House Committee Calls on IRS to Crack Down on NGOs Funding Terrorists

In Minnesota, federal funds earmarked for hungry children and disabled seniors have likely been diverted to extremist groups, according to Scott Bessent.

House Committee on Ways and Means Chairman Rep. Jason Smith (R-Mo.) speaks during a hearing on Capitol Hill in Washington on May 13, 2025. Madalina Vasiliu/The Epoch Times

The IRS must overhaul its oversight of the nonprofit sector amid the fraud scandal in Minnesota that has led to taxpayer funds being funneled for terror activities, Republicans on the House Ways and Means Committee said in a Jan. 20 statement.

The lawmakers sent a letter to IRS Acting Commissioner Scott Bessent and CEO Frank Bisignano on Tuesday, raising concerns about “significant fraud, waste, and abuse” of taxpayer dollars.

“As you are aware, investigative journalists recently uncovered a network of fraud involving Minnesota’s Medicaid Housing Stabilization Services program and non-profit organizations in the state during the COVID-19 pandemic—a scheme that not only seemingly funneled millions, if not billions, of taxpayer dollars to the Al-Shabaab terrorist group, but has also resulted in the prosecutions of nearly 80 individuals by the Department of Justice (‘DOJ’) to date,” they wrote.

“This is unacceptable.”

Al-Shabaab is a militant wing of the Somali Council of Islamic Courts and is responsible for the assassination of several peace activists, journalists, international aid workers, and civil society personalities, according to the National Counterterrorism Center. It was designated a foreign terrorist organization in 2008 by the State Department.

During a press conference in Minneapolis on Jan. 9, Bessent said the U.S. Treasury had launched an enforcement campaign targeting Somali-linked fraud networks in Minnesota. According to Bessent, billions of dollars intended for disabled seniors, hungry children, and families with special-needs children were diverted, with some of the funds likely diverted to extremist groups such as Al-Shabaab.

“We have traced where the money went, and we are examining it,” he said, adding that the findings of the probe were “highly concerning.”

The GOP letter highlighted the issue of a Minnesota nonprofit, Feeding Our Future, that was launched to serve food to children from low-income groups. However, its promoters used more than $250 million to buy jewelry, real estate, and luxury goods.

Since 2022, dozens of people linked to Feeding Our Future have been convicted. During a Jan. 7 hearing, Minnesota state Rep. Kristin Robbins said the total fraud in this case had hit about $310 million. In addition, investigators are probing 14 Minnesota Medicaid programs, suspecting $9 billion or more in fraudulent payments.

This potential terror-financing scheme by a tax-exempt organization “calls into question the current safeguards in place to protect taxpayer dollars,” the letter said. “The concern over tax-exempt organizations funneling taxpayer dollars to designated terrorist organizations and other illicit purposes cannot be understated.”

Lawmakers called on the IRS to hold tax-exempt organizations accountable and ensure the funds do not end up in the hands of terror outfits.

Crackdown in Minnesota

Meanwhile, Minnesota is seeing stringent federal immigration enforcement activities. Homeland Security Secretary Kristi Noem recently said that more than 10,000 illegal immigrants have been arrested in the state. The DOJ has started issuing subpoenas to top officials in Minnesota.

Responding to reports of the DOJ investigation, Minnesota Gov. Tim Walz’s office said on Jan. 17 that they have not received any notice of a probe.

“Weaponizing the justice system and threatening political opponents is a dangerous, authoritarian tactic,” Walz said.

Minneapolis Mayor Jacob Frey also responded to reports of him being subpoenaed in a federal probe.

“When the federal gov weaponizes its power to intimidate local leaders for doing their jobs, every American should be concerned,” Frey said in a Jan. 21 post on X.

“We shouldn’t live in a country where federal law enforcement is used to play politics or crack down on local voices they disagree with.”

Amid reports of fraud perpetrated by Somalis in Minnesota, including convictions of naturalized citizens, Sen. Eric Schmitt (R-Mo.) has introduced the Stop Citizenship Abuse and Misrepresentation Act, his office said in a Jan. 19 statement.

The bill seeks to expand the denaturalization process for individuals who have committed fraud or serious felonies or joined up with terror outfits, it said.

“The rampant fraud uncovered in Minnesota must be a wakeup call,” Schmitt said.

“People who commit felony fraud, serious felonies, or join terrorist organizations like drug cartels shortly after taking their citizenship oaths fail to uphold the basic standards of citizenship. They must be denaturalized because they have proven they never met the requirements for the great honor of American citizenship in the first place.”