The Small Business Administration has taken the extraordinary step of freezing all grant funding to Minnesota after investigators uncovered what appears to be fraud on a staggering scale.
SBA Administrator Kelly Loeffler announced the immediate action following revelations that exposed more than half a billion dollars in fraudulent activity within the state’s small business grant programs. The decision represents one of the most aggressive federal responses to state-level fraud in recent memory.
The investigation gained momentum after independent journalist Nick Shirley documented suspicious activity at multiple facilities claiming to receive federal small business assistance. His team uncovered more than $110 million in questionable funding in a single day of investigation, raising red flags that prompted federal scrutiny.
What Shirley’s cameras captured tells a troubling story. At the “Quality Learning Center” in South Minneapolis, a facility supposedly serving up to 99 children while receiving millions in federal aid, there were no signs of actual operations. The center had even misspelled its own name on the signage, displaying “learing” instead of “learning.” When Shirley approached the building, an unidentified woman shouted warnings not to open the door, mistakenly claiming the journalists were immigration enforcement agents.
The pattern repeated at other daycare centers across the state, each supposedly operating legitimate businesses while drawing substantial federal funding.
Administrator Loeffler did not mince words about what investigators found. She described herself as “disgusted and sickened” by the scope of the fraud and indicated that federal authorities would now turn their attention to state officials who may have enabled what she characterized as an “industrial-scale crime ring.”
The SBA’s rapid investigation uncovered approximately half a billion dollars in fraudulent activity within days of beginning their review. However, Loeffler warned that the full scope remains unknown and could reach into the billions of dollars.
The administrator placed significant blame on Minnesota Governor Tim Walz, citing his alleged failure to enforce laws governing small businesses and what federal officials view as his facilitation of fraudulent activity through inadequate oversight.
This latest revelation follows previous reporting that documented millions of dollars in stolen taxpayer funds being funneled from Minnesota’s Somali community back to Somalia, with some funds allegedly ending up in the hands of the terrorist organization Al-Shabaab.
The Trump administration has made clear that this investigation will not stop at clawing back fraudulent grants. Federal officials intend to examine how state-level oversight failures allowed such massive fraud to flourish unchecked.
Representative Tom Emmer of Minnesota has demanded answers from Governor Walz regarding the state’s apparent failure to detect or prevent the fraud scheme operating under its watch.
The freeze on all SBA grant funding to Minnesota remains in effect pending further review. Administrator Loeffler emphasized that the action aims to immediately stop the hemorrhaging of taxpayer dollars while investigators work to determine the full depth of the fraud.
For hardworking Americans whose tax dollars funded these programs, the revelations raise serious questions about government oversight and accountability. The SBA’s decisive action signals that the Trump administration intends to pursue fraud aggressively, even when it means taking the politically difficult step of cutting off an entire state from federal small business assistance.
The investigation continues, and federal officials warn that what has been uncovered so far may represent only a fraction of the total fraud perpetrated against American taxpayers.
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