Minnesota’s State Leaders Ignored Fraud Scandal, Causing $5 Million in Business Losses

Republican Minnesota State Senator Michael Holmstrom Jr. stated that legitimate small businesses—rather than those engaged in massive fraud—are now bearing the consequences of years of obfuscation and indifference by Governor Tim Walz and his administration.

Appearing on Newsmax’s “Carl Higbie FRONTLINE,” Holmstrom condemned the Democratic governor’s handling of widespread fraud tied to Somali-run organizations, arguing that the lack of accountability has directly led to the Small Business Administration freezing more than $5 million in federal grants—money relied upon by honest entrepreneurs.

“That’s all that’s been happening. This fraud has been perpetuated,” Holmstrom said. “The administration doesn’t care. And then these programs keep getting cut.”

“I hear from local providers. I hear from businesses,” he added. “Everyone is starting to feel the pain.”

Holmstrom asserted that the SBA’s decision to pull funding is an inevitable result of state leadership failing to confront fraud head-on, leaving federal agencies with little choice but to shut off the money entirely.

“The actual areas that should be focused on—the state is not interested,” he said. “They’re obfuscating.”

The Republican lawmaker accused Walz and other top officials of treating the crisis as unserious while Minnesota “is drowning.” He criticized Walz for what he described as tone-deaf behavior during the scandal’s unfolding, noting that the governor spent the weekend posting cat memes.

Holmstrom also singled out Lieutenant Governor Peggy Flanagan, adding she was “throwing on a hijab and pretending to be part of the Somali community to try to gather votes for her Senate run.”

“It’s really despicable,” he said. “This is just an unserious administration.”

Holmstrom revealed that Minnesota’s Department of Human Services had scheduled training sessions for members of the Somali community on accessing DHS funds—even as fraud investigations intensified. “There was actually scheduled earlier this month or late November a training from Minnesota DHS for the Somali community on how to get access to DHS funds,” he stated.

The lawmaker emphasized that such conduct demonstrates the state’s failure to learn lessons from prior scandals, including the Feeding Our Future case, which federal prosecutors estimate cost taxpayers billions of dollars. He also accused Minnesota’s media of deliberately ignoring the fraud scandal’s scope, citing a year-end wrap-up by The Minnesota Star Tribune that omitted any reference to it.

“They did not mention this fraud scandal once,” Holmstrom said. “That’s the type of media we have here in Minnesota. It’s not honest. It’s not interested in getting to the truth. It’s just an apparatchik of the Democratic Party.”