Trump unleashes Minnesota fraud crackdown as feds freeze nearly 7,000 borrowers over $400m scam
The suspensions cover 7,900 Paycheck Protection Program and Economic Injury Disaster loans approved during the pandemic.
By ROSS IBBETSON, ASSOCIATE EDITOR
Published: 19:12 GMT, 2 January 2026 | Updated: 20:18 GMT, 2 January 2026
The Trump administration has suspended 6,900 borrowers over suspected Covid loan fraud involving roughly $400 million of taxpayer funds in Minnesota.
'These individuals will be banned from all Small Business Administration loan programs, including disaster loans, going forward,' SBA boss Kelly Loeffler announced Thursday night on X.
The suspensions cover 7,900 Paycheck Protection Program and Economic Injury Disaster loans approved during the pandemic.
The crackdown stems from a sprawling investigation into the Feeding Our Future program - a nonprofit accused of billing for millions of phony meals for kids during COVID. The vast majority of the 57 people convicted in the case are Somali.
Prosecutors say defendants used the stolen $250 million to buy Lamborghinis, Porsche SUVs, beachfront property in Kenya and private villas in the Maldives.
Loeffler's move escalates pressure on Democratic Minnesota Gov. Tim Walz, whose administration is facing scrutiny over billions in suspected social services fraud.
'The volume and concentration of potential fraud is staggering, matched in its egregiousness only by your response to those who attempted to stop it,' Loeffler wrote in a separate letter to the governor last week.
At least $2.5 million in pandemic-era loans were tied to a Somali fraud scheme in Minneapolis, the SBA said.
Small Business Administration administrator Kelly Loeffler walks outside the West Wing of the White House after President Donald Trump spoke about investing in America in the Cross Hall of the White House, Wednesday
A viral video posted by independent journalist Nick Shirley last Friday showed empty Somali-owned daycare centers allegedly receiving hundreds of millions in taxpayer funds
A viral video posted by independent journalist Nick Shirley last Friday showed empty Somali-owned daycare centers allegedly receiving hundreds of millions in taxpayer funds.
The shocking film sparked an immediate federal response including by FBI Director Kash Patel and Department of Homeland Security chief Kristi Noem who announced investigations earlier this week.
The widening crackdown is the direct result of the initial Feeding Our Future scandal which investigators warned was 'ground zero' for a much wider fraud network.
While that first probe uncovered $250 million in stolen meal funds, it exposed a blueprint for exploitation that prosecutors say has permeated almost every facet of Minnesota's welfare system.
Around $9 billion in federal Medicaid funds supporting 14 Minnesota programs since 2018 may have been stolen, US Attorney Joe Thompson announced on December 18.