The Small Business Administration has opened an investigation into a network of Somali organizations in Minnesota that federal officials say may be connected to a sweeping COVID-19 fraud scheme, intensifying scrutiny of Gov. Tim Walz and his administration’s oversight of public funds.
Walz, the 2024 Democratic vice-presidential nominee, is facing questions amid a scandal that has already produced charges against dozens of defendants — many of them Somali — and sparked complaints from civil servants who allege whistleblower retaliation and systemic failures in monitoring taxpayer money.
“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,” Small Business Administrator Kelly Loeffler announced on X. “I have ordered an investigation into the network of Somali organizations and executives implicated in these schemes.”
She continued: “Despite Governor Walz’s best efforts to obstruct, SBA continues to work to expose abuse and hold perpetrators accountable, full stop.”
An SBA spokesperson confirmed the probe to Fox News Digital, explaining 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 – evaluating their citizenship status, the legitimacy of their nonprofit work, and other requirements for eligibility.”
“The agency will provide additional details as the scope of fraud across these Somali networks are uncovered – and remains committed to clawing back all funding that was illegally obtained on behalf of American taxpayers,” SBA spokesperson Maggie Clemmons said.
The controversy is unfolding against a charged political backdrop. President Donald Trump said Tuesday that the Somali community in Minnesota was “garbage,” drawing fierce criticism from local leaders, including Minneapolis Councilman Jamal Osman, who argued that “everyone knows that our president is racist, xenophobic and Islamophobic.”
Walz did not respond to a Fox News Digital request for comment on Loeffler’s announcement.
He has previously said he would “welcome” a Treasury Department investigation into whether his administration allowed millions of 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.”
A separate report from City Journal, which also broke the Walz story, highlighted a 2015 House Homeland Security Committee task force study that found more foreign-fighter terrorism-related travelers came from Minnesota than from any other state at the time.
Among those charged with attempting to join ISIS, the outlet reported that they were “sophisticated users of social-welfare benefits.” Two suspects allegedly used federal financial aid to fund their travel as they prepared to depart Howard Beach, N.Y., for Syria.
Minnesota’s predicament is part of a broader national pattern of abuse involving pandemic-era relief programs.
In 2020, federal authorities arrested several New York nail salon owners near JFK Airport in a case that allegedly combined smuggling Vietnamese immigrants for low-wage labor with diverting COVID-19 relief funds, according to the New York Post. Dat Ho, Peter Nguyen and Victoria Ho were charged with conspiracy to commit bank and wire fraud after allegedly inflating payroll numbers to secure $13 million in PPP loans, the outlet reported.
In another case, an Iowa man accused of being a former Cuban military officer — who reportedly entered the United States 20 years ago by crossing the border after his visa application was denied — was arrested as a central figure in an Iowa COVID-benefit fraud scheme, according to an indictment from the Justice Department.
Yovany Ciero of Mason City was convicted on dozens of counts, including wire fraud, money laundering and engaging in a monetary transaction in property derived from a specified unlawful activity.
Prosecutors said Ciero and his co–conspirators stole an estimated $2.4 million through a scheme involving more than 100 Cuban immigrants who obtained PPP loans under false pretenses, claiming to be “self-employed businesspeople” while they were actually working at the same meatpacking plant. Authorities say Ciero recruited participants and passed their information to others who then filed fraudulent loan applications with the federal government. According to the U.S. Attorney’s Office for the Northern District of Iowa, he faces a potential sentence of up to life in prison.
