🗞️ DOL Launches Targeted Review of Minnesota Unemployment Insurance Program Amid Statewide Fraud Crisis

The Department of Labor's Employment and Training Administration has initiated an urgent targeted review of Minnesota's Unemployment Insurance program following what Labor Secretary Lori Chavez-DeRemer described as "appalling" reports of widespread fraud across multiple Minnesota benefits programs. The DOL's Chicago regional office informed the Minnesota Department of Employment and Economic Development that a specialized UI strike team would conduct an onsite examination focusing on Benefit Payment Control operations and integrity functions.

This action comes in response to cascading revelations of systematic fraud that has cost Minnesota taxpayers potentially hundreds of millions of dollars across several programs. The most prominent case involves Feeding Our Future, where federal prosecutors charged dozens of individuals with stealing over $240 million from the Federal Child Nutrition Program. Defendants allegedly submitted fraudulent claims while purporting to serve thousands of meals daily to children during the COVID-19 pandemic, using proceeds to purchase luxury vehicles, real estate, and international properties.

The fraud extended beyond child nutrition programs. Minnesota's Early Intensive Developmental and Behavioral Intervention (EIDBI) autism program experienced explosive growth from $1 million in 2017 to over $220 million in 2024, with federal investigators now believing much of this increase stems from fraudulent activity. Asha Farhan Hassan became the first person charged in the autism fraud investigation in September 2025, accused of defrauding the program of $14 million through her company Smart Therapy LLC by billing for services never provided, employing untrained staff, and paying parents monthly kickbacks ranging from $300 to $1,500 to keep their children enrolled.

Minnesota's Housing Stabilization Services (HSS) program represents another major fraud vector. The program, designed to help vulnerable individuals find and maintain housing, paid out $302 million over 4.5 years despite being budgeted for approximately $12 million during that period. Acting U.S. Attorney Joseph Thompson indicated that most of the $300 million in spending appears fraudulent, with eight individuals charged for misappropriating $8.4 million in September 2024.

The DOL's concern centers on whether these patterns of organized fraud have infiltrated Minnesota's unemployment insurance systems. Secretary Chavez-DeRemer emphasized that "malicious actors" would not be tolerated and expressed determination to protect American workers. The specialized strike team, comprising staff from ETA's national and regional offices, has been directed to investigate both current UI operations and pandemic-era UI programs.

This Minnesota review occurs against a backdrop of massive nationwide unemployment insurance fraud during the COVID-19 pandemic. The Government Accountability Office estimates that fraud in UI programs nationwide reached between $100 billion and $135 billion during the pandemic, representing 11-15% of total benefits paid. States were overwhelmed by unprecedented claim volumes while simultaneously implementing new emergency programs, creating vulnerabilities that fraudsters exploited through identity theft, cross-state claims filing, and organized criminal networks.

The House Committee on Oversight and Government Reform has launched a parallel investigation into Minnesota's fraud crisis, requesting information from Governor Tim Walz and Attorney General Keith Ellison by December 17, 2025. The investigation seeks to understand why Minnesota officials failed to intervene despite early warning signs, particularly in the Feeding Our Future case where state employees reportedly flagged concerns.

The Minnesota fraud cases have prompted intense scrutiny and debate. A Star Tribune analysis found that confirmed fraud through court records and convictions totals approximately $217.7 million to date, though this figure is expected to rise as investigations continue. The discrepancy between various estimates—ranging from hundreds of millions to over a billion dollars—reflects the ongoing nature of investigations and differences in methodologies for calculating potential versus proven fraud.

As of December 2025, federal prosecutors have secured 56 convictions in the Feeding Our Future scheme alone, including ringleader Aimee Bock, who was found guilty of fraudulently operating Federal Child Nutrition Program sites throughout Minnesota. The DOL's review will determine whether similar organized fraud networks have compromised unemployment insurance systems and what corrective actions may be necessary to restore program integrity.

Key Points

• Action Taken: DOL deploying specialized UI strike team for onsite review of Minnesota's unemployment insurance program
• Trigger: Widespread fraud discoveries across multiple Minnesota benefits programs totaling potentially hundreds of millions of dollars
• Programs Affected: Federal Child Nutrition ($240M+ alleged), EIDBI Autism Services ($220M+ potential), Housing Stabilization Services ($302M paid vs. $12M budgeted)
• Key Cases: Feeding Our Future: 56 convictions, $240+ million stolen from child nutrition program, Smart Therapy LLC: $14 million autism program fraud, first defendant charged September 2025, Housing services: 8 charged for $8.4 million misappropriation
• Review Focus: Benefit Payment Control operations, integrity functions, and investigation of both current and pandemic-era UI programs
• Secretary's Statement: Labor Secretary Lori Chavez-DeRemer called reports "appalling" and vowed zero tolerance for UI fraud
• National Context: GAO estimates $100-$135 billion in nationwide UI fraud during pandemic (11-15% of total benefits paid)
• Congressional Oversight: House Committee investigating Minnesota fraud, requesting documents from Governor Walz by December 17, 2025
• Confirmed Losses: Star Tribune analysis documents $217.7 million in fraud through convictions/charges to date, with investigations ongoing
• Systemic Issues: Identified patterns include organized networks, cross-program fraud participation, kickback schemes, and fictitious service billing

Primary Author: U.S. Department of Labor, Employment and Training Administration

Primary Source: U.S. Department of Labor News Release #25-1595-NAT

Primary Source Link: https://www.dol.gov/newsroom/releases/eta/eta20251215

Supplemental Sources

• Chairman Comer Launches Investigation into Massive Fraud in Minnesota's Social Services System
• Fraud in Minnesota: Detailing the nearly $1 billion in schemes
• Federal prosecutors charge first person in Minnesota autism fraud investigation
• How the Minnesota Star Tribune analyzed alleged fraud totals in Minnesota
• Unemployment Insurance: Estimated Amount of Fraud During Pandemic Likely Between $100 Billion and $135 Billion
• Schemes stacked upon schemes: $1B public benefits fraud fuels scrutiny
• Pandemic Unemployment Insurance: How much has been paid to fraudsters?
• Some Minnesota autism centers got money through fraud-riddled federal child nutrition program
• Minnesota Unemployment Insurance Fraud Reporting