EXCLUSIVE — Americans are now acutely aware that welfare fraud is rampant in Minnesota. But the blatant theft from taxpayers is so widespread that there’s an entire category of fraud yet to be uncovered. It’s all but certain that local retailers are trafficking in food stamps, too. But this isn’t just a Minnesota scandal.
In a new report, we estimate that thieves are stealing at least $2 billion per year nationwide. Thankfully, the Trump administration is starting to crack down with a new investigation.
To date, billions of dollars in fraud have been uncovered in Minnesota — across Medicaid, child nutrition, housing, and child care. But from the moment that scandal broke, we started looking into a different kind of theft: “food stamp retailer fraud.” Under this scheme, retailers accept food stamps for products that aren’t eligible for the program, including liquor or cigarettes. But they record it as a purchase that qualifies — say, vegetables or meat. The retailers pocket the taxpayer money, while consumers get something they couldn’t otherwise buy. As far as fraud goes, it’s quick and easy and profitable.
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The Department of Agriculture, which runs the food stamp program, has long known this is a major problem. In 2021, the Biden administration estimated that 1 in 7 retailers is involved in trafficking, including 25% of small grocery stores and 21% of convenience stores accepting food stamps. But rather than stop this abuse of taxpayers, Democratic administrations have ignored and encouraged it. Most recently, the Biden administration supercharged food stamp spending by more than 50%, creating huge new opportunities for theft. Based on our analysis, all the signs in Minnesota point to significant abuse of taxpayers.
We focused our analysis on the epicenter of the broader fraud story: The area around the “Little Somalia” apartment complex near downtown Minneapolis. All told, we identified 44 authorized food stamp retailers within a 2-mile radius. A shocking 24 of them have operated without a business license in recent years. Four have never applied for a license at all. This raises serious questions about whether they’re following the law on food stamps, too.
Halal Mini Market is a case in point. The state government has dissolved its corporate charter no fewer than six times, and in 2015, the federal government charged it with food stamp trafficking. Yet the Obama administration, for unknown reasons, later restored its ability to accept food stamps. At the time, the market had no active corporate status with the state, so it was legally banned from doing business. The Obama administration let it accept food stamps anyway. It continues to do so to this day.
Seward Market and Halal Meat is also very concerning. The federal government approved it for food stamps in 2004, yet since then, the company’s corporate status has been terminated by Minnesota seven times. At one point, the company was legally banned from doing business for 27 months, but it continued to accept food stamps during that time. Its owner has also gone to trial over hundreds of thousands of dollars in unreported income. No less an authority than the House oversight committee in Congress has flagged the business for further investigation.
Retailers that fail to follow such basic laws as maintaining their licenses are obviously at higher risk of violating the law on food stamps, too. Concern is especially warranted in Minnesota, where fraudsters are clearly committed to bilking taxpayers however they can.
That’s why we took our findings to the USDA in January. It has given us approval to announce publicly that it’s investigating food stamp retailer fraud in Minneapolis.
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The Trump administration sees what we see: A welfare program that’s riddled with fraud and a danger to taxpayers. The administration deserves praise for investigating abuse by food stamp retailers, even as it indicts and imprisons thieves who’ve stolen from other welfare programs. But it’s also telling that this food stamp fraud has existed for so long without much public awareness, let alone federal intervention.
It’s bad enough that this fraud is so rampant. It’s even worse that such massive theft pales in comparison to all the other fraud in Minnesota and across America.
Kristi Stahr is a senior data analyst at the Foundation for Government Accountability, where Ryan Young is a legal fellow.