Treasury Sends Investigators to Minnesota to Probe Alleged Fraud and Overseas Money Transfers

 

Treasury Secretary Scott Bessent

Treasury Sends Investigators to Minnesota to Probe Alleged Fraud and Overseas Money Transfers

WASHINGTON, D.C. — The U.S. Treasury Department is ramping up its investigation into alleged large-scale fraud in Minnesota, deploying investigators and tightening financial reporting rules to track millions of dollars believed to have been sent overseas through money services businesses.

Treasury Secretary Scott Bessent announced Friday that federal authorities are expanding enforcement actions following revelations that hundreds of millions of taxpayer dollars may have been siphoned from Minnesota’s social services system and transferred abroad, including to Somalia.

“We will not stop until we fully investigate, analyze, and permanently end this massive fraud ring,” Bessent said, adding that the scope of the investigation continues to widen.

As part of the effort, the Treasury Department will issue a Geographic Targeting Order (GTO) requiring enhanced reporting from certain money services businesses (MSBs). These entities, which provide financial services outside the traditional banking system, will now face heightened scrutiny to ensure that suspicious international transfers are immediately flagged to the Treasury’s Financial Crimes Enforcement Network (FinCEN).

“This will empower investigators to develop additional leads through increased scrutiny on funds going to areas of concern, such as Somalia,” Bessent said in a statement posted on X.

The expanded probe follows a sweeping fraud scandal involving Minnesota’s COVID-era social services programs. Federal prosecutors have charged at least 77 individuals in connection with schemes that allegedly diverted relief funds intended to provide meals for schoolchildren. Authorities say many of the illicit proceeds were routed through money services businesses rather than regulated banks.

According to Treasury officials, the alleged fraud has cost taxpayers hundreds of millions of dollars, with a portion of the funds traced to overseas destinations. Treasury personnel are now on the ground in Minnesota investigating MSBs believed to be involved, and FinCEN is expected to issue formal notices of investigation in the coming weeks.

In addition to financial fraud, Treasury is also examining allegations that some diverted funds may have been sent to Al-Shabaab, the U.S.-designated terrorist group based in Somalia. Bessent first disclosed that aspect of the investigation on December 1, following comments by President Donald Trump, who described Minnesota as a “hub of fraudulent money laundering activity.”

The probe has intensified political scrutiny of Minnesota’s handling of federal funds, with federal officials signaling that enforcement actions will continue until all financial channels connected to the alleged schemes are identified and shut down.

Treasury officials emphasized that the new reporting requirements are designed to protect taxpayers, strengthen oversight of international money transfers, and prevent future abuse of federal programs.

FAQs: Treasury Investigation Into Minnesota Fraud and Overseas Payments

What action has the U.S. Treasury Department taken in Minnesota?

The Treasury Department has sent investigators to Minnesota and is increasing financial reporting requirements for certain money services businesses to track suspected fraud and overseas money transfers.

Who announced the investigation?

Treasury Secretary Scott Bessent announced the expanded probe and enforcement actions.

What is a Geographic Targeting Order (GTO)?

A GTO is a Treasury directive that requires specific financial entities in a designated area to provide enhanced reporting of certain transactions to help identify illegal activity.

Why are money services businesses being targeted?

Authorities believe some money services businesses were used to move taxpayer funds outside the formal banking system, making it harder to detect fraud and trace international transfers.

How much money is allegedly involved in the fraud?

Treasury officials say the alleged fraud has cost taxpayers hundreds of millions of dollars.

Where were the funds allegedly sent?

Investigators are examining transfers to multiple foreign destinations, including Somalia.

What triggered the federal investigation?

The probe follows a large fraud scandal involving Minnesota’s COVID-era social services programs, where funds intended for school meal programs were allegedly misused.

How many people have been charged so far?

At least 77 individuals have been charged in connection with the alleged fraud schemes.

Is terrorism financing being investigated?

Yes. Treasury officials are examining allegations that some diverted funds may have been sent to the militant group Al-Shabaab.

What role does FinCEN play in this investigation?

FinCEN collects and analyzes financial intelligence and will receive enhanced transaction reports to help investigators identify illegal activity.

Will the investigation continue?

Yes. Treasury officials have said the investigation will continue until all fraudulent networks and financial channels involved are identified and shut down.

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