Minnesota fraud scandal poses danger for Democrats in Senate race

 The massive statewide fraud scandal in Minnesota is threatening to become a liability for Democrats in the state’s closely watched Senate race this year. 

In particular, some Democrats think the widespread money laundering scheme, which is estimated to have stolen as much as roughly $9 billion, could be a problem for Lt. Gov. Peggy Flanagan, the second-in-command to Minnesota Gov. Tim Walz (D). Flanagan is running against Rep. Angie Craig (D-Minn.) for the party’s nomination to replace Sen. Tina Smith (D-Minn.). 

Others in the party worry the issue could be a challenge for the party as a whole in the North Star State, as President Trump, House Majority Whip Tom Emmer (R-Minn.) and other Republicans seek to make it a major issue, especially in the wake of a viral video from conservative YouTuber Nick Shirley alleging fraud by federally funded daycare centers in the state.

“It is hard to say how much the fraud challenges in [Minnesota] will impact the DFL Senate primary. However, I expect it will be ever present in all 2026 races,” Mike Erlandson, a former chair of the Minnesota Democratic-Farmer-Labor (DFL) party, told The Hill in an email. 

“The Lt Governor’s leadership in the Walz-Flanagan  administration creates a challenge for her, especially if this continues to escalate,” he added. “At minimum it forces her to be defensive.” 

Craig, Flanagan and DFL candidate Billy Nord are vying for the party’s nod to succeed Smith in the Aug. 11 primary. The Senate Democratic primary has largely turned into a proxy war between the two factions of the party as centrists and mainstream Democrats have rallied around the congresswoman, while progressives have endorsed Flanagan. 

While the nonpartisan election handicapper Cook Political Report has rated Smith’s seat as “likely Democratic” — the GOP hasn’t won a statewide office in Minnesota since former Gov. Tim Pawlenty (R) notched a second term in 2006 — Democrats believe the seat could become competitive, particularly if former NFL reporter Michele Tafoya jumps in. 

The fraud scandal has already put pressure on Walz, the former 2024 vice presidential nominee running for a third term as Minnesota governor. The governor — whose administration believes tens of millions of dollars were stolen, in contrast to the $9 billion number noted by prosecutors — has taken steps to address the issue, including launching an audit into more than a dozen Medicaid services. He has also named Tim O’Malley, a former superintendent of the Minnesota Bureau of Criminal Apprehension, as Minnesota’s Director of Program Integrity. 

But Republicans have started to tie the two Senate candidates to the broader fraud scandal as well. Tafoya, who could jump into the race soon, has already attacked both Flanagan and Craig over the issue.

Flanagan has also received criticism from Republicans for wearing a hijab during an appearance on Somali TV Minnesota where she expressed her support for the community. Most of the fraud defendants have a Somali background, and the community has come under growing scrutiny. Emmer recently drew headlines when he called for the deportation of all Somalis linked to fraud in the state. The majority are U.S.-born or naturalized citizens.

Flanagan’s campaign explained at the time that the lieutenant governor briefly wore the hijab “out of respect” after she was handed one by a friend during her visit, adding that the outrage should instead be directed at the “masked men throwing American citizens into vans and violating the constitution.”

In interviews with The Hill last month, Craig and Flanagan condemned the fraud while noting the actions Walz has taken to address the issue. 

“The governor views addressing fraud as a top priority, and if you defraud the government in Minnesota, you know you should be arrested, prosecuted and put in jail,” Craig told The Hill. “There should be no tolerance for it whatsoever, and I think over the last three years, the governor has made that, you know, crystal clear.” 

Craig also noted she’s worked on legislation aimed at combatting fraud. 

“Fraud of any kind is completely unacceptable,” Flanagan told The Hill prior to her appearance on Somali TV Minnesota, saying that “the idea that anyone would steal from children, families, people with disabilities, vulnerable communities” made her “incredibly angry” as a former nonprofit executive director. She noted Walz’s appointment of O’Malley as “fraud czar,” while suggesting Trump was a hypocrite on the issue. 

“I think the fraud and corruption that is surrounding Donald Trump in this moment is also on the minds of people in Minnesota,” Flanagan said, pointing to Trump’s decision to fire multiple agencies’ inspectors general as an example. 

But Flanagan’s campaign also sought to put distance between herself and Walz in a statement to The Hill. 

“Regardless of the attempts being made by Republicans to connect every member of the Democratic Party to fraud – despite the blatant corruption and fraud being committed by the President  –  the Governor has made it abundantly clear that the buck stops with him,” Flanagan campaign spokeswoman Alexandra Fetissoff said. 

“The Lieutenant Governor is the best candidate to win the primary and general, and go on to represent Minnesotans in the Senate,” she added.

Some Democrats don’t see the scandal playing a major role in the primary, but they fear it could be a bigger issue for Flanagan if she wins the nomination, given her current role. At the same time, some experts think that her personal split with the governor may also offer her cover over the issue, too. 

“One approach she could take is to distance herself from the governor and say, ‘You know, I wasn’t running the executive branch,’ but she was his lieutenant governor, and … they governed almost jointly …for the first three years of his term, and so it’s going to be much easier for people to point a finger at her,” said Brian Melendez, who also served as a former chair of the Minnesota DFL. 

But he suggested Flanagan might be better off pushing back at the allegations “that the fraud should somehow be laid at the Walz administration’s doorstep” rather than the earlier approach of putting the onus on Walz.

A Minnesota Democrat who’s worked on multiple statewide campaigns and is not involved in the Senate race said they don’t see the fraud issue playing out as an issue in the primary, but said it’s one Flanagan could be more vulnerable to in the general election, noting that Republicans see the issue as their “ticket out of the wilderness.”

Other Democrats, meanwhile, see the fraud scandal as a broader issue for the party writ large. 

“I see that as a challenge for Peggy, for the legislature, for the governor, I think it’s going to be a challenge for all Democrats come next year,” Corey Day, a former executive director for the Minnesota DFL, told The Hill in an interview last month.  

Republicans are “going to do as much as they can to make sure that it stays in as a central conversation,” Day said. 

But some observers don’t see the fraud scandal as a potent enough issue for Republicans to win on. Democratic strategist Abou Amara said it wouldn’t be surprising if Republicans try to tie Flanagan to the fraud scandal if she wins the primary but said it wouldn’t be enough to get them over the finish line in November.

“Fundamentally, is this issue going to override kind of the macro dynamics of a midterm election?” Amara said. “That question — I don’t think so.”

Larry Jacobs, director of the Center for the Study of Politics and Governance at the University of Minnesota, was also skeptical the issue would hurt Democrats writ large or Flanagan specifically, saying that midterm elections are “fought about the incumbent president’s party.” He said he didn’t see the progressive lieutenant governor as being vulnerable over the fraud scandal but would be on other issues.

While the issue could potentially roil the primary between Craig and Flanagan, experts also point out that Democrats are likely to benefit from a better political environment as issues around affordability and the economy remain top of mind for voters.

Maddy McDaniel, a spokeswoman for the Senate Democrats’ campaign arm, told The Hill that Republicans “will be dragged down by their support for the incredibly toxic GOP agenda that strips health care from tens of thousands of Minnesotans and raises costs.”

Some, too, suggest Republicans may be overreaching on the issue of fraud and unintentionally activating a new base of voters that could help Democrats in November.

“You’re seeing this targeting — mass scale kind of indiscriminate targeting of people in the East African community. You’re seeing kind of a blowback,” Amara said.

“It might actually activate tens of thousands of new East African voters or tens of thousands of new kind of infrequent Democratic-leaning voters who maybe … weren’t going to turn out.”

https://thehill.com/homenews/campaign/5670354-minnesota-democrats-fraud-scandal/