Government Waste

The Real Villain in Minnesota's $1.5 Billion Fraud Scandal Isn't Somalis—It's the Feds

In America, we judge people according to the content of their character, not the behavior of a narrow minority of their coethnics.

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Illustration of a Somali woman standing in front of the U.S. Capitol | Illustration: Eddie Marshall | Midjourney
(Illustration: Eddie Marshall | Midjourney)

A years-long scheme to defraud $1.5 billion from federally subsidized social services is fueling a wave of xenophobia against Minnesotans of Somali descent. The real culprit is Uncle Sam.

In September, the Justice Department announced that eight defendants, six of whom are of Somali descent, had been charged for their participation "in a massive housing stabilization fraud scheme." The conspiracy consisted of acquiring the information of those eligible for Minnesota's Housing Stabilization Services (HSS) program—the elderly, disabled, and drug-addled—to submit fake reimbursement claims for nonexistent housing support services. According to the Justice Department, the program was projected to cost $2.6 million per year in 2020, but paid out $21 million in 2021, $42 million in 2022, $74 million in 2023, $104 million in 2024, and $61 million from January to June of 2025, likely due, in large part, to rampant fraud.

Despite charges being levied in September, the story recently made headlines after Ryan Thorpe and Christopher Rufo reported in City Journal about the dubious nature of autism claims made to Medicaid in Minnesota in another scheme. As Thorpe and Rufo pointed out, autism claims were only $3 million in 2018, but climbed to "$54 million in 2019, $77 million in 2020, $183 million in 2021, $279 million in 2022, and $399 million in 2023," reaching around $400 million in 2024, per their source. One of the largest alleged perpetrators of autism claims fraud is Asha Farhan Hassan, a 28-year-old of Somali descent, who was charged in September of defrauding the state for $14 million from November 2019 to December 2024.

Hassan allegedly perpetrated this fraud through her company Smart Therapy LLC, which purported to provide individualized applied behavior analysis (ABA) therapy to autistic children through Minnesota's Early Intensive Developmental and Behavioral Intervention (EIDBI) program. "Many of [Smart Therapy's] claims [for Medicaid reimbursement] were fraudulently inflated, were billed without providers' knowledge, and were for services that were not actually provided," alleges the Justice Department. Moreover, the scheme involved "monthly cash kickback payments to the parents of children who enrolled their children in Smart Therapy to receive autism services." Hassan is also accused of fraudulently enrolling Smart Therapy in the Federal Child Nutrition Program (FCNP) via Feeding Our Future, a nonprofit front that stole nearly $250 million in federal funds by purporting to serve thousands of children free meals during the COVID-19 pandemic.

The New York Times reports that, while the "vast majority are American citizens, by birth or naturalization," 78 of the 86 defendants—about 91 percent—charged in connection with the FCNP, EIDBI, and HSS fraud schemes are of Somali ancestry. In light of this reality, Rufo said "Somalis are stealing billions of dollars from American taxpayers" and called on President Donald Trump "to revoke Temporary Protected Status (TPS) for all Somalis in Minnesota" during an interview with Laura Ingraham. The president obliged.

The fraud, while egregious, does not justify revoking legal protections for Somali immigrants: While the lion's share of this monumental theft was likely perpetrated by people of Somali descent, the vast majority of this community had nothing to do it.

The real story here is not the ethnicity of those who defrauded the HSS, EIDBI, and FCPN programs, but the fact that the majority of public funding for these programs came from the federal government instead of Minnesota's own coffers.

HSS and EIDBI are both benefits of Medical Assistance, Minnesota's Medicaid program. Although Medicaid is administered at the state level, two out of every three Medicaid dollars come from the federal government, on average, says Michael Cannon, director of health policy studies at the Cato Institute. In Minnesota, 63 percent of the $19.1 billion spent on Medicaid in 2023, the most recent year for which data are available, came from Uncle Sam, despite the share of Medicaid expenses covered by the federal government being only 50.79 percent that year.

Cannon says that states "shift about one-sixth of the cost of the Medicaid program" to the federal government by gaming the amount of matching funds that D.C. provides to states, resulting in about $159 billion of "perfectly legal" fraud each year. He adds that fraud enforcement with Medicaid is notoriously lax at the state and federal levels because, with the dollar-for-dollar matching system, the incentive to fight fraud is cut in half since "half of the savings go to another level of government, not their own." (In the case of FCNP funding, there is next to no incentive for states to investigate fraud because every dollar comes from the federal government.) Consequently, Cannon characterizes Medicaid as "socialism on stupidity on stilts," and a "bonanza for fraud."

We should not be surprised when states are overly generous and insufficiently circumspect about handing out money to their constituents when the majority of the money isn't coming from their own coffers, but the Treasury Department. The fraud perpetrated in Minnesota isn't grounds for bigotry against an ethnic group or xenophobia against a nationality; it's a wake-up call to reduce the government's role in our lives and put money back in the hands of the people who earned it: American taxpayers.