Millions of dollars in stolen Minnesota welfare funds were allegedly diverted by members of the state's Somali community to an overseas terrorist group linked to al-Qaida, the Daily Caller reported Wednesday.
The administration of Democrat Gov. Tim Walz, Kamala Harris' running mate last year, is now under scrutiny after federal investigations revealed rampant fraud in a state Department of Human Services program meant to help struggling residents find taxpayer-funded housing, according to the Caller, which cited a report from the City Journal.
The alleged diversion occurred against the backdrop of what prosecutors have described as one of the largest welfare-fraud waves in state history, with total losses possibly reaching into the hundreds of millions of dollars across multiple DHS programs.
The Office of Director of National Intelligence Tulsi Gabbard said Al-Shabaab has killed more U.S. citizens than any other al-Qaida affiliate and, as of 2025, is al-Qaida's wealthiest component.
One of its operatives, Kenyan national Cholo Abdi Abdullah, was convicted in November 2024 of plotting a 9/11-style plane attack in Atlanta.
"This is a third-rail conversation, but the largest funder of Al-Shabaab is the Minnesota taxpayer," an unnamed source, who previously contracted for law enforcement on counterterrorism work, told the City Journal.
The report did not specify a timeframe or identify specific programs that were the source of the funds. Much of the money was sent to clan-based money traders and then laundered to Al-Shabaab, the City Journal reported.
Investigators said portions of the fraud relied on informal "hawala" networks — cash-based clan and family money-transfer systems common in East Africa — which made the funds difficult to trace once they left the U.S.
Six of the eight people federally charged in September with fraud linked to Walz's Housing Stabilization Services program are of Somali descent, a Department of Justice spokesperson told City Journal.
The state shuttered the program Oct. 31 because of widespread fraud.
Critics have blamed weak oversight inside the state's social-services bureaucracy for allowing the alleged scheme to flourish.
A Somali-American former fraud investigator told local media that cultural trust networks inside Minnesota's Somali community — combined with poor DHS enforcement — created an environment ripe for exploitation.
The City Journal report also noted that Minnesota has seen repeated fraud cases involving child care and food aid programs over the past decade, raising renewed questions about systemic vulnerabilities and whether taxpayer-funded benefits are being monitored closely enough.
The Daily Caller reported it reached out to the Minnesota DHS inspector general's office and the FBI's Minneapolis field office for comment.
Michael Katz ✉
Michael Katz is a Newsmax reporter with more than 30 years of experience reporting and editing on news, culture, and politics.
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