Hennepin County has stopped processing applications for a $2 million relief fund meant to help small businesses hurt by federal immigration enforcement, after officials found signs of fraud in the majority of submissions.
The Hennepin County Small Business Recovery Fund was set up to provide grants of $3,000 to $10,000 to brick-and-mortar businesses facing financial hardship because of Operation Metro Surge, the federal immigration enforcement operation carried out by U.S. Immigration and Customs Enforcement in the Minneapolis area. County guidelines cited declining customers, temporary closures and workforce disruptions as the kinds of harm the fund was designed to address.
The county received roughly 300 applications. Only 82 were approved, resulting in about $500,000 in grants paid out. More than 200 applications were flagged for potential fraud, according to county officials.
Officials said the flagged applications included false information, businesses that could not be located during site visits, and language that appeared to be generated by artificial intelligence and repeated across multiple submissions.
Hennepin County Commissioner Jeff Lunde said the county decided to halt the program once the pattern became clear. “Then at a certain point we’re like, ‘OK, we’re getting declining results on that,'” Lunde said. “And so we said it’s time to stop the program. So we just stopped processing at that point.”
Lunde said the volume of apparent fraud attempts pointed to a broader problem. “The fact that people, after all this fraud, felt that they could apply and get away with it, I think it’s a problem because clearly there’s no fear out there,” he said.
Part of a larger pattern
The episode adds to a string of fraud cases involving taxpayer-funded programs in Minnesota in recent years. The largest is the Feeding Our Future case, a federal child-nutrition fraud prosecution in which authorities allege roughly $250 million was stolen through fraudulent meal-reimbursement claims.
Gov. Tim Walz has said addressing the state’s fraud problems is his “responsibility to fix,” while also saying Republicans have exaggerated or politicized past fraud scandals. He has separately pushed back against President Trump’s criticism of Minnesota’s Somali community, saying an entire community should not be blamed for crimes committed by individuals.
Hennepin County has not said whether it plans to revive the small business fund in a revised form or pursue further review of the flagged applications.
