USDA halts over $120M in payments to Minnesota amid fraud concerns, Secretary Rollins confirms

MINNEAPOLIS, MINNESOTA: The Trump administration froze more than $129 million in federal payments to Minnesota, sharply escalating a standoff over what federal officials described as systemic fraud across the state’s social services programs.

Agriculture Secretary Brooke Rollins announced the suspension on Friday, January 9, halting all active and future US Department of Agriculture (USDA) awards to the state.

In a letter sent to Governor Tim Walz and Minneapolis Mayor Jacob Frey, Rollins said that the federal government would no longer release funds without detailed proof of how taxpayer money was being used.

The move followed months of federal scrutiny into Minnesota programs tied to child nutrition, housing assistance, and daycare subsidies.

Brooke Rollins cites fraud cases in Minnesota spending dispute

In her letter, which she shared publicly, Agriculture Secretary Brooke Rollins cited multiple high-profile cases, including the Feeding Our Future scandal, alleged abuse within the Housing Stabilization Services program, and ongoing investigations into daycare reimbursements.

“Despite a staggering, wide-reaching fraud scandal, your Administrations refuse to provide basic information or take common sense measures to stop fraud,” Rollins wrote.

She informed state leaders that all payments were suspended until Minnesota submitted justification for every dollar of federal spending from January 20, 2025, “to the present.”

The state had 30 days to comply. Going forward, Rollins said, “all future payments will require such payment justification.”

The freeze affected both current awards and pending funding streams, marking the most sweeping federal action yet in the dispute.

Attorney General Keith Ellison vows legal fight over funding freeze

Minnesota officials reacted quickly. Attorney General Keith Ellison responded directly to Rollins’ post on social media.

“I will not allow you to take from Minnesotans in need. I’ll see you in court,” Ellison wrote.

The City of Minneapolis office issued a statement condemning the action, calling it politically motivated and harmful to residents who relied on federal assistance.

“What’s abundantly clear is that Minneapolis is the latest target of the Trump administration - willing to harm Americans in service of its perceived political gain,” the city office stated, adding that officials were assessing the impact of what they described as a “blanket cut.”

Minnesota becomes testing ground for crackdown

The funding freeze aligned with a broader federal push. President Trump had publicly labeled Minnesota as a “hub of fraudulent money laundering activity,” and cabinet agencies were moving in concert.

On Friday, Treasury Secretary Scott Bessent traveled to the state and announced the formation of a new IRS task force focused on fraud in social services.

“Minnesota is going to be the protocols, procedures and investigative techniques and collaboration,” Bessent said. “Minnesota is going to be the genesis for a national rollout.”

Federal officials also confirmed to CBS News that the Justice Department was dispatching a team of prosecutors to investigate state-administered programs directly.

Political fallout already reshaping state leadership

The pressure had already altered Minnesota’s political landscape.

On Monday, Governor Walz announced that he would not seek reelection in 2026, a decision made amid intensifying criticism over oversight failures.

Walz defended his record, saying that his administration “spent years cracking down on fraudsters.” He accused the White House of using the scandal to justify cuts to aid programs.

“The president is politicizing this issue to defund programs that help Minnesotans,” Walz said.