As Minnesota’s massive fraud problems continue to gain nationwide attention, an audit is now sounding the alarm about potential fraud in a new area in the state related to contracts doled out by the city of Minneapolis in response to the death of George Floyd.

More than 100 contracts were handed out to community groups as alternatives to policing in 2020 and the lax oversight of those contracts, according to a Minnesota Star Tribune report, was found by an audit to be susceptible to fraud and favoritism.

The new Neighborhood Safety Contract Management Audit Report, which reviews spending from 2020-2025, shows the city is "not providing sufficient contract oversight or managing contracts effectively" in order to properly manage the more than $36 million that has been spent since 2023 on five major violence-prevention programs.

The report warns that Minneapolis’ weak contract controls created a heightened risk of fraud and improper payments. Auditors found contractors often submitted invoices with limited supporting documentation, while the city sometimes continued making payments despite missing records or unresolved concerns. The department is also said to have lacked a standardized process for conducting and documenting site visits to verify that contracted services were actually being performed.

FINAL WALZ FRAUD REPORT RIPS ‘CULTURE OF TOLERANCE’ AS MINNESOTA TAXPAYERS FACE BILLIONS IN ALLEGED LOSSES Additionally, auditors found the city still needs to improve invoice reviews, preserve contract records, document contractor communications and establish clearer procedures for escalating concerns.

"Based on my past reporting on this and other city grant programs, any diligent audit of any city-administered grant programs would produce similar results," Center of the American Experiment policy fellow Bill Glahn told Fox News Digital, pointing to his 2023 reporting on the matter.

Glahn’s reporting raised questions about whether Minneapolis’ violence-interrupter program was producing measurable results. In a 2023 analysis, Glahn noted that the city had committed up to $7.5 million to the initiative for 2022–23, with another $13 million included in its budget for 2024–28, while the city had not published substantive evidence demonstrating that the program was reducing violent crime.

Glahn also examined the backgrounds and finances of participating organizations, finding that several had annual revenues or staffing levels far below the size of the grants they received. One participant, We Push for Peace, had staffers involved in violent incidents outside St. Paul grocery stores in 2021, including one violence interrupter captured on video beating a homeless man.

"The city seems primarily interested in shoveling money out the door to ‘address’ urgent problems," Glahn added. "Little if any care is given to ensuring that the grant recipients are capable of or have a track record of doing the work, are actually doing the work contracted for, or whether that work is resulting in net benefit for city residents and taxpayers." MINNESOTA'S ANTI-ICE AID FUND BECOMES LATEST CASUALTY OF STATE'S EMBARRASSING FRAUD PROBLEM The state has faced heavy criticism in recent years for not conducting enough onsite visits to combat fraud in the Feeding Our Future program along with fraudulent Medicaid programs.

"If they would have just gone to the facilities, you know, you hear of the thousands of people being served out of an apartment twice a day, all they would have to do is show up and look at it," Minnesota Republican state Sen. Mark Koran told Fox News Digital in December as the fraud scandal was unfolding.

"There was a legislative auditor report that showed that 30 property owners where these businesses claim to operate out of, contacted the Department of Education who manage it, who managed that program, and they told them one, the businesses don't exist in their facilities, so they don't exist, period, and one of them I think was a city park," Koran said.

Glahn told Fox News Digital that site visits are "generally helpful" but he suspects that "even a cursory, front-end review of tax records and financial statements would have disqualified many of these vendors from the get-go." "We have not slowed down, there is no sense in which the fraud has been stopped in Minnesota," Glahn told Fox News Digital last month.

The audit did not identify a specific instance of fraud, but it warned that Minneapolis’ weak oversight controls created a heightened risk of fraud and improper payments, and many social media users weren't willing to give the state the benefit of the doubt.

"Call it what it is," retired Navy intelligence officer Phillip C. Parrish posted on X. "This isn’t a tracking glitch. It’s the same business model that looted child-nutrition money, Medicaid housing, autism therapy, and daycare: stand up a moral emergency, pour cash through politically connected nonprofits, skip site visits and receipts, then scream 'livelihoods' when anyone asks where the money went." Fox News Digital reached out to Walz's office for comment.

A Minneapolis city spokesperson told Fox News Digital in a statement, "We appreciate the support of the auditor to make thoughtful, strategic recommendations to improve our department. In fact, the auditor expanded the scope of the report to be more thorough and holistic."

The spokesperson added, "The Neighborhood Safety Department has a lot to be proud of. Our work is meaningful, and every day we’re working to make our City safer through innovative safety services, like violence prevention and human trafficking prevention, among others. We’ve taken several steps since the audit report to improve our processes and contract oversight. We are in the business of helping people and improving lives – and that means improving how we do it. It’s that simple."