WASHINGTON, D.C. – A Senate Homeland Security and Governmental Affairs Subcommittee hearing titled “Examining Fraud and Foreign Influence in State and Federal Programs” turned tense on February 10, 2026.
Senators argued over claims that huge sums were stolen from taxpayer-funded programs, with Minnesota at the center, while witnesses also raised concerns about foreign actors and hard-to-track nonprofit funding.
Sen. Josh Hawley, R-Mo., led the hearing at the Dirksen Senate Office Building. Testimony focused on how failures at the state level may connect to larger national risks. Witnesses described organized fraud rings, possible overseas links, and “dark money” channels that they said help fund protests and protect bad actors.
The Main Issues Behind the Senate Clash
The hearing focused on two broad concerns. First, lawmakers examined large-scale fraud in state and federal programs. Second, they looked at whether foreign influence and hidden funding networks are weakening public institutions in the United States.
Senators pressed witnesses on how money meant for vulnerable people, including children, seniors, and disaster victims, may have ended up with criminal groups. Minnesota drew special attention because of several major cases tied to child nutrition programs, Medicaid services, and pandemic relief funds.
Critics said state officials ignored red flags, punished whistleblowers, and let the problem grow. Others warned that focusing too much on certain groups or donors could turn oversight into a political fight.
Major Fraud Claims Tied to Minnesota Programs
Minnesota State Sen. Mark Koran, a Republican, gave blunt testimony based on nine years of work on the Legislative Audit Commission. He said fraud in the state is “pervasive and systemic” and reaches from agencies to the executive branch.
- Agencies often failed to verify whether grant-funded work was ever done.
- In one case, documents were allegedly backdated to mislead auditors, which Koran said was a first in an auditor’s 27-year career.
- Koran estimated that billions of dollars were stolen, far beyond the public figures discussed so far.
- He said the damage hit programs serving children, older adults, vulnerable residents, and honest providers, including child nutrition and Medicaid-related services.
- Federal prosecutors have said as much as $9 billion may have been lost in Minnesota through fake daycares, food programs, and health clinics.
Koran blamed what he called “gross incompetence or willful complicity” under Gov. Tim Walz and Attorney General Keith Ellison. He pointed to ignored audits, retaliation against whistleblowers, and stalled reform efforts. He argued that Minnesota’s fraud crisis marks one of the largest and fastest-growing expansions of fraud in the country.
He also outlined tactics that fraud networks allegedly used:
- Setting up shell groups to bill the government for services never provided.
- Taking advantage of relaxed pandemic rules that sped up funding.
- Moving stolen money into luxury purchases, overseas accounts, or criminal activity such as drug trafficking and human exploitation.
Haywood Talcove, CEO of LexisNexis Risk Solutions, widened the scope beyond Minnesota. He said the federal government loses about $1 trillion each year to fraud, or about $115 million every hour. He added that roughly 70 percent of that fraud involves transnational criminal groups. According to Talcove, stolen funds often support organized crime, terrorism-related networks, or hostile foreign actors.
Talcove said criminals go after programs that elected and appointed officials are reluctant to challenge. He also said fraud rings learned during the pandemic that the government keeps paying out money and that the odds of getting caught are very low.
Claims About “Dark Money” and Foreign Influence
The hearing grew more contentious when the discussion shifted to nonprofit funding and protest activity linked to pushback against fraud enforcement.
Seamus Bruner, vice president of the Government Accountability Institute, testified that his group traced more than $60 million in payments to about 14 groups active in Minnesota. Some were local organizations, while others had a national reach. He said the money came through networks tied to George Soros, Arabella Advisors, Neville Roy Singham, and groups such as Tides and the Ford Foundation.
Bruner described the funding setup as a classic “dark money” model. In his view, layered grants make it hard to follow the money while shaping policy, protecting political interests, or organizing disruption when fraud probes put pressure on the system. He also linked some of the networks to coordinated unrest, including anti-ICE protests.
Witnesses and senators tied those concerns to foreign influence in several ways:
- Hawley pointed to the chance of money linked to the Chinese Communist Party and other transnational actors.
- Witnesses said some stolen funds move overseas or support activity that fuels unrest in U.S. cities.
- Talcove connected benefit fraud to larger criminal systems involving Russia, other countries, and hostile foreign governments.
Hawley said American taxpayers are being robbed of billions, especially in Minnesota, while foreign actors stir chaos in the streets. He called for the Department of Justice to investigate the networks and bring prosecutions.
Koran added that some protest activity in Minnesota appeared highly organized. He mentioned reports of training 30,000 observers, doxxing, attacks on federal agents, including one who lost a finger, and efforts to interfere with law enforcement.
Pushback and Broader Reform Proposals
Still, not every witness or senator framed the issue the same way. Dylan Hedtler-Gaudette of the Project On Government Oversight, POGO, urged lawmakers to focus on broad, nonpartisan fixes to waste, fraud, and abuse across government. He said the problem goes well beyond one state or one community.
Some Democrats also warned against tying the issue too closely to certain groups, including Minnesota’s Somali-American community in some cases, or to high-profile donors. They said that approach could divide the public and undercut legitimate concerns.
Several reform ideas came up during the hearing:
- Koran backed an independent Office of Inspector General for Minnesota. He said the measure passed the state Senate with bipartisan support but was blocked in the House.
- He also called for stronger eligibility checks and federal incentives that reward states for lowering error rates.
- Talcove and other witnesses pushed for stronger identity checks, better data tools, and pre-payment screening to stop fraud before money goes out.
- Hawley and other Republicans stressed tougher prosecutions, more scrutiny of nonprofit funding webs, and using Minnesota as a warning sign for the rest of the country.
Witnesses agreed on one point: fraud hurts the people these programs are supposed to help. It delays aid, drains public money, and weakens trust in safety-net programs.
Why the Hearing Matters
The February 10 hearing was part of a wider congressional effort that includes House Oversight hearings on Minnesota funds and related Senate investigations. It showed how failures in one state can lead to major national losses and raise homeland security concerns tied to transnational crime and foreign influence.
Supporters of the hearing’s approach said unchecked fraud damages disaster response, pulls money away from people in need, and may help fund activity that destabilizes communities. Critics said the framing could distract from the deeper task of fixing weak systems across all programs.
One witness summed up the stakes in simple terms. Stolen taxpayer dollars do not just disappear. They often end up paying for luxury goods, moving overseas, or supporting criminal enterprises.
The hearing closed with fresh calls for accountability, stronger oversight tools, and Justice Department action. Whether that leads to new laws or criminal cases is still unclear. Still, the session exposed deep disagreements over how government should protect public money when fraud, politics, and outside influence all collide.
