USDA Suspends All Federal Funding to Minnesota Amid Billion-Dollar Fraud Investigation
MINNEAPOLIS, Minn. — The U.S. Department of Agriculture (USDA) has taken the unprecedented step of suspending all federal funding to Minnesota following revelations of a large-scale fraud scheme involving billions of dollars in taxpayer funds. Agriculture Secretary Brooke Rollins announced the suspension on January 9, 2026, declaring that the Trump administration uncovered “MASSIVE fraud” siphoning off billions from federally funded programs without any plan in place to address the issue.
Secretary Rollins emphasized the gravity of the situation in a social media post, stating, “Enough is enough! The Trump administration has uncovered MASSIVE fraud in Minnesota and Minneapolis — billions siphoned off by fraudsters. And those in charge have ZERO plan to fix it.” The USDA’s decision to halt federal financial awards will remain in effect until Minnesota provides sufficient proof that the fraudulent activity has ceased.
The suspension affects a broad range of programs, including those supporting children’s nutrition, childcare, and housing services. One particularly egregious case involves the nonprofit organization Feeding Our Future, which allegedly defrauded $250 million from a USDA-funded children’s nutrition program during the COVID-19 pandemic. Investigations revealed that dozens of individuals submitted fake invoices, attendance records, and meal distribution reports in low-income communities, exploiting USDA COVID-era waivers that allowed for less oversight in program enrollment.
In addition to the USDA’s actions, the Department of Health and Human Services froze funding for several childcare grant programs in Minnesota earlier this week. These include the Child Care and Development Fund, Temporary Assistance for Needy Families, and Social Services Block Grant programs. However, a federal judge blocked the administration’s attempt to withhold federal funding for childcare subsidies and aid programs for low-income families, underscoring the ongoing legal complexities surrounding the case.
Treasury Secretary Scott Bessent further raised concerns that some Minnesota tax dollars may have been funneled to the terrorist group al-Shabab, based on a December investigation by his agency. This alarming development adds a national security dimension to the fraud probe. The Housing Stability Services Program, which provides Medicaid coverage for housing stabilization for individuals with disabilities, mental illnesses, and substance use disorders, is also under scrutiny for alleged misappropriation.
The magnitude of the fraud has drawn sharp criticism from federal officials. Secretary Rollins declared, “No more handouts to thieves! Time to drain the Minnesota swamp and put American taxpayers first.” Senate Republicans have pressed Minnesota Governor Tim Walz for accountability, describing the scandal as just the “tip of the iceberg.”
For more information on USDA funding and oversight, visit the USDA official website. Details on federal childcare programs can be found at the Administration for Children and Families. The Treasury Department’s efforts to combat fraud and terrorism financing are outlined at the U.S. Department of the Treasury. Legal rulings related to the funding freeze are available through the Federal Judiciary.
The investigation continues to unfold as federal agencies collaborate to uncover the full extent of the fraud and implement measures to safeguard taxpayer funds. Minnesota officials have yet to release a detailed response to the USDA’s suspension, but the state faces intense pressure to demonstrate corrective actions to restore federal support.
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