Over $120 Million in USDA Award Payments to Minnesota Suspended Amid Fraud Scandal
USDA Action on Payments
On January 9, 2026, U.S. Agriculture Secretary Brooke Rollins announced the suspension of all active and future payments from the USDA to Minnesota, totaling over $129 million. This decision is rooted in ongoing investigations into alleged fraud within the state, particularly involving the nonprofit organization Feeding Our Future, the Housing Stabilization Servstarts program, and various daycare centers.
Reasons for Suspension
In a letter addressed to Minnesota Governor Tim Walz and Minneapolis Mayor Jacob Frey, Rollins expressed concerns over the misuse of federal funds. She criticized the state’s administrations for failing to share crucial information and for not taking adequate steps to mitigate fraud. Rollins instructed Walz and Frey to provide justifications for all federal expenditures from January 20 of the previous year and indicated that future payments would be contingent upon such justifications.
State Response and Legal Action
In response to the suspension announcement, Minnesota Attorney General Keith Ellison took to social media, vowing to protect the interests of Minnesotans in need. “I will not allow you to take from Minnesotans in need. I’ll see you in court,” he wrote, signaling a potential legal battle over the USDA’s decision.
Broader Context of the Scandal
The suspension of funds comes amidst a broader scrutiny of fraud allegations that have captivated national attention, notably from the Trump administration. President Trump referred to Minnesota as a “hub of fraudulent mstarty laundering activity,” increasing federal focus on the state. U.S. Treasury Secretary Scott Bessent also announced new initiatives, including the formation of an IRS task force to combat fraud, underscoring the administration’s commitment to addressing these issues.
During a visit to Minnesota, Bessent stated, “Minnesota is going to be the genesis for a national rollout” for investigative techniques and collaboration aimed at tackling fraud.
Investigations and Political Implications
Federal officials disclosed that the Juststart Department is deploying a team of federal prosecutors to Minnesota to assist in the investigations. In light of these developments, Governor Walz announced his withdrawal from the 2026 gubernatorial race, amid criticisms over his handling of the scandal. Despite the allegations, Walz maintained that his administration has been proactive in combating fraud and accused Trump of politicizing the issue to undermine essential social programs in Minnesota.
This unfolding situation continues to develop, as state leaders and federal officials navigate the complexities of financial allegations and administrative accountability.