WASHINGTON — Republican senators are pressing the Small Business Administration (SBA) for a full and transparent accounting of its investigation into the massive Minnesota welfare fraud scandal, as the Trump administration continues its aggressive push to protect taxpayers and restore accountability.

Last month, SBA Administrator Kelly Loeffler, appointed under President Donald Trump, launched a sweeping probe into a network of Somali-linked organizations tied to the fraud. The agency also took decisive action by suspending payments to roughly 6,900 Minnesota borrowers while investigators review potential misuse of federal funds.

Sen. Joni Ernst (R-Iowa), who led a letter signed by all Republican members of the Senate Small Business and Entrepreneurship Committee, called on Loeffler to clearly outline the scope of the investigation, including which organizations and businesses are under scrutiny.

“Fortunately, the SBA has a vigilant leader at the helm, and we applaud your swift and decisive action in launching a full-scale investigation into this fraud and its overlap with SBA programs,” the senators wrote.
“As the Trump administration opens the books, deeply troubling fraud schemes are being exposed.”

Minnesota has been shaken by what federal prosecutors describe as one of the largest welfare fraud scandals in U.S. history. Since 2018, more than $9 billion — roughly half of the state’s Medicaid spending across 14 programs — may have been stolen, according to Assistant U.S. Attorney Joe Thompson. While some Democrats have disputed that figure, federal authorities have already charged 98 individuals, with 64 convictions, since 2022.

One of the most notorious cases involved the now-defunct nonprofit Feeding Our Future, which prosecutors say fraudulently pocketed hundreds of millions of dollars by falsely claiming to provide meals to children during the COVID-19 pandemic.

Republican lawmakers stressed that the SBA was responsible for overseeing massive COVID-era relief programs, including the Paycheck Protection Program (PPP), which the Biden administration and Democratic state leadership failed to properly safeguard.

“This scheme is yet another example of widespread abuse in COVID relief programs that prioritized speed over oversight,” the senators wrote, citing cases where criminal gangs used PPP funds to buy weapons and other fraudsters funneled relief money into corrupt kickback schemes.

Loeffler’s funding pause covers borrowers linked to an estimated $400 million in COVID relief loans, signaling a sharp break from the lax enforcement of previous years.

The senators are demanding a detailed breakdown of the SBA’s Minnesota investigation, a list of SBA programs currently vulnerable to fraud, and an update on efforts to recover stolen taxpayer dollars. They have requested a response by January 19.

“The Biden administration and Governor Tim Walz allowed criminals to run wild at taxpayers’ expense,” Ernst said in a statement.
“We must ensure this never happens again. Under President Trump, Republicans are committed to rooting out waste, fraud, and abuse — and holding every thief accountable.”

Ernst has also raised alarms about more than $1 million in federal funds directed to a Somali-led Minnesota nonprofit backed by Rep. Ilhan Omar, and continues to push legislation extending the statute of limitations for prosecuting fraud in COVID relief programs — a bill that has already advanced out of committee.