THE STATE THAT FUNDS TERROR

How Minnesota Built the Largest Welfare-Fraud Architecture in Modern America

THE STATE THAT FUNDS TERROR

How Minnesota Built the Largest Welfare-Fraud Architecture in Modern America

with thanks to Christopher Rufo and Ryan Thorpe for pulling the alarm Minnesota’s governing class tried very hard not to hear

By Jim Reynolds | www.reynolds.com

I. A State That Confused Compassion With Abdication

Every society confronts a moment when the distance between its public virtues and its private realities becomes too wide to conceal. Minnesota has arrived at such a moment.

Long admired for its civility, its lakeside gentility, and its midwestern confidence in well-managed institutions, the state is now revealed—through the reporting of Christopher Rufo and Ryan Thorpe—as a case study in how administrative benevolence, stripped of vigilance, collapses into a system that rewards fraud, enriches criminal intermediaries, and ultimately subsidizes forces far beyond its borders.

The mechanics are depressingly consistent: a welfare bureaucracy designed with low barriers, minimal oversight, and near-automatic reimbursement; a political culture conditioned to equate scrutiny with prejudice; and an ever-expanding network of providers who learned that accusation, not compliance, was the governing currency.

What emerged was not an accident of kindness but an architecture of permissiveness. The machinery of the state became porous, then compromised, then exploited—often by actors who understood its vulnerabilities better than the people entrusted to run it.

There is a certain irony here: a state that prided itself on administrative competence engineered, almost inadvertently, a model of institutional decay worthy of a civics textbook on decline.

A quiet truth sits beneath it all: when the guardians retreat, someone else steps confidently forward.

II. The Housing Stabilization System: Benevolence Without Boundary

The Housing Stabilization Services (HSS) program was conceived as a humane intervention—an initiative intended to assist seniors, the disabled, and those recovering from addiction in securing stable shelter. Its projected cost was modest: $2.6 million annually.

Instead, it grew with the velocity of a system that had discovered a loophole in itself:

• $21 million (2021)

• $42 million (2022)

• $74 million (2023)

• $104 million (2024)

• $61 million more in the first half of 2025

The U.S. Attorney for Minnesota dispensed with euphemism and declared the “vast majority” of the program fraudulent—a phrase that in more serious times would have occasioned a statewide reckoning.

Nearly eighty providers were terminated for “credible allegations of fraud.” Many were perfunctory operations housed in vacant storefronts. Others were scarcely more than paper entities, registering clients pulled from rehab centers only to bill Medicaid for services never rendered.

If institutions derive their dignity from their seriousness, this program became a cautionary tale: a public system entrusted with vulnerable lives became, instead, a marketplace for opportunists.

One is reminded of Steyn’s line about “the biography-in-progress”—except here the biography belonged to a bureaucracy, and its chapters were filled in by those who realized the state would not.

III. Feeding Our Future: A Parable of Unsupervised Virtue

If the HSS scandal revealed the system’s fragility, the Feeding Our Future affair revealed its scale.

A modest nonprofit ballooned almost overnight from $3.4 million in federal nutrition funding to nearly $200 million, claiming to feed children whose names, attendance, and meal counts existed almost entirely on paper. It was a logistical marvel—the administrative equivalent of feeding a city without ever opening a pantry.

Dozens of defendants have now pled guilty. The expenditures read less like a charity ledger than a travel brochure: luxury homes, overseas properties, Caribbean vacations, high-end vehicles, and a diaspora of purchases far too curated to be accidental.

When state officials raised reasonable inquiries, the organization responded not with documentation but with litigation—alleging racial discrimination, a charge that in Minnesota’s political climate functions less as an argument than an injunction. The bureaucracy recoiled. Oversight softened. And the fraud accelerated.

It was, in every respect, a portrait of a system that had lost the courage to defend its own integrity.

IV. The Autism-Services Explosion: When Diagnosis Becomes Currency

The third scandal—the one involving Early Intensive Developmental and Behavioral Intervention services—may be the most unsettling, not for the dollars involved but for the moral inversion it represents.

Between 2018 and 2023, Minnesota’s autism-related Medicaid spending grew from $3 million to $399 million. Providers increased eightfold. And within a single community, autism diagnoses surged to more than three times the state average.

Prosecutors allege that a network of providers paid Somali parents between $300 and $1,500 per child per month to enroll their children in therapy—diagnosis optional. Services were exaggerated or fabricated. Reimbursements flowed. And the state, conditioned to accept “culturally appropriate programming” as an argument unto itself, allowed the scheme to metastasize.

There is a special gravity when institutions built to support disabled children become instruments of opportunism. It marks a point at which the system is no longer merely inefficient but inverted—its protections turned outward, its vulnerabilities turned inward.

It is, as Steyn might say, a hood ornament without an engine: the form of compassion absent the function.

V. The Pattern the State Refused to See

Across three programs—and at least 28 major fraud scandals since 2019—a common pattern emerges. Investigators, including Somali-American fraud examiner Kayesh Magan, have been unambiguous:

“Nearly all of the defendants are from my community.”

One might expect that such testimony, offered with sobriety and firsthand experience, would prompt the state to reassess its assumptions. Instead, the reaction was silence—the kind practiced by institutions that fear the implications of acknowledgment more than the consequences of inaction.

Democratic officials in Minneapolis are acutely aware that the Somali vote is indispensable. The political geometry is simple: lose that bloc, lose the city; lose the city, lose the state. And so oversight becomes hesitation, hesitation becomes paralysis, and paralysis becomes the quiet architecture of decline.

What Bob would call a moral instinct is simply this: when leaders begin protecting voting blocs instead of citizens, the republic is already drifting.

VI. Remittances, Hawalas, and the Unintended Beneficiary

The question of where the money ultimately traveled is no longer speculative.

In 2023, Somali Minnesotans sent $1.7 billion in remittances to Somalia—more than the Somali government’s annual budget. Federal counterterrorism officials confirm that every dollar sent through hawala networks is subject to taxation, skimming, or extortion by Al-Shabaab, the region’s primary Islamist terror faction.

One former Joint Terrorism Task Force investigator, after years tracing the financial currents, described the situation with grave precision:

“The largest funder of Al-Shabaab is the Minnesota taxpayer.”

Whether the intention was charitable or familial is, at this stage, immaterial. A welfare system that hemorrhages billions without verification will inevitably supply more than poverty relief. It supplies opportunity—often to people far removed from the Minnesotans asked to finance it.

There is a moment when administrative negligence becomes something closer to inadvertent complicity. Minnesota has reached that moment.

VII. The Walz Question: Continuity Without Correction

Governor Tim Walz now seeks a third term. Under his administration:

• Fraud warnings were dismissed or deferred

• Oversight mechanisms atrophied

• Program costs spiraled

• Indictments multiplied

• Whistleblowers were marginalized

• Media scrutiny was minimal to nonexistent

Federal officials suggest that the true scale of the fraud is still only partially understood.

There is something almost classical here: a state governed by a political class that confuses inertia for stability and silence for prudence. No wonder the scandals proliferated. Institutions do not correct themselves when their stewards refuse to confront what they oversee.

VIII. A Reckoning Deferred Becomes a Reckoning Demanded

Minnesota is not suffering from a lack of compassion. It is suffering from a lack of courage. A welfare system cannot endure when its administrators fear the social cost of scrutiny more than the fiscal cost of fraud. Nor can a state long maintain the illusion of competence while subsidizing criminal networks that operate both locally and abroad.

The reporting by Rufo and Thorpe did not create this crisis. It clarified it. They did what the state’s own institutions would not: they restored the light.

The truth that emerges is neither comfortable nor optional:

Minnesota built a vast, unguarded welfare architecture, entrusted it to officials unwilling to enforce the rules, and watched as opportunists—some criminal, some political, some transnational—used it to extract billions and finance networks the state pretended not to see.

A civilization that refuses to name the source of its decline cannot correct it. And a government that will not protect its own resources cannot long protect anything else.

Bob’s small contribution, offered with the kind of moral simplicity that institutions sometimes envy, is this:

“At some point, a state must decide whether it wants to help the vulnerable or subsidize the people who prey upon them.”

Minnesota has postponed that decision long enough.