia’s national budget that year. The investigation says fraud proceeds moved through hawalas and other trading networks, and that law enforcement sources identified connections between those transfers and Al-Shabaab.

Retired Seattle Police Detective Glenn Kerns, who spent 14 years on a federal Joint Terrorism Task Force, told the reporters that coordinated networks routed cash on commercial flights from U.S. hubs to hawala operators in Somalia. Quoting Kerns, the report says investigators pulled records showing benefit recipients among those sending money through the hawalas.

Program abuses and legal action

The HSS program, created to help Minnesotans secure housing, was intended as a modest assistance effort but — according to the investigation — was exploited. The program’s initial estimate of $2.6 million in costs was eclipsed by reported payouts: more than $21 million in its first year and some $61 million in the first half of 2025, the report states. Minnesota’s Department of Human Services ended the program on Aug. 1 after identifying "credible allegations of fraud" and terminating payments to 77 providers.

Soon after the HSS shutdown, the U.S. Attorney’s Office for the District of Minnesota announced indictments tied to HSS fraud naming eight defendants. The office has since announced dozens of additional charges related to multiple schemes, including a large federal case involving Feeding Our Future and other providers.

Feeding Our Future reportedly received $3.4 million in federal funds in 2019 and expanded rapidly during the COVID-19 pandemic, with investigators saying the group received nearly $200 million in 2021. Prosecutors allege the organization used fabricated meal counts, altered attendance records and false invoices to claim service to thousands of meals per day — while money was diverted for luxury vehicles, real estate and other expenditures abroad.

Separately, prosecutors charged individuals in alleged frauds tied to autism services. One person identified in charging documents is accused of recruiting children for therapy and facilitating fraudulent diagnoses to generate program payments; prosecutors say kickbacks of several hundred to over a thousand dollars per month were used to drive enrollment.

"From Feeding Our Future to Housing Stabilization Services and now Autism Services, these massive fraud schemes form a web that has stolen billions of dollars in taxpayer money," Acting U.S. Attorney Joe Thompson said in a public statement cited by the investigators.

Allegations, sources and context

The report relies on law enforcement sources, court filings and interviews. It uses terms such as "allege" and "report" to reflect that many of the findings are based on ongoing investigations and prosecutions. Investigators cite money flows through hawalas and other remittance channels and attribute portions of those flows to Al-Shabaab based on counterterrorism briefings; those attributions have not been independently verified by the reporters’ account.

The investigation also notes that some individuals tied to the organizations under scrutiny made political donations and that advocates engaged with state offices during the groups’ expansion. Those connections are presented in the report as context for the broader inquiry; public officials contacted for comment did not all respond within the timeline of the reporting.

Ongoing work

Federal prosecutors and state agencies continue to pursue charges and civil remedies related to the schemes described in the report. The investigation concludes that a pattern of multi‑program fraud has routed public dollars into international remittance channels, and that law enforcement has tied portions of those flows to Al-Shabaab. Authorities say their work to dismantle these networks remains ongoing.