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Loeffler said the Walz administration bears responsibility for allowing this system to metastasize, dismissing early warnings from legislators and whistleblowers and labeling oversight efforts as racially insensitive. She blamed the governor for making Minnesota the epicenter of one of the largest fraud scandals of the COVID-19 era, describing the state’s policies as deliberately designed to pump out welfare funding without oversight or accountability.
Federal scrutiny has expanded beyond the SBA. The USDA and Treasury Department are now investigating misuse of SNAP and other benefit programs, while the Department of Health and Human Services has frozen childcare payments to Minnesota amid reports that taxpayer dollars were funding daycares that appeared vacant, according to independent reporting.
The scale of the abuse has shocked even seasoned officials. Loeffler described the volume and concentration of fraud as matched only by the administration’s inadequate response, noting that criminal networks exploited the state’s generous welfare and pandemic programs while oversight was ignored.
She warned that taxpayers would no longer foot the bill for fraudulent schemes and that federal resources would be redirected to law-abiding small business owners. “SBA’s responsibility is to taxpayers and small business owners, not to criminals or the politicians who enable them,” Loeffler said.
Critics of the Walz administration cite repeated warnings about potential abuse during the pandemic, including whistleblowers and legislators flagging irregularities in funding disbursements, which were largely ignored. Federal officials now emphasize that Minnesota’s problems were not isolated incidents but part of a larger pattern of endemic fraud facilitated by lax state oversight.
