The Trump administration has moved to suspend a substantial $129 million in federal benefit payments to the state of Minnesota, escalating a long-running dispute over alleged widespread fraud involving local non-profits and businesses.
Federal Funding Freeze and Official Reaction
In a letter shared publicly on Friday, US Department of Agriculture (USDA) Secretary Brooke Rollins informed Minnesota Governor Tim Walz and Minneapolis Mayor Jacob Frey of the decision. Rollins accused state and city administrations of refusing to provide basic information or implement measures to stop what she described as a "staggering, wide-reaching fraud scandal."
The letter demands that Minnesota officials justify all federal spending since 20 January 2025 within 30 days. Furthermore, it states that all future federal payments to the state will require the same level of pre-approval justification.
In response, a spokesperson for Minneapolis, Brian Feintech, said the city was assessing the impact of what he called a "blanket cut" targeting residents most in need. He characterised the move as politically motivated, stating, "Minneapolis is the latest target of the Trump administration – willing to harm Americans in service to its perceived political gain."
Minnesota Attorney General Keith Ellison responded forcefully on social media, writing: "I will not allow you to take from Minnesotans in need. I’ll see you in court."
Background of Allegations and Targeting of Somali Community
This action is the latest in a year-long campaign by the federal government focusing on Minnesota, with particular emphasis on its Somali American residents. Federal prosecutors have estimated that as much as $9 billion has been stolen in schemes allegedly linked to the state's Somali population.
In November 2025, former President Donald Trump ended legal protections for Somali migrants in Minnesota, claiming "Somali gangs are terrorising the people of that great State, and BILLIONS of Dollars are missing." He later launched a xenophobic tirade against Somalis and US Representative Ilhan Omar, who is from Somalia, calling her "garbage" and stating, "we’re going to go the wrong way if we keep taking in garbage into our country."
In December 2025, the FBI announced it was deploying extra resources to dismantle large-scale fraud schemes in Minnesota. Director Kash Patel cited a previously dismantled $250 million scheme that stole federal food aid meant for children during the Covid pandemic, which resulted in 78 indictments and 57 convictions.
Political Fallout and Broader Context
The funding suspension coincides with a separate federal court ruling that blocked the Trump administration from withholding money for childcare subsidies and other programmes for low-income families in five Democratic-led states, including Minnesota.
The political pressure appears to have taken a toll on state leadership. Last week, Governor Tim Walz announced he would not seek a third term, acknowledging that his handling of the fraud scandal had come under intense scrutiny from Trump and Republican allies. In his statement, Walz accused them of exploiting the crisis, saying, "Donald Trump and his allies... want to make our state a colder, meaner place."
The situation sets the stage for a significant legal and political battle between Minnesota's Democratic leadership and the federal government, with vital aid for vulnerable residents hanging in the balance.
