WASHINGTON — A group of senators is requesting that the Small Business Administration (SBA) provide a comprehensive report on its investigation into the significant welfare fraud issue in Minnesota.
Recently, SBA Administrator Kelly Loeffler initiated an inquiry into a network of Somali organizations tied to this fraud case, which reportedly involved stopping payments to around 6,900 borrowers in Minnesota.
Sen. Joni Ernst (R-Iowa), who spearheaded a letter supported by all Republican members of the Senate Small Business and Entrepreneurship Committees, has asked Loeffler to clarify the specifics of the investigation, including which companies are under scrutiny.
“Fortunately, the SBA is under strong leadership, and we appreciate your rapid move to start a thorough examination of this fraud and its overlap with SBA programs,” they stated in a letter sent Thursday.
“As the Trump administration opens its books, various disturbing fraudulent schemes are coming to light.”
Minnesota is currently facing a troubling welfare fraud scandal, with Assistant U.S. Attorney Joe Thompson indicating that over $9 billion, which is about half of the $18 billion allocated to 14 Medicaid programs since 2018, might have been defrauded.
Some members of the Democratic Party have expressed skepticism regarding this figure.
Since 2022, the Justice Department has charged 98 individuals, with 85 being of Somali descent, and 64 have already been convicted.
A notable case within this scandal involves Feeding Our Future, a nonprofit organization that has been accused of embezzling hundreds of millions while falsely claiming the funds were used for feeding schoolchildren during the pandemic.
The senators pointed out that the SBA is responsible for managing a large COVID-19 relief package, which includes the Paycheck Protection Program (PPP) loans.
“This situation involving Somalia is just the most recent illustration of widespread fraud within the coronavirus relief framework, which seems to prioritize sending funds out of the country rather than implementing effective oversight to protect taxpayers,” the senators wrote.
They referenced instances of what they termed “insane Crip gangs” involved in misusing COVID-19 relief funds to finance arms purchases and provide kickbacks to government officials, with one plan amounting to $63 million.
Loeffler has halted some fund distributions to Minnesota, including to borrowers who received approximately $400 million in COVID-19 relief loans.
The three senators seek details about the SBA’s investigation, a summary of current SBA programs that involve fraud risks, and information on measures taken to recover misappropriated funds.
They are hoping to receive this information by January 19th.
“The Biden administration and Tim Walz have allowed criminals to operate at taxpayer expense,” Ernst remarked to the Post about the letter to Loeffler.
“We have to ensure this level of fraud doesn’t occur again. I will persist in identifying waste and fraud in Washington and equip the Department of Justice with the necessary tools to hold accountable those who steal from Americans.”
Additionally, senators have voiced concerns regarding over $1 million in federal funding allocated to a Somali-led addiction recovery organization in Minnesota, which has ties to Rep. Ilhan Omar (D-Minn.).
This group, Generation Hope MN, was reportedly managed by three individuals residing in the same household and appears to be functioning out of a Somali restaurant.
Ernst has previously advocated for legislation, specifically the SBA Fraud Enforcement Extension Act, which aims to prolong the statute of limitations for fraud related to significant COVID-19 relief programs. This bill has passed the Senate Small Business Committee but has yet to go to a vote.
