Treasury Department Launches Investigation Into Alleged Taxpayer-Funded Terror Ties Under Biden and Walz

The Treasury Department is officially probing what could be one of the most alarming cases of taxpayer-funded fraud in recent history — allegations that public money overseen during the Biden administration and Minnesota Gov. Tim Walz’s tenure was funneled to the Islamist terror organization Al-Shabaab.

Treasury Secretary Scott Bessent confirmed Monday that the department has initiated a federal investigation into the claims.

“At my direction, @USTreasury is investigating allegations that under the feckless mismanagement of the Biden Administration and Governor Tim Walz, hardworking Minnesotans’ tax dollars may have been diverted to the terrorist organization Al-Shabaab,” Bessent posted on X.

He credited the swift federal response to the leadership of President Donald Trump, emphasizing that the current administration is moving decisively.

“Thanks to the leadership of @POTUS @realDonaldTrump, we are acting fast to ensure Americans’ taxes are not funding acts of global terror. We will share our findings as our investigation continues,” he wrote.

These allegations first gained national attention last month after City Journal published an extensive report detailing systemic failures inside Minnesota’s sprawling welfare apparatus. According to the investigation, “Billions in taxpayer dollars have been stolen during the administration of Governor Tim Walz alone. Democratic state officials, overseeing one of the most generous welfare regimes in the country, are asleep at the switch.”

The report highlighted how vulnerabilities in Minnesota’s programs allegedly became a pipeline for international money transfers tied to members of the state’s large Somali community. Multiple federal counterterrorism sources reportedly confirmed that “millions of dollars in stolen funds have been sent back to Somalia, where they ultimately landed in the hands of the terror group Al-Shabaab.”

One source put it bluntly: “The largest funder of Al-Shabaab is the Minnesota taxpayer.”

Another former official who investigated financial flows to Somalia explained the scale: “Every scrap of economic activity, in the Twin Cities, in America, throughout Western Europe, anywhere Somalis are concentrated, every cent that is sent back to Somalia benefits Al-Shabaab in some way.” He continued, “For every dollar that is transferred from the Twin Cities back to Somalia, Al-Shabaab is… taking a cut of it.”

Glenn Kerns, a retired Seattle Police Department detective who spent 14 years on a federal Joint Terrorism Task Force, described the money pipeline linking Minnesota, Seattle, and Somalia as staggering in both size and sophistication. He recalled discovering that “as much as $20 million was sent abroad in one year.”

“The amount of money was staggering,” Kerns said.

More troubling, Kerns found that many individuals wiring large sums overseas were on government assistance: “all these Somalis sending out money are on DHS benefits. How does that make sense? We had good sources tell us: this is welfare fraud.”

According to the report, the fraud extended deep into Minnesota’s state-run programs. The Medicaid Housing Stabilization Services program — expected to cost $2.6 million annually — instead burned through $61 million in just six months. In September, federal prosecutors indicted eight individuals for a fraud scheme linked to this program, six of whom are from the Somali community.

Another massive scheme involved a $250 million fraud operation linked to Feeding Our Future, an agency with documented ties to Minnesota Democratic Rep. Ilhan Omar and her office. Fifty-six defendants have already pleaded guilty.

Still more allegations point to a $14 million autism-services scam involving Minnesota’s Early Intensive Developmental and Behavioral Intervention program. The scheme involved parents receiving kickbacks for enrolling their children, while scammers billed the state for unnecessary or invented services. The report emphasized that “one in 16 Somali four-year-olds in the state had reportedly been diagnosed with autism—a rate more than triple the state average.”

Federal officials say these scandals are not isolated. They are connected.

“This is not an isolated scheme,” U.S. Attorney Joseph Thompson said. “From Feeding Our Future to Housing Stabilization Services and now Autism Services, these massive fraud schemes form a web that has stolen billions of dollars in taxpayer money. Each case we bring exposes another strand of this network.”

The Treasury Department has signaled that under President Trump’s direction, the federal government intends to dismantle every part of the alleged fraud pipeline — and determine how deeply it reached into terror financing.