The head of the US federal health agency has threatened to withhold crucial Medicaid funding from the state of Minnesota, following revelations of a massive fraud scheme allegedly perpetrated within its Somali community.
Federal Ultimatum Over "Looted" Funds
Dr Mehmet Oz, who serves as Administrator for the Centers for Medicare & Medicaid Services (CMS), issued a stark warning to Minnesota's Democratic Governor, Tim Walz. In a letter sent on Friday, Oz stated that federal Medicaid funding could be withheld if the state fails to take sufficient action to root out extensive fraud, waste, and abuse from its social welfare system.
The threat follows a New York Times report detailing how, over the last five years, individuals mostly within Somali communities allegedly stole at least $1 billion from Medicaid-funded programmes. These programmes were designed to feed low-income children, provide therapy for autistic children, and offer affordable housing.
The Scale of the Alleged Fraud Schemes
Federal prosecutors have described three separate fraud schemes, resulting in charges against 86 people, with 59 convictions secured so far. The fraud reached an astonishing scale: one housing programme, Housing Stabilisation Services, ballooned from a budgeted $2.6 million to $104 million, primarily due to fake billing.
In a pre-recorded video message, Dr Oz accused Governor Walz and other state Democrats of turning a blind eye. "Governor Walz and the state's other Democrats rely on Somali votes to get elected, so they decided to look the other way because they were afraid of political backlash," Oz claimed.
Prosecutors outlined several shocking cases:
- The non-profit Feeding Our Future claimed to serve tens of thousands of meals to children during the pandemic. Prosecutors allege most meals never existed, with funds instead buying luxury homes, cars, and overseas real estate.
- Another programme for autistic children allegedly involved providers falsely certifying children from Minneapolis's Somali community for treatment. Parents were reportedly paid kickbacks for their cooperation and silence.
- Prosecutors also cited an element of political blackmail, where Somalis in one case allegedly threatened to sue the state government and accuse officials of racism if demands weren't met.
Demands for Action and Political Connections
Oz's letter demands that Minnesota provide weekly updates on its progress auditing the 14 high-risk programmes identified by CMS. The state must also stop accepting new applicants for these programmes until it demonstrates corrective progress. By the end of December, Oz wants a detailed plan to prevent future fraud.
"By the end of January 2026, if your administration has not taken sufficient corrective steps, CMS may initiate actions to withhold federal Medicaid funding," the letter warned.
The scandal has also drawn attention to political ties. Both Governor Walz and US Representative Ilhan Omar, a Minnesota Democrat originally from Somalia, have documented connections to an illegal Somali migrant, Abdul Dahir Ibrahi. Ibrahi, who has a lengthy criminal record including asylum and welfare fraud convictions in Canada, was arrested by Immigration and Customs Enforcement (ICE) on Friday following a massive raid ordered by President Donald Trump. He was not implicated in the Medicaid fraud but has had a deportation order against him since 2004.
Oz emphasised that this fraud has hurt both vulnerable Americans who rely on these essential programmes and the taxpayers who fund them. The coming weeks will test Minnesota's commitment to overhauling its systems and safeguarding public money.
