Trump Administration Freezes $129M in Federal Benefits to Minnesota Amid Fraud Allegations

The Trump administration has suspended $129 million in federal benefit payments to Minnesota, citing ongoing investigations into alleged fraud by local nonprofits and businesses.

USDA Secretary Brooke Rollins posted a letter on social media Friday addressed to Minnesota Governor Tim Walz and Minneapolis Mayor Jacob Frey notifying them of the action. In the letter, Rollins says recent investigations suggest "a staggering, wide‑reaching fraud scandal" and demands greater transparency and accountability for federal funds distributed in the state.

Financial Documentation Request

Rollins ordered Minnesota officials to provide the USDA with itemized justification for all federal spending from 20 January 2025 to the present within 30 days and said future federal payments to the state would require the same documentation before funds are released.

State And City Responses

A city spokesperson, Brian Feintech, told the Guardian officials were working with state partners to assess the impact of what he called "a blanket cut to funding meant for residents most in need." Feintech added: "What’s abundantly clear is that Minneapolis is the latest target of the Trump administration—willing to harm Americans in service to its perceived political gain."

Minnesota Attorney General Keith Ellison replied publicly on X:

"I will not allow you to take from Minnesotans in need. I’ll see you in court."

Legal And Federal Context

The USDA action comes after a federal court recently ruled that the administration cannot withhold federal childcare subsidies and other programs supporting low‑income families in five Democratic‑led states, including Minnesota. The freeze also follows increased federal scrutiny of alleged fraud schemes operating in the state.

Federal prosecutors have said some schemes linked to individuals in Minnesota’s Somali community may have diverted as much as $9 billion, according to published reports. These figures reflect allegations under investigation and have not resulted in findings of guilt for entire communities.

FBI Investigations

In December 2025 the FBI announced it was deploying additional personnel and investigative resources to Minnesota to "dismantle large‑scale fraud schemes exploiting federal programs," according to agency director Kash Patel. Patel said the FBI had previously dismantled a $250 million fraud scheme that diverted federal food aid meant for vulnerable children during the COVID pandemic; that case produced 78 indictments and 57 convictions.

Political Fallout

In November 2025, President Trump announced an end to certain legal protections for Somali migrants in the state and made public statements criticizing members of the Somali community and Representative Ilhan Omar. Those remarks drew widespread attention and condemnation from many state officials and civil‑rights groups.

Last week Governor Walz announced he will not seek a third term as governor, acknowledging that the fraud investigations and the political response have deeply strained the state. In his announcement he said:

"Donald Trump and his allies— in Washington, in St. Paul and online—want to make our state a colder, meaner place."

What Happens Next

The USDA has given state and local officials 30 days to provide the requested accounting. Minnesota officials have pledged legal challenges, and the dispute is likely to produce further court battles and congressional scrutiny as both sides seek to justify their actions.