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The U.S. Treasury Department is investigating allegations that tax dollars from Minnesota may have been diverted to the al-Shabaab militant group in Somalia, Treasury Secretary Scott Bessent said on Monday.

Bessent announced the investigation on X days after President Donald Trump 

 Minnesota a “hub of fraudulent money laundering activity” under Democratic Gov. Tim Walz, an apparent response to unverified media reports shared by several Republican lawmakers that al-Shabaab had benefited from fraud committed in Minnesota.

“At my direction, the Treasury Department is investigating allegations that under the feckless mismanagement of the Biden Administration and Governor Tim Walz, hardworking Minnesotans’ tax dollars may have been diverted to the terrorist organization al-Shabaab,” Bessent said.

On Tuesday, Walz reacted to the investigation by saying he isn't afraid of the scrutiny. But he expressed doubts about the driving forces behind it. He said a cluster of announcements by the Trump administration targeting Minnesota coincides with him speaking critically of the president.

"If they want to help us, I welcome that," Walz said. "I think they do an investigation. Find out. But I don't think anybody in here really believes their motive and their timing is about actually doing something about this."

Walz said he worries it will be part of a push to demonize immigrants. He said the allegations of money being fed into overseas groups tied to terrorism is speculation at this point.

"I don't know what criminals do with their money," he said. "They buy drugs, buy houses, buy cars or whatever. These are criminals."

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In an interview aired on NBC News on Sunday, Walz was asked about Trump's allegations and convictions of dozens of people of East African descent in fraud-related cases involving COVID-era government programs. Walz said Minnesota attracts criminals who get prosecuted.

“I will note, it's not just Somalis. Minnesota is a generous state. Minnesota is a prosperous state ... But that attracts criminals. Those people are going to jail,” Walz said.

“But to demonize an entire community on the actions of a few, it's lazy,” he added.

The attention on Minnesota stems from an article in City Journal, which is run by the conservative think tank Manhattan Institute for Policy Research. It cited predominantly unnamed sources and alleges remittance money immigrants often send home intentionally or unintentionally wound up in the hands of terrorist organizations. 

The Minnesota U.S. Attorney's Office has aggressively prosecuted the Feeding Our Future case and other fraud cases under both the Trump and Biden administrations. The office has not charged any of the defendants with providing material support to designated foreign terrorist organizations. 

The office has also aggressively prosecuted separate material support cases, and has made no link between those and the fraud cases. 

Shortly after the City Journal article ran, Trump announced that he was terminating temporary deportation protections for Somalis living in Minnesota, saying “Somali gangs are terrorizing” people in the U.S. state. The move accelerates the end of a program that began in 1991 under another Republican president.

The administration of Trump's Democratic predecessor, Joe Biden, extended the eligibility for Somalis through March 17, 2026. Most of Minnesotans of Somali heritage are U.S. citizens, and there are only 705 Somali-born individuals nationwide who have TPS status, according to a report by the non-partisan Congressional Research Service.

As of Tuesday, U.S. Citizenship and Immigration Services had not published a notice terminating TPS for Somalia.

MPR News correspondents Dana Ferguson and Matt Sepic contributed to this story.

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The U.S. Treasury Department is investigating allegations that tax dollars from Minnesota may have been diverted to the al-Shabaab militant group in Somalia, Treasury Secretary Scott Bessent said on Monday. The Minnesota U.S. Attorney's Office, however, has aggressively prosecuted fraud in the state and not made such links. 

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Treasury investigating tax fraud allegations in Minnesota, Bessent says

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