Minnesota county closes immigration-surge relief fund amid suspected fraud

Hennepin County, Minnesota, has shut down a $2 million relief program for businesses affected by a federal immigration enforcement operation after reviewers flagged more than 200 of the program’s roughly 300 applicants for potential fraud, according to local reports. 

The county created its Small Business Recovery Fund in March to help businesses cover rent or commercial mortgage payments after they reported losses during Operation Metro Surge, the Trump administration’s large-scale immigration enforcement operation in Minnesota that launched in December 2025. The operation deployed thousands of federal officers to the Twin Cities area and drew national attention and widespread protests after federal agents fatally shot two U.S. citizens in separate January incidents.

The program, which offered grants ranging from $3,000 to $10,000 to qualifying businesses, received roughly 300 applications but awarded about $500,000 to only 82 businesses after officials verified their eligibility, according to the Minnesota Star Tribune. 

Hennepin County Commissioner Jeffrey Lunde told local outlet KARE 11 that reviewers discovered applications that appeared to have been generated using artificial intelligence and others that repeated the same information across multiple purported businesses. 

“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,” Lunde said. 

In-person inspections also revealed that some purported businesses did not exist, according to the Star Tribune.

The county hired NextStage, a nonprofit community lender, to administer the program and evaluate the applications. After reviewers began finding fewer legitimate applicants, officials stopped processing applications and ended the program, Lunde told KARE 11.

“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.”

According to FOX 9, county officials said no public money was lost to fraudulent applicants because the screening process included document verification, heightened scrutiny, and site visits.

“Thanks to county staff and our partner, we were able [to] thwart these efforts by devoting more time and effort to tighter oversight, in-person inspections, and increased scrutiny,” Lunde told FOX 9. “As the fraudsters continue their efforts, we need to ramp up our game as well. This is the new normal for all levels of government in Minnesota.”

The Hennepin County Sheriff’s Office said county officials asked it in June to review the applications for possible criminal activity and that it requested the relevant records in July, according to FOX 9. The office said it would begin its investigation after receiving the necessary records.

County spokesperson Carolyn Marinan told the outlet that officials are now shifting from focusing on “immediate grant relief” to “strategies that support the long-term vitality and sustainability of businesses.”

The suspected attempted fraud comes as Minnesota officials have faced heightened scrutiny in recent months over fraud involving taxpayer-funded programs.

In Minnesota’s largest pandemic-related fraud scheme, known as Feeding Our Future, prosecutors said participants stole more than $250 million in taxpayer funds during the COVID-19 pandemic through fake meal sites, shell companies, and falsified invoices, as Zeale News previously reported.

>> Feeding Our Future ‘mastermind’ sentenced to 41 years amid Minnesota Medicaid fraud crackdown <<

Democratic Minnesota Gov. Tim Walz has come under particularly intense scrutiny over the alleged fraud, with lawmakers and the public pressing him on how much his administration knew and why it did not intervene sooner.