Trump Admin Unleashes Federal Crackdown: SBA Suspends Thousands in Minnesota Over $400M Pandemic Loan Fraud

WASHINGTON D.C. – The Trump administration has initiated a sweeping federal intervention in Minnesota, with the Small Business Administration (SBA) suspending nearly 7,000 borrowers and uncovering a staggering $400 million in potentially fraudulent pandemic relief loans. This aggressive move comes amidst mounting scrutiny on Minnesota Governor Tim Walz's administration over allegations of widespread social services fraud, including schemes linked to Somali-run daycare centers.

SBA Uncovers Massive Fraud, Bans Borrowers

In a decisive announcement on Thursday, SBA Administrator Kelly Loeffler revealed that the agency had suspended 6,900 Minnesota borrowers after an extensive review unearthed what it describes as widespread suspected fraud. The investigation focused on thousands of Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) disbursements approved during the COVID-19 pandemic, identifying close to $400 million in suspicious loans tied to individuals and entities within the state.

"These individuals will be banned from all SBA loan programs, including disaster loans, going forward," Loeffler declared on X, signaling a stern warning to those attempting to illicitly benefit from federal aid. She further stated that appropriate cases would be referred to federal law enforcement for prosecution and the recovery of stolen funds. "After years, the American people will finally begin to see the criminals who stole from law-abiding taxpayers held accountable — and this is just the first state," Loeffler added, hinting at broader investigations to come.

Minnesota Governor Walz Under Fire as Federal Funds Halted

The SBA's crackdown intensifies pressure on Minnesota Governor Tim Walz and his administration, who are already facing intense scrutiny over billions of dollars in alleged social services fraud. Critics, including the chair of Minnesota's fraud committee, claim Walz "turned a blind eye" to warnings for years.

Adding to the state's woes, Loeffler sent a letter to Governor Walz on Tuesday, December 23, informing him that the SBA would immediately "halt" over $5.5 million in annual support to resource partners operating in Minnesota. This significant financial freeze underscores the federal government's grave concerns about the state's handling of federal funds and oversight mechanisms.

"I am notifying you that effective immediately and until further notice, the SBA is halting the disbursement of federal funds to SBA resource partners operating in the state of Minnesota, totaling over $5.5 million in annual support," Loeffler wrote, emphasizing the urgency and severity of the agency's response.

Somali Daycare Schemes and Staggering Fraud Volume

A significant portion of the identified fraud is linked to a Somali fraud scheme based in Minneapolis, with the SBA stating that at least $2.5 million in PPP and EIDL funds from the pandemic era were connected to these operations. This specific revelation echoes earlier reports discussing increasing threats at Somali-run daycare centers in Minnesota and federal intervention.

Loeffler's letter to Walz further detailed that approximately $430 million in PPP funds, tied to roughly 13,000 loans, were flagged as potentially fraudulent but were nevertheless funded. Disturbingly, some of these loans were reportedly forgiven during the Biden administration. "The volume and concentration of potential fraud is staggering, matched in its egregiousness only by your response to those who attempted to stop it," Loeffler chastised Walz.

Trump Vows to "Get to the Bottom of It"

The Trump administration has made it clear it intends to aggressively pursue these allegations. Former President Trump himself has previously targeted the Minnesota fraud allegations, stating, "We’re going to get to the bottom of it." The current federal actions by the SBA under Administrator Loeffler appear to be a direct fulfillment of that promise, signaling a determined effort to recover taxpayer money and hold perpetrators accountable.

As the federal investigation continues, the focus remains on the accountability of those who allegedly exploited critical pandemic relief programs and the oversight responsibilities of state officials. Fox News Digital has reached out to Governor Walz’s office for comment but has not yet received a response.