SBA Launches Investigation into Minnesota Somali Groups Linked to COVID Fraud Scandal

The Small Business Administration has initiated an investigation into a network of Somali organizations in Minnesota allegedly connected to a massive COVID-19 relief fraud scheme, spotlighting what critics describe as systemic oversight failures during Governor Tim Walz’s administration.

SBA Administrator Kelly Loeffler announced the probe on social media, stating, “Numerous individuals and nonprofits indicted in the $1 billion Minnesota COVID fraud scandal, including Feeding Our Future, received SBA PPP loans in addition to other state and federal funding.” Loeffler emphasized that the investigation would examine the network of Somali organizations and executives implicated in the fraudulent activities.

An SBA spokesperson confirmed to media outlets that the agency is “investigating all individuals and organizations indicted as part of the $1 billion Minnesota COVID fraud scheme to identify any that may have also fraudulently obtained PPP loans.” The investigation will scrutinize citizenship status, the legitimacy of nonprofit operations, and other eligibility requirements.

The controversy has created political complications for Walz, the 2024 Democratic vice-presidential nominee, as dozens of individuals—primarily from Minnesota’s Somali community—have already been charged. The scandal has been further inflamed by allegations from state employees claiming whistleblower retaliation and institutional negligence within the Walz administration.

“Despite Governor Walz’s best efforts to obstruct, SBA continues to work to expose abuse and hold perpetrators accountable, full stop,” Loeffler added in her statement.

When previously questioned about the controversy, Walz stated he would “welcome” a Treasury Department investigation into whether his administration enabled taxpayer dollars to reach the Somali terror group Al Shabaab. “If they want to help us, I welcome that,” Walz said. “Do an investigation, find out. But I don’t think anybody really believes their motive or timing is about actually doing something about this.”

The Minnesota situation gained additional attention following comments by President Donald Trump, who referred to the Somali community in Minnesota as “garbage,” prompting sharp rebuttals from local officials including Minneapolis Councilman Jamal Osman.

A report from City Journal noted that a 2015 study by a House Homeland Security Committee task force found Minnesota had produced more foreign-fighter terrorism-related travelers than any other state. The report indicated that individuals charged with attempting to join ISIS were “sophisticated users of social-welfare benefits.”

The Minnesota case highlights broader concerns about COVID relief fraud nationwide. Federal authorities have uncovered similar schemes in other states, including a 2020 case in New York where nail salon owners were arrested for allegedly inflating payroll to secure $13 million in PPP loans while smuggling Vietnamese immigrants for low-wage labor.

In Iowa, a former Cuban military officer was convicted on dozens of counts related to a COVID-benefit fraud ring that stole an estimated $2.4 million. The scheme involved more than 100 Cuban immigrants obtaining PPP loans under false pretenses as “self-employed businesspeople” while working at the same meatpacking plant.

The SBA spokesperson indicated the agency remains “committed to clawing back all funding that was illegally obtained on behalf of American taxpayers” and will provide additional details as the investigation progresses.

According to a House committee report earlier this year, the Biden-Harris administration has struggled to recoup approximately $200 billion in fraudulent COVID relief loans nationwide, underscoring the widespread nature of pandemic aid abuse.