By David Lawder and Andrea Shalal
MINNEAPOLIS, Jan 8 (Reuters) – U.S. Treasury Secretary Scott Bessent on Thursday underscored the U.S. government’s commitment to recovering funds stolen in a social services fraud scheme in Minnesota, prosecuting those responsible and preventing future crimes.
Bessent, in remarks prepared for a speech to the Economic Club of Minnesota, said Treasury would also probe similar fraud in other states.
“Minnesota is ground zero for what may be the most egregious welfare scam in our nation’s history to date. Under Governor Tim Walz, billions of dollars intended for families in need, housing for disabled seniors, and services for children were diverted to benefit fraudsters,” Bessent said.
“I am here this week to signal the U.S. Treasury’s unwavering commitment to recovering stolen funds, prosecuting fraudulent criminals, preventing scandals like this from ever happening again, and investigating similar schemes state by state.”
Minnesota Governor Tim Walz, a Democrat and a vice president candidate in the 2024 election, this week announced he will not seek a third term and instead focus on allegations of state welfare fraud that have become a crisis after mounting attacks from Republican U.S. President Donald Trump’s administration.
The Trump administration has singled out Walz and Minnesota, including its large population of Somali Americans and Somali immigrants, over allegations of fraud dating to 2020 by some nonprofit groups that administer the state’s childcare and other social services programs, backed by federal funding.
At least 56 people have pleaded guilty since federal prosecutors started to bring charges in 2022 under Trump’s Democratic predecessor, Joe Biden.
Walz has called the fraud scandal a crisis, but has criticized Trump and other Republicans for what he described as bad-faith attacks.
Bessent last month said on X that Treasury was boosting financial reporting requirements for money services businesses that will help track where cash goes.
Bessent said the Minnesota fraud has cost taxpayers hundreds of millions of dollars, including money sent to Somalia through money services businesses rather than formal banks.
(Reporting by David Lawder and Andrea Shalal; Editing by Cynthia Osterman)
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