In a significant move to combat rampant government benefits fraud in Minnesota, Secretary of the Treasury Scott Bessent has announced several initiatives aimed at safeguarding the financial system and protecting Minnesota taxpayers. This announcement comes as the state grapples with the alarming issue of fraud that has cost taxpayers billions. “President Trump has instructed the administration to bring accountability for the hardworking people of Minnesota,” stated Secretary Bessent. He emphasized the need for action, noting that under Democratic Governor Tim Walz, welfare fraud has spiraled out of control, diverting funds meant for essential services to fraudulent activities.
During his visit to the Twin Cities, Secretary Bessent engaged with a variety of stakeholders, including financial institutions, fraud victims, and state leaders. He also planned a roundtable discussion to hear directly from affected citizens. This meeting aims to foster a public-private partnership, bringing together financial institutions and law enforcement at all levels to share information crucial for identifying, reporting, and investigating government benefits fraud.
Complex fraud rings operating in Minnesota have reportedly stolen billions of dollars from state programs intended for public welfare. The perpetrators have misused these funds for personal gain, purchasing luxury items such as real estate, vehicles, and even international flights, all at the expense of the U.S. taxpayer. In response to this dire situation, Secretary Bessent outlined several actions being undertaken by the U.S. Department of the Treasury.
The Financial Crimes Enforcement Network (FinCEN) has initiated investigations into several money services businesses in Minnesota. Four notices of investigation have been issued, requesting information from these businesses under the Bank Secrecy Act. This scrutiny aims to examine their role in potentially facilitating fraud and to bolster preventive measures against future misconduct.
In a parallel effort, the IRS is launching a fraud task force specifically targeting the misuse of funding associated with pandemic-era tax incentives. This task force will focus on investigating entities that have exploited their 501(c)(3) tax-exempt status within the context of Minnesota's social services fraud schemes. The IRS's civil enforcement division is already auditing financial institutions that have played a role in laundering state funds, reinforcing the commitment to hold accountable those involved in fraud.
To improve oversight and enhance prosecution efforts, FinCEN has issued a Geographic Targeting Order that requires banks and money transmitters in Hennepin and Ramsey Counties to report additional information regarding transactions exceeding $3,000 that are sent outside the United States. This measure aims to provide law enforcement with vital information to better investigate government benefits fraud, facilitating the prosecution of offenders and aiding in the recovery of laundered funds.
In a proactive step, FinCEN has also issued an alert to financial institutions about the fraud schemes exploiting federal child nutrition programs. These fraud rings have defrauded the government of at least $300 million that was intended for children in need in Minnesota. The alert includes specific “red flags” to help financial institutions identify and report suspicious activities related to these fraudulent schemes.
To enhance the capabilities of law enforcement, FinCEN has provided on-the-ground training for federal, state, and local agencies in Minnesota. This training focuses on utilizing financial data, including Suspicious Activity Reports, to combat fraud schemes more effectively. By equipping law enforcement with the necessary tools and knowledge, the initiative aims to strengthen the response to financial crime in the state.
Through these comprehensive initiatives, the U.S. Department of the Treasury is demonstrating its commitment to increasing transparency and accountability, ensuring that taxpayer dollars are used appropriately and effectively in Minnesota.