Treasury Secretary Scott Bessent Unleashes Comprehensive Crackdown on Minnesota Fraud Networks
MINNEAPOLIS, MN (STL.News) In a move signaling a sweeping shift in federal oversight, U.S. Treasury Secretary Scott Bessent visited the Twin Cities this week to announce an aggressive, multi-agency offensive against what he described as “rampant and egregious” government benefits fraud. Speaking before the Economic Club of Minnesota and later to reporters, Bessent characterized the state as “ground zero” for welfare exploitation, specifically targeting intricate financial networks that have allegedly siphoned hundreds of millions of taxpayer dollars intended for school children and vulnerable seniors.
The Secretary’s visit comes at a time of heightened tension in the region, following a year of escalating federal scrutiny into Minnesota’s social service programs. The initiatives announced mark a significant escalation of the Trump administration’s “America First” economic and accountability agenda, utilizing the full weight of the Treasury’s specialized bureaus to dismantle fraud rings and track illicit funds across international borders.
Dismantling the “Feeding Our Future” Legacy
At the heart of the federal intervention is the fallout from the “Feeding Our Future” scandal, a scheme that federal prosecutors previously labeled the largest pandemic-era fraud in the United States. While dozens of individuals have already faced charges for siphoning nearly $300 million from federal child nutrition programs, Secretary Bessent signaled that the Treasury’s interest extends far beyond the initial arrests.
“Billions of dollars intended for feeding hungry children and housing disabled seniors were diverted to benefit fraud rings,” Bessent stated. “We are here to signal the U.S. Treasury’s unwavering commitment to recovering these stolen funds and ensuring such scandals never happen again.”
The new federal strategy focuses on the “financial plumbing” that allowed these funds to be moved. Treasury officials revealed that evidence from recent trials showed suspects utilized complex transfers to move money into foreign bank accounts, specifically in Kenya, China, and Somalia. To counter this, the Treasury is deploying a “whole-of-government” approach that pairs criminal prosecution with aggressive financial surveillance.
FinCEN and the “Geographic Targeting Order”
One of the most potent tools unveiled by Secretary Bessent is a new Geographic Targeting Order (GTO) issued by the Financial Crimes Enforcement Network (FinCEN). Effective immediately, this order imposes strict reporting requirements on all banks and money transmitters operating within Hennepin and Ramsey Counties—the state’s most populous areas, including Minneapolis and St. Paul.
Under the GTO, financial institutions must report detailed information on any international transaction of $3,000 or more involving a beneficiary located outside the United States. This measure is specifically designed to provide law enforcement with a “map” of where fraudulent proceeds are being sent.
“Currently, law enforcement has limited insight into the persons located abroad who receive the proceeds of these frauds,” Bessent explained. “This order equips federal, state, and local investigators with the data needed to advance prosecutions and recover laundered funds internationally.”
In tandem with the GTO, FinCEN has issued notices of investigation to four specific money services businesses (MSBs) in the Twin Cities. These businesses, which often operate outside traditional banking structures to facilitate global remittances, are being scrutinized for their role in moving suspected fraudulent capital.
IRS Task Force and Nonprofit Oversight
The crackdown also involves a major pivot for the Internal Revenue Service (IRS). As the Acting Commissioner of the IRS, Bessent announced the formation of a specialized Fraud Task Force dedicated to investigating the misuse of 501(c)(3) tax-exempt status.
The task force will focus on:
- Audit of Facilitating Institutions: Examining banks and credit unions that may have turned a blind eye to suspicious patterns of social service fund laundering.
- Nonprofit Integrity: Investigating organizations that allegedly used “sham” meal sites or housing programs as a front to claim federal grants.
- Pandemic-Era Incentives: Auditing the misuse of tax credits and incentives that were intended to keep businesses afloat during the 2020–2022 economic disruptions.
“Treasury remains committed to preventing fraudulent nonprofits from taking advantage of the American taxpayer,” Bessent said. He hinted that the findings in Minnesota would serve as a “launching pad” for similar investigations into other states where social service spending has spiked without clear accountability metrics.
The Political and Community Landscape
Bessent’s visit was as much a political statement as a policy rollout. He was vocal in his criticism of Governor Tim Walz and state leadership, blaming “failed experiments with big government” and a lack of oversight for creating an environment where fraud could flourish.
The Secretary’s focus on the Somali diaspora—many of whom have been implicated in the meal program trials—has drawn sharp rebukes from local leaders and the Minnesota Attorney General’s office. Critics argue that the administration is using fraud as a pretext for a broader “immigration crackdown,” noting that the visit coincided with protests over recent ICE enforcement actions in the city.
Governor Walz, who recently ended a bid for a third term, has maintained that his administration has cooperated with federal partners and that fraud “will not be tolerated.” He has cautioned against the “demonization” of an entire community based on the criminal actions of a few.
Bessent, however, remained firm in the Treasury’s stance. “You commit crimes, you go to jail,” he said. “It doesn’t matter what your race or ethnicity is. We are investigating a massive theft of taxpayer resources, and the data is leading us to specific networks.”
A National Blueprint for Accountability
The initiatives announced this week are being framed as a pilot program for a broader national strategy. By integrating FinCEN’s data-tracking capabilities with IRS auditing power and on-the-ground law enforcement training, the Treasury hopes to create a replicable model for “cleaning up” welfare systems nationwide.
FinCEN provided on-the-ground training this week for Minnesota-based officers on how to utilize Suspicious Activity Reports (SARs) to identify the early warning signs of benefit skimming and money laundering. These “red flags” include:
- Nonprofits are receiving sudden, massive influxes of federal cash without a corresponding increase in staff or infrastructure.
- Frequent, high-dollar wire transfers to countries with weak anti-money laundering controls.
- Individual accounts receiving multiple government checks intended for different beneficiaries.
Looking Forward: Recovering the “Stolen Billions”
As the Treasury begins its “national rollout,” the immediate focus remains on recovery. With the IRS Task Force and the GTO in place, federal authorities expect a surge in new leads over the coming weeks. The Treasury has also emphasized a new focus on whistleblower incentives, encouraging community members to come forward with information regarding hidden assets or ongoing schemes.
For Minnesotans, the visit underscores a new era of federal involvement in state-managed programs. For Secretary Bessent, it is a fulfillment of the President’s directive to “bring accountability to the hardworking people of Minnesota” and to ensure that the “North Star State” once again reflects a standard of fiscal integrity.
“The stage is set for robust, non-inflationary growth in 2026,” Bessent concluded. “But that growth is only possible if we stop the leak of taxpayer dollars to criminal enterprises. Today, we are plugging that leak.”
© 2025 STL.News/St. Louis Media, LLC. All Rights Reserved. Content may not be republished or redistributed without express written approval. Portions or all of our content may have been created with the assistance of AI technologies, like Gemini or ChatGPT, and are reviewed by our human editorial team. For the latest news, head to STL.News.
