But what was supposed to be a relatively straightforward relief effort quickly turned into an exercise in fraud detection.
According to CBS Minnesota, roughly 300 businesses sought money through the program. Ultimately, only 82 grants were approved, while more than 200 applications reportedly raised enough concerns to be flagged for possible fraud. About $500,000 was distributed before officials decided to stop the grant program.
Hennepin County Commissioner Jeffrey Lunde said the safeguards worked before suspicious applicants could get their hands on taxpayer dollars.
“We caught the fraud before we spent any money,” Lunde said.
The program offered qualifying businesses grants ranging from $3,000 to $10,000. The money could be used to cover as much as two months of commercial rent or mortgage expenses.
County guidelines required applicants to operate a physical business location in Hennepin County and demonstrate that their operations suffered significant financial disruption connected to Operation Metro Surge. Businesses also had to meet revenue and operating-history requirements and submit supporting financial documents.
NextStage, a nonprofit lender and business-advising organization, was hired to administer the program. Applications opened March 18 and closed March 25.
That review process apparently uncovered major warning signs.
Officials reportedly encountered applications using legitimate business information but listing different names or telephone numbers. Other suspicious submissions prompted additional scrutiny and in-person verification.
The situation became serious enough that the Hennepin County Sheriff’s Office was asked to examine the applications for potential criminal activity. CBS Minnesota reported that investigators requested relevant documents as part of that process.
Lunde said the experience demonstrates that government agencies will have to become increasingly aggressive about screening applications before taxpayer dollars leave the door.
“Clearly, fraud and people who want to commit it are still very active, as they do not fear the penalty. 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,” he said.
Lunde has also called for accountability.
“We need to prosecute some people. People need to be held accountable,” he told CBS Minnesota.
He also questioned whether Minnesota lawmakers need to examine the laws available to authorities dealing with attempted fraud.
“I think we’re gonna need the legislature to take a look. Do we have some of the right laws to prosecute these people?” Lunde said.
Importantly, county officials say the suspicious applicants did not receive grant money. The fraud concerns instead emerged during the screening process, meaning the episode is not evidence that more than 200 fraudulent payments actually went out.
The scale of the questionable applications nevertheless raises serious questions about what might have happened without document verification and physical inspections.
The county has now shifted its approach rather than continuing the original grant program.
Approximately $1 million of the unused money is being made available for small-business financing, while another $500,000 is expected to support consulting and promotional services for businesses, according to CBS Minnesota.
The episode comes as Minnesota continues wrestling with politically charged disputes surrounding federal immigration enforcement. Hennepin County itself maintains that its sheriff’s office does not participate in civil immigration enforcement, although it works with other agencies on criminal investigations and public-safety matters.
Whatever the politics surrounding Operation Metro Surge, the collapse of the original relief program highlights a much more basic problem for taxpayers: emergency government programs can become attractive targets for people willing to submit questionable claims in pursuit of public money.
In this case, county employees appear to have caught the suspicious applications before the money was distributed.
Now the next question is whether investigators will determine that any of those applications crossed the line from suspicious paperwork into criminal fraud—and whether anyone will ultimately face consequences.
