New Minneapolis Audit Exposes Fraud Risk in $36 Million Program as Walz’s Minnesota Fraud Crisis Grows

Breaking

A new audit of Minneapolis’s violence-prevention spending has found serious gaps in how the city oversaw millions of taxpayer dollars handed to community groups after the death of George Floyd. The Neighborhood Safety Contract Management Audit Report found the city was “not providing sufficient contract oversight or managing contracts effectively.” Since 2023, the city has spent more than $36 million on five major violence-prevention programs run through its Neighborhood Safety Department.

Auditors found that contractors submitted invoices with “limited supporting documentation” and that the city made payments despite “missing records or unresolved concerns.” The report warned that the gaps create potential for “fraud, waste, and abuse.” It also found that the city lacked a “standardized process for conducting and documenting site visits,” making it difficult to confirm that contractors actually delivered the services taxpayers paid for.

Details & Background

In 2020, after Floyd’s death, members of the Minneapolis City Council pledged to dismantle the police department, and the city awarded more than 100 contracts to community groups as alternatives to policing. Voters rejected a ballot measure to replace the police department in 2021, but the city kept funding the alternative programs. The audit identified seven shortcomings, including oversight practices that were not shared or consistent across city departments, a contracting process lacking protection “from pressure or influence,” policies that “remain in draft form,” and contract records stored “in different locations and formats.”

The report lands in a state already battered by fraud. Federal prosecutors have estimated that fraud across Minnesota-run programs could exceed $9 billion. The largest single case, Feeding Our Future, involved roughly $250 million in pandemic-era fraud, and founder Aimee Bock was convicted in 2025. The state also shut down its Housing Stabilization Program in 2025 after discovering “large-scale fraud.” Gov. Tim Walz dropped his bid for reelection in January amid the growing scandal.

Reactions

Bill Glahn, a policy fellow at the Center of the American Experiment, said the audit shows “the city seems primarily interested in shoveling money out the door” without making sure recipients could do the work they were paid for. A Minneapolis city spokesperson said the department appreciated the auditor’s recommendations and has “taken several steps since the audit report to improve our processes.” Mayor Jacob Frey has acknowledged the programs have “not demonstrated the level of results taxpayers deserve,” and the city’s 2027 budget proposes cutting nearly $2.7 million in violence-interrupter funding. The city currently has 35 active contracts totaling $8.87 million running from 2025 through 2028.

Walz has defended his administration’s record on the wider fraud crisis. He has called the $9 billion estimate “sensationalized” and accused the Trump administration of “a weaponization” of the issue, while also saying, “This is on my watch. I am accountable for this. And more importantly, I am the one that will fix it.” Republican Senate candidate Michele Tafoya said fraud is now “one of the first words” Minnesotans mention when they talk about concerns with state government.

Why This Matters to You

Programs like these are paid for by taxpayers who expect their money to make neighborhoods safer. When a city hands out tens of millions of dollars without proper records, site visits or verification, it becomes nearly impossible to know whether that money bought real results or simply disappeared. The audit’s recommendations, including stronger invoice reviews and better record-keeping, are basic safeguards that should have been in place from the start.

The findings also matter far beyond Minneapolis. Federal dollars flow into state and local programs across the country, and the Minnesota scandals show how quickly weak oversight can turn into massive losses. As federal prosecutors continue to pursue fraud cases in the state, this audit is another warning that government accountability must come before political promises, and that taxpayers deserve to know exactly where their money goes.