Episode 920: Minnesota’s Billion-Dollar Fraud Scheme

Summary

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Podcast Summary: Newt’s World – Episode 920

Minnesota’s Billion-Dollar Fraud Scheme
Host: Newt Gingrich
Guest: Ryan Thorpe (Investigative Reporter, Manhattan Institute)
Date: December 11, 2025

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Episode Overview

This episode explores the intricate details of a massive fraud scandal involving nearly a billion dollars lost through Minnesota’s social services programs. Newt Gingrich interviews investigative reporter Ryan Thorpe, who co-authored a major exposé on the topic, illuminating what may be one of the largest corruption stories in recent American history. The conversation focuses on how the schemes operated, their political and social implications, the failure of oversight, and the hard questions they raise for state and federal authorities.

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Key Discussion Points & Insights

1. Unfolding the Minnesota Fraud Scheme

• Scope and Operation:

  • The fraud began with "Feeding Our Future," a nonprofit meant to feed children during COVID-19 school shutdowns. The organization partnered with local businesses to set up feeding sites, but:

    “The only problem was kids weren’t actually being fed by these sites, but the state was being billed as if they were… owners… reimbursed… were actually spending the money on luxury cars, houses and real estate projects overseas.”
    — Newt Gingrich [04:16]

  • Additional programs involved included Housing Stabilization Services and a therapy program for autistic children, all exploited for fraudulent billing.
  • The schemes were so extensive that Minnesota paused 14 other social service programs to audit for fraud.

• Scale: The amount stolen is nearing $1 billion just for Minneapolis.

  “…You would think at a billion, it should be nationwide, but it’s not.” — Newt Gingrich [05:18]

2. How the Fraud Was Exposed

• Investigative Process:

  • Thorpe and his co-author Chris Rufo started with DOJ press releases about indictments, building timelines and uncovering patterns.

  • “I simply went back over the past five years… and pretty quickly I was able to establish a timeline in terms of charges…”
    — Ryan Thorpe [07:10]

  • Major media outlets and state officials were slow or reluctant to engage, often sidestepping the issue due to sensitive community ties.

• Whistleblowers & Law Enforcement:

  • Aggressive efforts by the U.S. Attorney’s Office were essential to uncovering the fraud—without which “it would have been much easier for the establishment to ignore this.” — Ryan Thorpe [08:13]

3. Community, Politics, and Media Blind Spots

• Concentration in Somali Community:

  • The fraud rings were heavily concentrated in the state's Somali community.
  • Thorpe points out the near-taboo in discussing this aspect:

    “…this was an inconvenient fact that no one was either able or willing to confront.” — Ryan Thorpe [06:23]

• Political Shielding & Racial Accusations:

  • Allegations of racism and lawsuits were used as a shield when investigations began.

    “And even now with the publication of our piece in City Journal, we’ve gotten attacks by people saying, well, this is racism... If it’s true, then we need to confront the facts as they are…” — Ryan Thorpe [09:16]

• Political Connections:

  • Key Somali figures in city and state politics had ties to those indicted.

  • “…several individuals who were involved and indicted had donated to Ilhan Omar or appeared with her publicly… they really have established significant political connections…” — Ryan Thorpe [24:26]

4. Scheme Details and Notable Examples

• Feeding Our Future:

  • Over 250 nutrition sites established; 78 people charged, 50 convicted or pleaded guilty; “sophisticated coordinated network” extracting millions via shell companies and doctored paperwork. — [10:11]

• Autism Therapy Scam:

  • Providers recruited children from the Somali community, falsely certified them for treatment, and paid parents kickbacks.

  • “…if the kickbacks weren’t high enough, they said, ‘there’s so many fraudulent autism providers in the smaller community, if you don’t pay me more, I’m going to pull my kid from your fake program, take them over to another fraudulent fake program, and they’ll give me more money.’” — Ryan Thorpe [11:29]

• Housing Stabilization Services:

  • Program structure included “loose criteria,” low barriers for reimbursements, and minimal oversight.

  • “They specifically designed it to have very loose criteria… minimal requirements in terms of how they get money released to them…” — Ryan Thorpe [21:21]

5. Systemic & National Implications

• Comparisons to Other Public Sector Abuse:

  • Newt draws parallels to school spending in Baltimore and identity theft fraud in California, suggesting a broader systemic problem nationwide:

    “…bureaucratic big government socialism simply has a massive propensity towards corruption…” — Newt Gingrich [33:45]

  • On the appearance-vs-reality of government services:

    “…hungry children aren’t actually getting fed. But look, on paper, it’s thousands that are getting fed, and we’re spending all this money, so of course we’re accomplishing something.” — Ryan Thorpe [35:45]

• Barriers to Auditing & Money Tracking:

  • The use of informal hawala money transfer networks means much of the cash flow to Somalia—and in some cases, to the terrorist group Al Shabaab—cannot be properly traced by investigators.

    “…these are, in some sense, you know, dark money networks. It becomes very difficult to trace exactly where these funds are going.” — Ryan Thorpe [32:23]

• Failures of State Oversight:

  • Hundreds of state employees reportedly tried to blow the whistle but faced retaliation or dismissal.

  • “…what they allege is that we’ve been trying to clean up the fraud and to expose the fraud internally… but political officials have been turning a blind eye and also retaliating against them.” — Ryan Thorpe [18:23]

6. Lessons, Policy Implications & The Path Forward

• Need for Policy Reform:

  • More than just legal prosecution is needed; policy changes and better controls are essential to stem repeat abuse.

    “There is so much fraud that… there needs to be change on the policy side… not just expect law enforcement to clean it all up after the fact.” — Ryan Thorpe [20:13]

• Broader Investigations Warranted:

  • Minnesota may be just the tip of the iceberg; similar schemes could be present in other states and programs.

    “It’s highly unlikely that’s the only state in the union that is dealing with a problem like this…” — Ryan Thorpe [36:53]

• Call for Federal Oversight & Analysis:

  • Gingrich suggests a nationwide forensic audit of federal funding in social programs.

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Notable Quotes & Memorable Moments

• On systemic failure:

  “If someone is motivated and has a little bit of know-how, it doesn’t appear to be that difficult to walk away with hundreds of millions of stolen tax dollars because it keeps cropping up in that state.”
  — Ryan Thorpe [12:42]

• On media and political avoidance:

  “…the mainstream press corps was just simply… turning a blind eye to this massive issue.”
  — Ryan Thorpe [08:23]

• On consequences for the vulnerable:

  “When you steal money for autism services, that means actual autistic children are not getting support.”
  — Ryan Thorpe [23:24]

• Policy challenge:

  “We do need to kind of go back to the drawing board from a policy standpoint and try to come up with a solution of that nature. Because… our hands are somewhat tied on this issue.”
  — Ryan Thorpe [33:00]

• The fraud’s broader impact:

  “Essentially, you have three things. You have money being taken away from the taxpayers, children and other people who should be getting money not getting it, and the growth of a sort of gray economy of people who are really good at stealing.”
  — Newt Gingrich [23:44]

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Timestamps for Key Segments

| Timestamp | Segment / Topic | |-------------|-----------------------------------------------------------------------------| | 02:41 | Newt introduces the Minnesota fraud story and guest Ryan Thorpe | | 04:00–05:55 | Overview of the fraud’s origin & scope (Feeding Our Future, housing, autism) | | 06:55–08:57 | How Thorpe and Rufo uncovered the story; lack of mainstream coverage | | 09:16–10:45 | Use of racism allegations to deflect investigations; scope of convictions | | 10:45–11:56 | Details of competitive autism fraud scheme | | 12:42 | National comparison: California and general underestimation of fraud | | 16:34–17:56 | Explosive growth of fraudulent programs & COVID-19’s effect | | 18:23–19:58 | Whistleblowers and retaliation | | 20:13–22:56 | Policy leadership & structural vulnerabilities to fraud | | 24:26–26:03 | Somali community’s demographic/political impact in Minnesota | | 29:13–32:48 | Discussion of link to money transfers and terrorism (Al Shabaab) | | 33:45–36:19 | Parallels to national corruption in education and other sectors | | 36:53–39:18 | Thorpe on later steps: more unanswered questions and national pattern |

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Conclusion – Final Remarks

• Thorpe and Rufo’s reporting has brought national attention to one of the largest fraud cases in American social services history—one which exposes weaknesses in oversight, whistleblower protection, and community integration policies.
• Gingrich highlights the urgent need for a broad, forensic audit of government spending and the development of new laws to address money tracking via informal networks.
• The conversation ends with both men acknowledging the importance of serious, transparent investigative reporting in preventing public sector corruption.

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For more details:
Read Thorpe and Rufo’s article, “The Largest Funder of Al Shabaab is the Minnesota Taxpayer” at City Journal (city-journal.org).

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Transcript

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[Newt Gingrich]

On this episode of newtsworld we're going to discuss the details of the billion dollar fraud scheme in the state of Minnesota and how it all happened. How could one state lose this much money through social service programs while going unchecked? My guest today has written about Minnesota's fraud for the Manhattan Institute City Journal in an article co authored with Christopher Rufo, quote, the largest funder of Al Shabaab is the Minnesota Taxpayer, which is available [e-mail] I am really pleased to welcome my guest, Ryan Thorpe. He is an investigative reporter at the Manhattan Institute.

Ryan, welcome and thank you for joining me on NewtsWorld.

[Ryan Thorpe]

It's great to be here.

[Newt Gingrich]

And then let me say to everybody that I think the paper that Ryan and Chris wrote is astonishing. And as you listen to this podcast, you'll understand what an extraordinary story they've helped put together and how truly this is a wake up call for the United States at a lot of different levels. But let me give you a brief overview of the fraud scheme because frankly, it's sufficiently complicated. I had to go back and reread various things several times to begin to realize the real depth of it. The fraud scheme began with a Minnesota based nonprofit organization called Feeding Our Future. Their goal was to help feed children during the COVID pandemic shutdowns, when food insecure children were not going to school. The result was they set up several feeding sites by partnering with local businesses. The only problem was kids weren't actually being fed by these sites, but the state was being billed as if they were. And what's worse, the owners of the businesses reimbursed for Wundfeuss for feeding children were actually spending the money on luxury cars, houses and real estate projects overseas. Then a second program emerged, the Housing Stabilization Services. Hundreds of providers were reimbursed for assistance they claimed to have provided to people at risk for homelessness, though federal authorities said those services were just not provided. In yet another Minnesota program meant to provide therapy for autistic children, prosecutors said providers recruited children Minneapolis Somali community falsely certifying them as qualifying for autism treatment and then paying their parents cash payments as kickbacks for their cooperation. The amount of money stolen is nearing $1 billion. Remember, this is just for the city of Minneapolis. You would think at a billion it should be nationwide, but it's not. And Minnesota has now announced that they're putting a pause on 14 other social services programs to evaluate them for fraud. So now, Ryan, given that background, first of all, what was your reaction when you first encountered this?

[Ryan Thorpe]

It was astonishing. We had been talking about doing some reporting on waste, fraud and abuse in government programs kind of writ large. We clued into Minnesota as perhaps being a good location for some on the ground reporting, given some of the indictments that we were seeing coming down. But when I really dove into this and started to piece together the scope of the fraud in the state of Minnesota, it was absolutely astonishing. And very quickly the other thing that became apparent to me was that when you're looking at these fraud rings, they have been heavily concentrated in the state's Somali community. But reviewing kind of mainstream media coverage or even statements from progressive politicians, it just seemed like this was an inconvenient fact that no one was either able or willing to confront. And so those two elements of this piece struck me right away and signaled to me that this was going to be fertile ground for some investigative reporter.

[Newt Gingrich]

How did you and Chris first discover the story?

[Ryan Thorpe]

I began by just going through press releases from the U.S. attorney's office. I been developing some sources in the state. People had indicated to me that this was something that would be worthwhile to look into. I was told that state level officials had really dragged their heels in confronting the program, so that wouldn't be the place to begin. But I simply went back over like the past five years, and I read through every press release that had been issued by the U.S. attorney's office announcing indictments. And pretty quickly I was able to establish a timeline in terms of charges that have come down and allegations that the U.S. attorney's office has made against members of the Somali community. And then from after that, it really focused on developing additional sources. So we started cold calling people associated with counterterrorism, with law enforcement. And we were able to develop a number of people who were willing to speak to us, who had looked into this, had a certain area of expertise on this topic, and were willing to feed us some information when you began.

[Newt Gingrich]

Digging into it, because you did have a U.S. attorney who was actually being pretty aggressive. The gap between the public coverage and what he was uncovering, it seems to me, might be as big as anything I've ever seen. Do you think if he had not been so aggressive that they would never have found any of this?

[Ryan Thorpe]

It's certainly quite possible. So one thing I would say is that there have been people, and I would say people kind of more associated with the political right in the state of Minnesota who have been trying to do good work on this and have been doing good work and trying to raise alarm bells, but it simply wasn't punching through into kind of a more mainstream conversation for a number of different reasons. But given the fact that the progressive political establishment I would say the mainstream press corps was just simply, from what I can tell, turning a blind eye to this massive issue. If it wasn't for the work of the U.S. attorney's office, breaking up these fraud rings, charging people, and also coming out at some press conferences with some really strong statements, I think it would have been much easier for the establishment to ignore this.

[Newt Gingrich]

And as I understand it, even as the facts began to come out about how much corruption is involved, you have people like Congresswoman Ilhan Omar, who was a Somali born congressman, aggressively attacking the people who are trying to get to the truth.

[Ryan Thorpe]

It's 100% right. I would say it's a pattern that we've seen for a number of years now. So off the top, you had mentioned the Feeding our Future scandal. Well, when alarm bells were going off about that particular fraud ring, the leaders responded by filing litigation against the state government and alleging racial discrimination. And so that is something that we've seen here as a shield on multiple occasions. And even now with the publication of our piece in City Journal, we've gotten attacks by people saying, well, this is racism. It's like, well, first of all, the first question is whether or not it's true. And if it's true, then we need to confront the facts as they are and begin to figure out what to do about it. We continue to see that defense here.

[Newt Gingrich]

In this first phase, feeding our future. If I understand it, 78 people have been charged with fraud. 50 of them have already been convicted.

[Ryan Thorpe]

Yes. Many have pled guilty because the evidence is overwhelming.

[Newt Gingrich]

And they had apparently set up over 250 nutrition sites within several dozen shell companies. This was a real project.

[Ryan Thorpe]

It was. This was a sophisticated coordinated network in Minneapolis in the state of Minnesota. It was heavily concentrated in the Somali community. And look, they figured out we can get our hands on millions of tax dollars if we simply doctor some paperwork here. And if anyone starts asking questions, we're going to accuse them of being bigots. And we're also going to flex our political connections to various Democratic officials in the state.

[Newt Gingrich]

Frankly, the one I found the most fascinating was the autism program where they were actually paying parents a monthly fee for the parent to claim that their child was autistic when they're not. That's a pretty amazing, deliberate effort to rip off the government.

[Ryan Thorpe]

It is. The other thing that I find quite noteworthy about that particular case is we've seen some people say after this has been exposed, well, it's a few bad apples. Well, this autism fraud case, one indictment's come down. The U.S. attorney's office says we're scratching the surface that more charges are coming. And it shows that this was a network that extended out into the wider Somali community. They needed parents on board with this scheme. And parents who, you know, may not have been ringleaders themselves were receiving kickbacks. And prosecutors alleged that the parents, if the kickbacks weren't high enough, they said, well, there's so many fraudulent autism providers in the smaller community, if you don't pay me more, I'm going to pull my kid from your fake program, take them over to another fraudulent fake program, and they'll give me more money. So they were using their leverage in order to get a greater share of the stolen tax dollars.

[Newt Gingrich]

So you had a competitive fraud market.

[Ryan Thorpe]

Yes, yes, that's exactly right.

[Newt Gingrich]

You know, it's one thing when you think about a couple of people who happen to be doing fraud, but this is a real machine. Yes, there was a period where during COVID where there's I think $2 billion stolen by identity theft by California criminals in prison using the state of California's computer programs to go out and file false claims and then have friends on the outside picking up the checks. And I think it came to $2 billion. It seems to me people really underestimate how much fraud is going on in the United States in general.

[Ryan Thorpe]

I think that's true. The situation in Minnesota seems quite bad. Where it stacks up nationally. Well, that's very difficult to say. The reality is we don't even know the true dollar figure in the state of Minnesota. From what I'm hearing, it's very safe to say billions of dollars, but final price tag Unsure of at this point. But what these schemes do reveal is that if someone is motivated and has a little bit of know how, it doesn't appear to be that difficult to walk away with hundreds of millions of stolen tax dollars because it keeps cropping up in that state.

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[Ryan Thorpe]

Nope.

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[Newt Gingrich]

Well, if you look at it, the Feed our future program jumped from 3.4 million in federal money in 2019 to 200 million two years later, in 2021 now, you would have thought somebody would have looked and said, with that scale of growth, something's happening that we need to really dig into. But apparently they just ignored it.

[Ryan Thorpe]

I think that's spot on. I think they did look the other way. And I think that's a consistent pattern we see here in regards to all of these fraud scams. You see expenditures skyrocket over a very short number of years, which should be setting off, you know, major alarm bells for the people who are responsible for keeping an eye on the public purse and overseeing and administering the these welfare programs. But they did not crack down on this. It was allowed to fester. I also think you mentioned the COVID 19. I think that's a very important moment here. I think that these issues predate Covid in the state of Minnesota, but we're allowed to fester. And then you get Covid, you have more money going out the door than ever. You have progressive politicians saying, well, this is an emergency. We can't worry about checks and balances right now. We simply need to get money into the hands of people who need it. And so because this problem had been allowed to fester before then, it just accelerates during the pandemic.

[Newt Gingrich]

Ryan, isn't it true that there have been a very large number of potential whistleblowers who have complained publicly that the Minnesota government, in fact, knew about this and did nothing about it, but that, in fact, it clearly was there and it clearly was being ignored or covered up by Tim Waltz's administration? Hasn't that been an allegation by people who actually are in the bureaucracy?

[Ryan Thorpe]

Yes. So there is a significant minority, I would say we're talking hundreds of employees within DHS in the state of Minnesota who have been trying to raise concerns for a number of years now. They've taken to various social media platforms to publish allegations against the government. And what they allege is that we've been trying to clean up the fraud and to expose the fraud internally within the state government for a very long time, but that political officials have been turning a blind eye and also retaliating against them. And then one other thing that's somewhat related that comes to mind is that during the Feeding Our Future scam, there were concerns raised among bureaucrats by just how rapidly this nonprofit was expanding, both in terms of the sites that it was administering and the total amount of taxpayer dollars it was therefore getting access to. And the ringleaders of this fraud ring, you know, they made public allegations of racism, they coordinated protests they also filed a lawsuit alleging racial discrimination against the state government. And subsequently, we've had an oversight report that was actually published not too long ago that looked into that and was able to get access to, you know, internal correspondence. And it proved. But the response from the state government, given the kind of social context they were in at that time, their response was impacted by worries about being seen as racist if they were to crack down on this fraud. Given the identities and nationalities of the perpetrators.

[Newt Gingrich]

How much of this, sooner or later comes to Governor Tim Waltz's administration? How much responsibility ultimately does his administration bear for allowing a billion dollars in fraud?

[Ryan Thorpe]

Well, I mean, he's the governor. Most people who are in that position would probably admit in their honest moments, like the buck stops with me, they are the people who are overseeing these programs. This has all happened on their watch. And I've spoken to a number of counterterrorism law enforcement folks who say, look, there is a law enforcement solution here. We need to keep doing investigations, we need to keep bringing charges. But at the end of the day, there is so much fraud that, like, there needs to be a change on the policy side of things. We have to stem the tide of this and not just expect law enforcement to clean it all up after the fact. And so if there's going to be a significant change on the policy side, I think that comes from political change, which means Minnesotans are going to have to decide at the ballot box whether or not they're okay with what's been going on, because they should be absolutely outraged at the extent to which they've been taken advantage of.

[Newt Gingrich]

As an example of the systemic problem, you described the Housing Stabilization Services program as, quote, almost designed to facilitate fraud. What were the things in the program structure that made it so vulnerable to abuse?

[Ryan Thorpe]

They specifically designed it to have very loose criteria in terms of people that it would apply to, and they wanted, again, specifically low barriers for reimbursements. So when you write the rules in such a way as you're trying to make this program accessible to as wide of a number of people as possible, and you also are putting in very minimal requirements in terms of how they get money released to them, and then you launch this program in the context of which you already know you have a significant fraud problem in the state, it is unsurprising that pretty quickly costs skyrocket, the program spirals out of control, U.S. attorney comes out and says, I think there's more fraud going on here than there is legitimate services, and then the government has to come in and shut the whole thing down.

[Newt Gingrich]

To what extent are the same people involved in all three?

[Ryan Thorpe]

So the individual charged in the autism fraud, she was also indicted in the Feeding our future scam. These are overlapping networks is how I've heard it described. So there are people who have gotten in on multiple of these Griffs. Now, the other thing I think that's important to note is that these are the three major fraud rings exposed to date. From what I'm hearing, this is the tip of the iceberg. They have had a lack of resources. Even though the U.S. attorney's office has been doing really great work, I don't think that they've had the resources they need in order to get to the bottom of this. So I think we'll see additional connections to grow as more prosecutions come down.

[Newt Gingrich]

When you start talking about a billion dollars, it's sort of like this gigantic ball. And we're only now on the surface of the ball. We don't fully understand the scale and just the handling of a billion dollars. There have to be so many different people who have been violating the law and methodically seeking to cheat the taxpayers and, frankly, to cheat the poor. I mean, this is money that was supposed to go directly to the poor.

[Ryan Thorpe]

That's absolutely right. Say whether or not you support in terms of welfare programs should be. You know, we can have a policy debate about that. But regardless, these programs were in some sense designed to try and help people who had some serious needs. And when you steal money for autism services, that means actual autistic children are not getting support.

[Newt Gingrich]

Essentially, you have three things. You have money being taken away from the taxpayers, children and other people who should be getting money, not getting it, and the growth of a sort of gray economy of people who are really good at stealing.

[Ryan Thorpe]

I think that's absolutely right.

[Newt Gingrich]

It has a little of the flavor of the Mafia in Sicily, where you begin to have a culture of criminality.

[Ryan Thorpe]

Certainly. Yeah.

[Newt Gingrich]

I think one of the sub stories here is the number of people from Somalia who now live in Minneapolis and the role they play in politics. Could you describe their impact on the politics of the state of Minnesota?

[Ryan Thorpe]

Absolutely. So Minnesota is home to the largest concentration of Somalis outside of Somalia itself. They began arriving in the state in large numbers in the 1990s. At this point, you know, I've seen estimates kind of on the low end, 80,000, some people indicating perhaps upward of 100,000. But this is a very sizable voting bloc in the state. And the other thing I would say is that they've really established some strong political connections in the state. So even looking at the Feeding Our Future scam in particular, several individuals who were involved and indicted had donated to Ilhan Omar or appeared with her publicly. Omar's deputy district director had advocated on behalf of the fraudering Omar Fatah, who's a former state senator, recently ran for mayor of Minneapolis and finished second. He had gotten involved with lobbying on behalf of the program, and one of the indicted was a senior aide to Minneapolis Mayor Jacob Fry. And so what that demonstrates is they really have established significant political connections and sources that I've spoken to in the state have indicated that, especially if you're a Democrat alienating Somali community, you run that risk at your own peril because they are a significant voting bloc in Minneapolis and in order to carry the state, you have to do well in the capital city.

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[Newt Gingrich]

I noticed that four Republican congressmen in the state had written a pretty strong letter. Tom Emmer, of course, is the Republican Whip, which is the third highest position in the House on the Republican side. And they say in their letter to the U.S. attorney, quote, as you know, officials estimate a billion dollars have been stolen under the Waltz administration since 2020. We have written the Waltz administration on numerous occasions inquiring about the Feeding Our Future fraud scheme as well as fraud in the Housing Stabilization Services Program, Child Care Assistance Program, and Minnesota's early intensive developmental and behavioral intervention program with no avail. Recently it has come to our attention, quote, millions of dollars in stolen funds have been sent back to Somalia where they ultimately landed in the hands of the terror group Al Shabaab. We are deeply disturbed by these reports. What is your sense and what do your sources tell you about the degree to which terrorist groups in Somalia were actually able to to attract and to use American taxpayer money?

[Ryan Thorpe]

Yes. So I want to be clear here on the claim that we were making in the piece because some people have misinterpreted it. Our argument is that after we realize the scope of the fraud in the state of Minnesota, pretty quickly, one of the first questions you'll have is like, okay, well where's the money going? And it can be Tracked to various sources. Sometimes people are enriching themselves or, you know, as mentioned, using it to purchase luxury vehicles, real estate, things of that nature. Significant funds are also being sent back to Somalia to support family members. Minnesota is the largest concentration of Somalis outside of Somalia itself, and that is a diaspora that sends significant funds back home. We develop numerous law enforcement and counterterrorism sources. One individual in particular had served on the JTTF in Minneapolis for many years. And what these sources confirmed to us was that as this money is getting sent back to Somalia, it is primarily going through hawala networks, which are informal money transfer networks that are prominent in Islamic countries, in countries that don't have traditional banking sectors like we would see here in the West. And that because Al Shabaab, the Al Qaeda affiliate, controls significant chunks of Somalia, when money is ending up in its territory, when it's going through money transfer networks in its territory, it is absolutely getting cut of that money. So our claim is not that these fraud rings were specifically ripping off American taxpayers in order to fundraise for Al Shabaab, but that inadvertently, tons of this money has ended up in their coffers, which is obviously a serious problem, and it has national security implications as well.

[Newt Gingrich]

Don't these historically traditional, but very, very private banking networks essentially make it impossible to apply the normal patterns we use with traditional banking to try to trace money?

[Ryan Thorpe]

That's absolutely correct. And the investigators that we've spoken to have indicated to us that, one, this is something that we know is going on, but, two, in terms of bringing a criminal indictment in regards to this behavior, it is extremely difficult. And so these are, in some sense, you know, dark money networks. It becomes very difficult to trace exactly where these funds are going.

[Newt Gingrich]

Well, in that sense, do we need a new law that applies the same money tracking capabilities to these networks that we apply to American banks?

[Ryan Thorpe]

I think that this is yet another problem that this story exposes, where we do need to kind of go back to the drawing board from a policy standpoint and try to come up with a solution of that nature. Because yet again, this is a situation where, at least from the criminal investigators that I'm speaking to, they're saying, you know, our hands are somewhat tied on this issue.

[Newt Gingrich]

And I think that's because we currently don't have any law which requires these groups to conform to any kind of reporting. They're historically, by definition, secret. It becomes a real cultural fight to suggest that we have an overriding interest. I was fascinated by the story in part because I'm working on a general proposition.

That bureaucratic big government socialism simply has a massive propensity towards corruption, whether it's in Chicago, Minneapolis, New York, the entire emergence for a while of the green industries where the US Government was passing out money to people who would then magically go bankrupt having got the money. One of the books I've been really touting is by Chris Pabst called the Failure Factories, which is a study of the Baltimore city schools in which at least 40% of the students cannot read or write when they graduate. It's the third most expensive school system in the country. When I read it, it hit me that in a very real sense, if you have a large school system certifying that, for example, a student has been in class when in fact they've never been in class, they had some students who they interviewed who had never, ever gone to class but were counted on the rolls for the purpose of getting money, that's fraud. It's really parallel to the Minneapolis situation. It turns out we have a really, really bright young assistant named Derek. And Derek has taken on Chris's assignment and has done an initial, very surface level look at New York, Chicago, Los Angeles, Indianapolis, Minneapolis, and St. Paul. And again and again, you'll have very expensive bureaucracies that are simply not delivering. And their conclusion, this was part of what Pabst finally decided after eight years of work, that the systems have concluded they can't actually teach, but they can lie about it. And so if they methodically lie about it, they'll get paid as though they were teaching.

[Ryan Thorpe]

Absolutely. And you're right to point out the parallels. In Minnesota, I mean, hungry children aren't actually getting fed. But look, on paper, you know, it's thousands that are getting fed, and we're spending all this money, so of course we're accomplishing something. Same with autism. Same with the Housing Stabilization Services Program, which was aiming to get the elderly, the mentally ill, people with addictions into housing. Well, none of this was happening, but on paper, it seemed like everything was running smoothly. And that's similar to kind of what you're pointing out in regards to Baltimore there. Well, on paper, all these children are getting educated.

[Newt Gingrich]

I think that the Office of Management Budget should be directing all of the federal agencies that are involved in giving out money to do this kind of forensic analysis to decide whether or not, in fact, we're paying for an amazing amount of dishonesty and theft and corruption. I'm curious, where do you go from here? I mean, you've sort of scratched the surface of what may be the biggest corruption and fraud story in American history. And I know this is part of your general interest nationally in the topic. Where do you guys go from here?

[Ryan Thorpe]

I think that there are still some unanswered questions on the ground in Minnesota. You know, I had done some on the ground reporting in the state for this story. Perhaps I will be back at some point in the near future. I mean, in particular, I think the main kind of unanswered question in Minnesota at this point is how was this allowed to go on for so long? We have some idea, we have some, some insight into that. But I do think that there are some serious unanswered questions there and there needs to be a real accounting of when were the alarm bells first raised? When did various government officials become aware that they had a problem? What steps were taken to address it? So I think that there's more to push on there. I also think that Minnesota is, it's highly unlikely that's the only state in the union that is dealing with a problem like this. And so I would be interested in doing some digging into whether or not there are similar patterns emerging in other jurisdictions. And we perhaps might be able to take what we've learned in Minnesota and apply it in some other areas and compare what's going on in different places.

[Newt Gingrich]

Well, I think in that sense you can be an enormous asset and setting up for the federal government kind of a framework for what you look for and what questions you ask. And I have a hunch that we will be astounded at the amount of total corruption and fraud that we discover, certainly in Medicare and Medicaid, but again and again in housing programs, in the various green programs, being the number of people who got money and the worthy cause of the environment who then just went out and went bankrupt but kept the money. It's an absurdity. So I would get very excited because I realize that the City Journal and the Manhattan Institute are centers of really intelligent, hard working analysis. And I think that by you doing it, you really move the seriousness of this issue very dramatically.

[Ryan Thorpe]

I mean, that's certainly our hope. And at least in regards to the Minnesota story, it's been very gratifying to see the way that this has caught the public's attention because now it is impossible for folks to ignore whether or not they want to quibble with us on some details of our recording. That's all fine, but the reality is everyone is now acknowledging that this is a billion dollar problem in the state and that's progress.

[Newt Gingrich]

I want to thank you for joining me and I want to remind people that your article co authored with Chris Ruffo, the largest funder of Al Shabaab is the Minnesota Taxpayer, is available now at Citi Dash.

And our listeners can follow the work you're doing at the Manhattan Institute. But this has been really, really helpful and I appreciate you doing it.

[Ryan Thorpe]

It was a pleasure to join you today.

[Newt Gingrich]

Thank you to my guest, Ryan Thorp. Newts World is produced by Ginger360 and iHeartMedia. Our executive producer is Garnesy Sloan. Our researcher is Rachel Peterson. The artwork for the show was created by Steve Fenby. Special thanks to the team at Gingrich 360. If you've been enjoying Newt's world, I hope you'll go to Apple Podcast and both rate us with five stars and give us a review so others can learn what it's all about. Join me on [e-mail] I'm Newt Gingrich. This is neutral.

Shh.

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[Ryan Thorpe]

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