A Hennepin County program created to help small businesses survive the economic fallout from Operation Metro Surge has been shut down after investigators found that nearly half of its grant applications were fraudulent. The $2 million fund, approved in March 2026, was meant to help businesses cover rent and mortgage payments after the immigration enforcement operation kept customers away.
County Commissioner Jeffrey Lunde confirmed the program was halted once the scale of the fraud became clear. “We caught the fraud before we spent any money,” Lunde said, calling it an unfortunate win for the county.
How the Fraud Unfolded
The county hired a nonprofit to administer the grants, and 82 legitimate payments were distributed before officials started seeing a surge in suspicious applications. Lunde described a pattern where applicants submitted accurate company information but swapped out key identifying details. People were, he said, “Applying all the information for that company except the phone number and name is not.”
As fraudulent submissions mounted, officials made the call to stop. “We were finding more and more fraud. We just said, ‘OK, we’re just gonna stop,'” Lunde said. As covered in the Hennepin County business relief investigation, the county managed to halt disbursements before any fraudulent claims were paid out.
Gilberto Diaz and the Businesses That Needed Help
Among those who received legitimate grants was Gilberto Diaz, who owns Luro Boots in Bloomington, Minnesota. His business received $10,000 from the program. “Rent doesn’t wait. Bills don’t wait,” Diaz said.
Diaz said he was angered when he learned about the fraudulent applications. “It is sad. When I was hearing this, I was upset because they don’t know the damage they do to a small business,” he said. Small businesses across the region lost hundreds of millions of dollars in revenue during Operation Metro Surge, making relief funds critical for many owners trying to stay afloat.
Criminal Investigation and What Comes Next
The Hennepin County Sheriff’s Office confirmed it was asked to review the situation in June and requested all relevant documents in July to formally open a criminal investigation. “Once the materials are received by our office, we will begin the investigation,” the department said in a statement.
Lunde called for accountability and said state lawmakers may need to act. “We need to prosecute some people. People need to be held accountable,” he said. “I think we’re gonna need the legislature to take a look. Do we have some of the right laws to prosecute these people?”
The county has not written off the remaining money. Approximately $1 million in unused grant funds is still available for small business financing, and another $500,000 will go toward consulting and promotional support for affected businesses.
