The Amount of Taxpayer Dollars We Lose to Fraud Is Staggering

The scandal surrounding Somali-linked welfare fraud in Minnesota has been festering for more than a decade. For years, it lingered as an open secret, quietly discussed and carefully avoided. That era has ended. The Trump administration is going to turn a blind eye to it in the way other past administrations have in the past.

In an exclusive interview, Christopher Rufo and Treasury Secretary Scott Bessent laid out just how vast the problem has become — and why Minnesota is just the tip of the iceberg because what the Treasury Department has uncovered is worse than most people realize.

“This waste, fraud, and abuse in the system [is] bigger than anyone thought,” Bessent said. The schemes span welfare programs, food assistance, and nonprofit grants, with money siphoned off through shell companies and sent overseas.

“If you are on public assistance and you’re sending money out of the country, one of two things must be true,” he said. “You are getting too much assistance… or you’ve got stolen money, and you’re sending that out.” Either way, he added, “money needs to stay in the U.S., or your benefits need to be cut.”

Minnesota may be the most well-known case so far, but Bessent indicated that it is a test run for a national crackdown. “What’s going on here is a microcosm of what’s going on” in larger states like California, Illinois, and New York, he said. Welfare programs, he explained, have been transformed into profit centers. “Benefits have been turned into businesses. It is a cottage industry of teaching people how to form LLCs, multiple LLCs, how to game the system, how to move money around.”

Treasury’s role is simple and relentless. “What Treasury does is follow the money,” Bessent said. “We have done it with the mafia… Mexican drug cartels, and now these Somali fraudsters.”

In Minnesota, the Somali community represents roughly 1% of the population, yet it accounts for as much as 90% of the fraud. The reason, Rufo argued, was political cowardice. State officials hid behind “Minnesota nice” and the fear of being called racist.

“You could steal hundreds of thousands, millions of dollars, and under the Minnesota laws, you might not even get jail time,” he said. Treasury plans to change that calculus by bringing in IRS enforcement. “They don’t monkey around.”

The most staggering revelation came near the end of the interview, when Rufo asked Bessent about the broader scope of fraud. According to the Government Accountability Office, federal programs lose between $300 billion and $600 billion every year. “It’s about 10% of the federal budget, 1 to 2% of GDP,” Bessent said.

This is why Democrats are pushing back so hard against the investigations. For years, Democrats have created a corrupt system that enriches their allies and comes back to them in the form of kickbacks. They hide behind accusations of racism and government weaponization, but what’s really happening is that they are protecting the system they’ve created that is designed to keep Democrats in power.

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