U.S. Labor Secretary Lori Chavez-DeRemer testified before the House Appropriations subcommittee overseeing labor, health and human services, education, and related agencies on May 15, 2025, in Washington.
In a letter to the Minnesota Department of Employment and Economic Development (DEED), the department said recent news reports detailing fraud in Medicaid-funded human services programs could indicate potential fraud or abuse within the state’s unemployment benefits system.
“If there has been any related abuse of our (unemployment insurance) systems, it will not be tolerated, and I trust our specialized strike team to get to the bottom of this and report their findings directly to me,” Labor Secretary Lori Chavez-DeRemer said in a press release, per the Minnesota Reformer.
Also, Chavez-DeRemer told Fox Business on Monday that her agency was sending an unemployment insurance ‘strike team’ to Minnesota to widen the fraud probe.
“We’re going to send in a UI strike team to find out exactly what’s happening on the ground. We will NOT tolerate fraud under this administration,” she told host Stuart Varney.
A spokesperson for DEED stated that the agency consistently surpasses the federal Department of Labor’s standards for payment accuracy and maintains a fraud rate lower than the national average.
“We welcome the opportunity to illustrate the strength of our payment controls and oversight,” DEED said.
Chavez-DeRemer is the latest Trump administration official to focus on fraud in Minnesota in recent weeks after the issue drew the attention of President Trump.
Trump has publicly highlighted the background of defendants charged in the Feeding Our Future and Medicaid fraud cases, noting that many have Somali ancestry.
Treasury Secretary Scott Bessent said last week that his department is increasing scrutiny of funds flowing to what he described as “areas of concern, such as Somalia,” and is examining allegations that fraud proceeds have been routed to the militant group al-Shabaab, the Reformer noted.
The allegations, based on anonymous sources and published by a conservative media outlet, are not new and have not been supported by any federal charges related to terrorism financing.
Minnesota has shifted from being the land of 10,000 lakes to the land of billion-dollar frauds. Democratic Gov. Tim Walz has faced mounting scrutiny as multiple large-scale fraud schemes have unfolded during his tenure.
Recent reports indicate Minnesota has suffered substantial taxpayer-funded fraud, much of it allegedly involving individuals within the state’s Somali community.
The state is still recovering from the fallout of the $250 million Feeding Our Future case, as new reporting from City Journal uncovered additional alleged fraud tied to Minnesota’s Medicaid Housing Stabilization Services program.
The report also noted accusations that millions from the scheme were funneled to the terror group Al Shabaab.
Investigators estimate the total fraud at roughly $1 billion across various public assistance programs.
Fox News reported the amount may ultimately be far higher. “Fraud investigators are finding in Minnesota is growing by the day,” Fox News National Correspondent Garrett Tenney reported.
“Kelly Loeffler, who leads the Small Business Administration, says in the two days her agency has been investigating the state, they’ve uncovered at least $1 million in PPP fraud.”
Tenney added that whistleblowers told lawmakers “they believe the total amount of fraud could total up to more than $8 billion.”
Walz has faced questions over accountability as he defended the state’s programs.
“And in spite of the headwinds we’re up against, Minnesota ranks economically, economic growth, happiness, number of people insured, education levels near the very top,” Walz said, pointing to a budget surplus that does not account for the alleged fraud losses.
