Minnesota fraud goes from bad to worse as ‘bombshell’ audit reveals major ‘misconduct’
A major state audit in Minnesota conducted by the nonpartisan Office of the Legislative Auditor found widespread failures and internal control problems in the Department of Human Services’ Behavioral Health Administration (BHA) grant program, reaffirming concerns about massive fraud issues.
The report, released on Monday, found that between July 1, 2022, and Dec. 31, 2024, DHS dished out more than $425 million in grants to 830 organizations, the majority being nongovernmental, and did not show proper oversight in watching over those taxpayer funds, which in many cases were meant to help those with addiction and mental health issues.
The audit found missing progress reports and discovered BHA could not show it had completed all required monitoring visits and had no documentation at all for some of them.
Additionally, auditors discovered what appeared to be backdated or newly created documentation that did not exist before the audit, suggesting an effort to retroactively manufacture paperwork to show compliance.
WALZ’S LONG-RUNNING FRAUD SCANDAL PUTS HARRIS CAMPAIGN JUDGMENT UNDER SCRUTINY
In one instance, the report found that a grant manager approved over $600,000 in payments and later left the government agency to work for the grantee.
“The OLA report shows a complete breakdown in how DHS’s Behavioral Health Administration manages hundreds of millions in taxpayer-funded grants,” Republican State Sen. Mark Koran said in a press release. “BHA failed to verify that grantees were providing the services they were paid for, failed to put basic financial controls in place, and then created documentation after the fact to mislead auditors.
“Minnesotans deserve integrity from state agencies. Fabricating evidence after an audit begins is unacceptable. It obstructs the OLA’s work and prevents DHS from correcting its failures. The finding that a DHS manager approved a large grant and later became a paid consultant for that same grantee is a blatant conflict of interest. This kind of misconduct erodes public trust and undermines the effectiveness of grant programs.”
CRITICS WARN MINNESOTA LEGISLATION NOW TAKING EFFECT IS SETTING UP THE ‘NEXT BILLION-DOLLAR FRAUD’
The audit also found that when employees were surveyed, 73% of them said they did not receive the necessary training to properly administer manage grants, with one employee saying, “Executive leadership has repetitively shown staff that they won’t take the staff’s concerns or questions seriously until something serious happens or it makes the news.”
Minnesota’s government agencies are already under heavy scrutiny amid a fraud scandal that prosecutors say could total as much as $9 billion and has already forced Gov. Tim Walz to drop his re-election bid.
“Today’s shocking report by the Legislative Auditor shows a culture of pervasive fraud, negligence, and deception,” Republican House Speaker DeMuth said about the report.
“We need answers immediately about the apparent backdating and potential falsification of documents found during the audit…It’s time to clean house and restore honesty and accountability in state agencies.”
Ultimately, the report concluded that the state government “did not comply with most requirements tested for mental health and substance use disorder grants and did not have adequate internal controls over grant funds.”
“The audit makes clear that DHS leadership has failed at every level. Employees were not properly trained, oversight was ignored, and accountability was missing, from Governor Walz, to Temporary DHS Commissioner Gandhi, to BHA managers. DHS needs a full reset, starting with leadership, training, ethics, and oversight,” Koran said in the press release.
The report was immediately picked up on social media, including from an account on X run by hundreds of anonymous DHS staff members.
“Yes, MN DHS will falsify documents and data. Worst of all, they do it to state legislature to demand more state funding,” Minnesota Staff Fraud Reporting Commentary posted on X. “And yes, MN DHS has lied to federal government. So.. fire Shireen Gandhi.”
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“Minnesota’s Legislative Auditor just dropped a BOMBSHELL,” Townhall columnist Dustin Grage posted on X. “Tim Walz’s DHS fabricated records, had zero internal controls, and employees ignored oversight on more than $400 MILLION in grants. The fraud and corruption continues.”
Fox News Digital reached out to Walz’s office for comment.
Gandhi, the acting DHS commissioner, said on Monday that the “findings provide us with a roadmap for our focus going forward to continue strengthening oversight and integrity of behavioral health grants.”
“I take the report seriously, I accept responsibility for the findings.”
Walz urges calm as authorities investigate ICE incident in Minneapolis
Minnesota Gov. Tim Walz said Wednesday that state officials were working to gather information about a shooting involving Immigration and Customs Enforcement (ICE) in Minneapolis.
“We will share information as we learn more. In the meantime, I ask folks to remain calm,” said Walz.
The city’s official X account posted that they “are aware of a shooting involving federal law enforcement near East 34th Street and Portland Avenue,” and warned the public to “avoid this area.”
Fox News has learned that ICE agents were unharmed and the Department of Homeland Security called the event a vehicle ramming incident.
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The Hennepin County Sheriff’s office said it was aware of the incident, noting that they were not involved but “have sent deputies to the area to assist as needed.”
Ernst drops hammer on Somali-led nonprofit earmarked for federal windfall
FIRST ON FOX: Republican Iowa Sen. Joni Ernst is working to strip more than $1 million of federal funds earmarked for a Somali-led Minnesota addiction recovery organization that shares an address with a Minneapolis Somali restaurant, Fox News Digital learned.
“The scale and frequency of fraud in Minnesota is staggering, but I fear just the tip of the iceberg,” Ernst told Fox News Digital Wednesday. “Congress owes it to the American people to clean up the mess instead of letting the same politicians who created it keep pigging out at the trough. I am putting a stop to this madness, protecting taxpayers, and empowering the Department of Justice to hold every single criminal accountable.”
Capitol Hill lawmakers unveiled a new spending package Monday that totals at least $174 billion and is slated to receive a vote from House lawmakers later this week. Within the package, Ernst’s office found that Omar had earmarked $1,031,000 through the Department of Justice for a group called Generation Hope MN in Minneapolis. The earmark is co-led by Minnesota Democratic Sens. Amy Klobuchar and Tina Smith in the Senate.
Generation Hope MN is a 501(c)(3) that was established in 2019 to create a “a better, safer, and more connected community for individuals experiencing drug addiction and substance use disorders in the greater East African community of the Twin Cities Metro area,” according to its website.
COMER VOWS MINNESOTA FRAUD PROBE WILL EXPAND TO OTHER STATES AMID MOUNTING SCRUTINY
“We are a Somali-led organization, and our team includes individuals in recovery, mental health professionals such as licensed counselors and peer recovery support specialists, and community members,” the website states.
The group’s website lists two addresses for the addiction recovery center in Minneapolis, including a location on Cedar Avenue.
The same Cedar Avenue address is also listed as the location for a Somali restaurant called Sagal Restaurant and Coffee. The restaurant’s website describes the restaurant, established in 1998, as a “culinary haven” that “brings the authenticity of Somali cuisine to Minneapolis.” Google Maps, Fox Digital found, also lists a neighborhood association group as also sharing the Cedar Avenue location.
The owner of Sagal Restaurant, Fartune Del, confirmed to Fox News Digital Tuesday evening that Generation Hope MN does operate out of additional office spaces above the restaurant.
“We have 8 office spaces on upper level of the building. Generation Hope (is) using space to help people in need of addiction,” Del told Fox Digital in an email when approached for comment about the shared address.
The other location listed on the addiction recovery group’s website shows a commercial property located on Minneapolis’ Harmon Place.
Ernst is readying an amendment in the Senate to redirect the more than $1 million in funding to a Department of Justice account dedicated to fraud prevention and enforcement, Fox Digital learned.
A review of documents published by Omar’s office promoting the earmark for the project listed the address for Generation Hope MN as sitting on “Cedar Ave. South” — not just “Cedar Avenue” as it’s described on Generation Hope’s website. The Cedar Avenue South address also pulls up the Sagal Restaurant on Google Maps, Fox Digital found.
Yelp reviews for the café and restaurant going back at least a decade praise it as serving “delicious” “Authentic Somali meals,” holding an average of four and half stars out of five based on reviews.
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Omar’s office previously described on its website that the fiscal year 2026 funding to Generation Hope would be used to address the “opioid crisis by combining this workforce readiness programming with addiction recovery, mental health, and housing support,” and “reduce recidivism and addiction while enabling greater opportunities for sustainable employment in the city, helping capable workers grow in their skills and education.”
“The funding would be used for targeted reentry support in Minneapolis including job-specific training, computer skills development, peer support services, and access to education, so that participants are equipped with the tools and resources necessary for workforce success. The initiative integrates a tailored support model with practical job training through partnering with certified apprenticeship programs to provide participants with industry-recognized certifications,” Omar’s office continued.
IRS documents, specifically IRS Form 1023-EZ which is needed to apply for recognition as a 501(c)(3) tax-exempt organization, showed the three chiefs of Generation Hope MN listed the same address for a five-bedroom home in Minnepolis as their primary residence, Ernst’s office found.
Abdirahman Warsame, a local author, co-founded Generation Hope MN in 2019, he told a media outlet for Minnesota refugees called Sahan Journal in 2022, when he published a book of poetry chronicling a “recovering addict’s journey to sobriety.”
Fox News Digital is looking into whether the group has received previous funds from the federal government.
SOMALI UN AMBASSADOR LINKED TO QUESTIONABLE CINCINNATI HEALTH SERVICE AGENCY, RFK JR. DEPUTY SAYS
Fox News Digital reached out to Warsame, Omar’s office, Klobuchar’s office, Smith’s office, Generation Hope MN for comment on the shared address and earmarked funds Tuesday evening but did not immediately receive replies.
Ernst’s efforts, as well as other Republican-led efforts, to strip the roughly $1 million in favor a project focused on fraud prevention and enforcement comes as Minnesota faces a massive fraud scandal.
Minnesota was allegedly home to a massive COVID-era scheme that allegedly involved money laundering operations related to fraudulent meal and housing programs, daycare centers and Medicaid services, according to investigators. Dozens of arrests have been made since 2022, mostly from the state’s large Somali community.
Local officials speculate the fraud could exceed $1 billion and rise to as high as $9 billion, as additional details come to light.
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Democratic Gov. Tim Walz dropped out of his re-election effort Monday amid the fallout of the fraud scandal, while President Donald Trump has slammed Omar, Walz and other Minnesota elected officials for the fraud. Walz, who has served as governor since 2019, took ownership of the fraud as it occurred under his watch, but argued multibillion-dollar figures were “sensationalized” by Republicans.
Demonstrators rename Tehran street after Trump during ‘unprecedented’ unrest
Iranian protesters intensified nationwide demonstrations over the past 24 hours, directly appealing to President Donald Trump while chanting anti-regime slogans. Footage published Wednesday showed a protester in Tehran symbolically renaming a street after Trump, while other videos captured handwritten appeals reading, “Don’t let them kill us,” Iran International reported.
Holly Dagres, a senior fellow at the Washington Institute, posted the video on X stating, “Since Trump’s comments about the Iran protests, I’ve seen numbers videos of Iranian protesters either thanking him or, in this case, renaming streets after the US president.”
The appeals came as demonstrators faced a widening security crackdown, including the deployment of armed units and tear gas near major civilian sites in Tehran.
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Exiled Iranian opposition leader Reza Pahlavi said the current unrest represents a historic opportunity to end Iran’s Islamic Republic.
“In all these years, I’ve never seen an opportunity as we see today in Iran,” Pahlavi said in an interview aired Tuesday on “Hannity.”
“Iranian people are more than ever committed to bringing an end to this regime, as the world has witnessed in the last few days, the level of demonstrations is unprecedented in Iran,” he said.
Pahlavi said protests have spread to more than 100 cities and emphasized the role of Iran’s traditional merchant class, describing developments inside the country’s bazaars as a turning point. “We are beginning to see more and more defections,” Pahlavi said, adding that “Either way, the regime is crumbling and is very close to collapsing.”
IRAN ON THE BRINK AS PROTESTERS MOVE TO TAKE TWO CITIES, APPEAL TO TRUMP
Over the past 24 hours, Iran International reported continued protests and strikes across the country, including in Tehran, Tabriz, Qazvin, Kermanshah, Kerman, Shiraz, Falavarjan and Bandar Abbas. Tehran’s Grand Bazaar remained a focal point of unrest, with large crowds chanting against Iran’s leadership as authorities responded with tear gas and armed deployments.
Security operations expanded into sensitive civilian locations. Videos published by Iran International showed tear gas used near or inside Tehran’s Sina Hospital and the Plasco Shopping Center.
Casualty and arrest figures continued to rise. The Human Rights Activists News Agency, cited by Iran International on Wednesday, reported at least 36 people killed since protests began, including 34 protesters and two members of Iran’s security forces, with more than 2,000 arrests nationwide. Iranian authorities have not released updated official figures.
New footage from the past day showed demonstrators lighting fires in the streets of Shiraz and chanting “Death to Khamenei,” referring to Supreme Leader Ali Khamenei. In Qazvin, protesters were heard chanting, “Law enforcement, return to the side of the nation.”
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Workers also joined the unrest, with strikes reported at the South Pars gas refinery and widespread shop closures at major markets in Tehran and Tabriz.
US seizes two oil tankers in North Atlantic amid sanctions enforcement
U.S. forces on Wednesday seized two sanctioned tankers in the Atlantic Ocean.
First, U.S. European Command (EUCOM) announced the seizure of the Russian-flagged Marinera oil tanker in the North Atlantic Sea.
“The @TheJusticeDept & @DHSgov, in coordination with the @DeptofWar today announced the seizure of the M/V Bella 1 for violations of U.S. sanctions,” read a post from EUCOM on X. “The vessel was seized in the North Atlantic pursuant to a warrant issued by a U.S. federal court after being tracked by USCGC Munro.”
“This seizure supports @POTUS Proclamation targeting sanctioned vessels that threaten the security and stability of the Western Hemisphere,” EUCOM added. “The operation was executed by DHS components with support from @DeptofWar, showcasing a whole-of-government approach to protect the homeland.”
Fox News previously reported that U.S. forces were attempting to board the Marinera tanker, which previously operated under the name Bella 1, in the North Atlantic earlier Wednesday morning.
TREASURY TARGETS OIL TRADERS, TANKERS ACCUSED OF HELPING MADURO EVADE U.S. SANCTIONS
The development comes after the Wall Street Journal reported on Tuesday that Russia had sent a submarine and other naval assets to escort the tanker.
The vessel had spent more than two weeks attempting to slip past U.S. enforcement efforts targeting sanctioned oil shipments near Venezuela, the outlet reported.
“The blockade of sanctioned and illicit Venezuelan oil remains in FULL EFFECT — anywhere in the world,” said Secretary of War Pete Hegseth after the tanker was seized.
President Donald Trump announced a blockade of all sanctioned oil tankers going in and out of Venezuela in mid-December.
Later Wednesday morning, U.S. Southern Command (SOUTHCOM) announced the separate seizure of another oil tanker, the M/T Sophia, in the Caribbean.
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“In a pre-dawn action this morning, the Department of War, in coordination with the Department of Homeland Security, apprehended a stateless, sanctioned dark fleet motor tanker without incident,” SOUTHCOM said.
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It added that the interdicted vessel was conducting “illicit activities” in the Caribbean and is being escorted by the U.S. Coast Guard to the United States for “final disposition.”
“Through Operation Southern Spear, the Department of War is unwavering in its mission to crush illicit activity in the Western Hemisphere. We will defend our Homeland and restore security and strength across the Americas,” said SOUTHCOM.
Carville claims US ‘ripe for invasion’ if legitimate to infiltrate ‘corrupt regime’
Democratic strategist James Carville claimed Tuesday that the U.S. would be “ripe for invasion” if it were legitimate to invade a “corrupt” regime while discussing the Trump administration’s actions in Venezuela and the capture of Nicolás Maduro.
“Look, if it was legitimate to invade a corrupt and an attempted authoritarian nation, then we better get troops on San Francisco and Boston — and all up and down the east and West Coast — because we would be ripe for invasion if somebody wanted to overturn a massively corrupt regime, which is, in my opinion, which we have here right this minute. And I think it’s unfolding right in front of us,” Carville told MS NOW’s Ari Melber.
Maduro and his wife, Cilia Flores, were captured in Venezuela on Saturday and indicted Monday in the Southern District of New York on federal charges including narco-terrorism conspiracy, conspiracy to import cocaine and weapons-related offenses.
Carville argued that Democrats needed to speak out about who would benefit from the U.S. actions in Venezuela.
TRUMP EMBRACES US INTERVENTION IN VENEZUELA, OPENS DOOR TO BROADER LATIN AMERICA PUSH
“I think we should certainly hammer who benefits from this operation. We’re doing all this. Who’s going to be a winner? Is a deputy sheriff in some rural Iowa going to be the winner here? Is a dental hygienist in western Montana going to be the winner here? I don’t think so. You’re not there. There are no shoe clerks in this poker game, and you’re not — you’re not in it. It’s not going to affect your life. In fact, it could very well adversely affect your life because we’re saying international order doesn’t matter,” he said.
“Earlier this year, President Trump paved the way for peace in the Middle East by obliterating Iran’s nuclear facilities. Now, he is bringing narcoterrorist Nicolas Maduro to justice for bringing deadly drugs and vicious criminals into our country. The Biden administration and over 60 countries have recognized Maduro’s rule as illegitimate, but only President Trump had the courage to hold him accountable for his crimes of killing countless Americans with illicit narcotics. All of the President’s foreign policy actions have put America First while making the entire world safer and more stable,” White House spokesperson Anna Kelly told Fox News Digital in a statement.
The Democratic strategist also spoke to Melber about Americans’ views of the actions in Venezuela. A Reuters/Ipsos survey found that 34% of Americans disapproved of the military action, 33% approved, and 33% said they were unsure.
Carville said American citizens were not involved in the operation and noted that President Donald Trump told reporters he gave notice of his actions to major oil companies, according to The Hill.
However, The Wall Street Journal reported Tuesday that Chevron and other energy companies did not receive prior notice, citing people familiar with the matter.
CROCKETT CALLS TRUMP THE “MADURO OF THE UNITED STATES” DURING ‘THE VIEW’ APPEARANCE
“Anybody that thought of voting for Donald Trump because he cared about their lives or cared about the cost of living, or their wages or their healthcare or anything else — you’re not part of this deal, junior. You just stay out on the outside, look in, and the whole company is going to cut their deals, and that’s just what’s going to happen. And people are just two thirds of the country that doesn’t like this or are on the verge not liking it. It’s pretty clear,” Carville said.
Democrats have argued that Trump lacks the legal authority to take military action in Venezuela without congressional approval. Secretary of State Marco Rubio defended the operation Sunday, arguing that congressional approval was not necessary.
“This is not an operation that requires congressional approval. In fact, this is an operation akin to what virtually every single president for the last 40 years has conducted. The difference is that when it’s Donald Trump, you know, all these Democrats go bonkers,” Rubio told NBC’s Kristen Welker on Sunday.
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Trump announced Tuesday that interim authorities in Venezuela would turn over between 30 million and 50 million barrels of “high-quality” sanctioned oil to the U.S.
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Trump said the oil would be sold at market price, and he would control the proceeds to ensure it is “used to benefit the people of Venezuela and the United States!”
Former college football star in critical but stable condition after ranching accident
Former Texas star and NFL player Jordan Shipley was hospitalized after he suffered “severe burns” during a ranching accident, his family said Tuesday.
The former Longhorns star was airlifted to a hospital in Austin, Texas, and was in critical but stable condition, the family said in a statement provided by the university.
“Jordan was involved in an accident this afternoon near his hometown of Burnet. The machine he was operating on his ranch caught fire, and although he managed to get out, it was not before sustaining severe burns on his body in the process.”
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“He was able to get to one of his workers on the ranch who drove him to a local hospital,” the statement continued. “He was then care-flighted to Austin, where he remains in critical but stable condition.”
Shipley was a star receiver at Texas from 2006-09, when he finished his career as the all-time leader in receptions (248) and ranked second in yards (3,191) and touchdowns (33).
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A two-time All-American, Shipley also served as a special teams player, returning 30 punts for 375 yards and three touchdowns. He also returned 19 kickoffs for 468 yards and one touchdown.
Shipley was drafted by the Cincinnati Bengals in the third round of the 2010 NFL Draft and had 79 receptions for 858 yards and four touchdowns over three seasons with the Bengals, Jacksonville Jaguars and Tampa Bay Buccaneers.
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Fire chief admits department altered review of California’s third-worst wildfire: report
The head of the Los Angeles City Fire Department (LAFD) revealed this week that the after-action analysis of the devastating Palisades Fire was edited several times to protect leadership, a report said.
The Palisades Fire, which ignited in January 2025, was the third most destructive in California’s history, Cal Fire has said.
LAFD Chief Jaime Moore made the admission about the report during an LA Fire Commission meeting on Tuesday, according to KNBC.
“It is now clear that multiple drafts were edited to soften language and reduce explicit criticism of the department leadership in that final report,” Moore was quoted by the station as saying. “This editing occurred prior to my appointment as Fire Chief. And I can assure you that nothing of this sort will happen ever again while I am Fire Chief.”
ONE YEAR AFTER LA FIRES, POLITICIANS’ PROMISES OF PERMITS APPEAR PALTRY
In November, KNBC reported that an anonymous letter was sent to Los Angeles Mayor Karen Bass and Councilmembers Marqueece Harris-Dawson and Traci Park claiming that the LAFD’s after-action report on the Palisades Fire wasn’t thorough because its preparation was supervised by some of the same fire officials who made decisions during the blaze.
Moore also said that the department’s handling of the Lachman Fire — a small New Year’s Day 2025 brush fire that ignited in the Pacific Palisades, eventually leading to the Palisades Fire — wasn’t good enough, KNBC added.
“At the time, fire companies were instructed to pick up hose. The department genuinely believed the fire was fully extinguished. That was based on the information, condition and procedures in place at that moment,” Moore reportedly said.
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Firefighters working the site of the Lachman Fire were ordered to leave the original burn scene despite tree stumps there being hot to the touch, according to a review of firefighter text messages by the Los Angeles Times last October.
The newspaper, citing the texts, reported that the firefighters’ battalion chief told them to pack up their hoses and depart the area on Jan. 2, one day after the Lachman Fire was declared contained. Then on Jan. 7, heavy winds reignited smoldering roots from the same area, sparking the Palisades Fire, which burned some 7,000 structures and killed 12 people.
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“As a result, we’ve already changed our mop-up procedures, and we formally incorporated the use of the drone technology to enhance post suppression verification, situational awareness and detection of residual heat,” Moore also said Tuesday, according to WNBC.
Judge demands explanation after Halligan listed herself as US attorney
A federal judge on Tuesday ordered Lindsey Halligan to explain why she identified herself as the U.S. attorney for the Eastern District of Virginia in a criminal indictment, despite a prior ruling that her appointment was unlawful.
According to court documents reviewed by Fox News Digital, U.S. District Judge David Novak said in a three-page order that Halligan must file a written response within seven days justifying her use of the title and explaining why it should not be struck from the indictment.
“Ms. Halligan shall further explain why her identification does not constitute a false or misleading statement,” said Novak.
Fox News Digital reached out to the U.S. Attorney’s Office for the Eastern District of Virginia for comment but did not immediately receive a response.
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President Donald Trump appointed Halligan to serve as interim U.S. Attorney for the Eastern District of Virginia after Erik Siebert resigned.
A federal judge in November dismissed the indictments of former FBI Director James Comey and New York Attorney General Letitia James, finding that Halligan had been unlawfully appointed and therefore lacked the authority to bring the charges.
Novak cited the Nov. 24 ruling by U.S. District Judge Cameron McGowan Currie in his order, noting that while it is under appeal, no stay has been issued, meaning it remains binding on the court.
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Trump pressed Senate Majority Leader John Thune, R-S.D., in December to dismantle the Senate’s “blue slip” tradition, arguing that the practice has allowed Democrats to block Republican judicial and U.S. attorney nominees.
“If they say no, then it is OVER for that very well qualified Republican candidate. Only a really far left Democrat can be approved. It is shocking that Republicans, under Senator Chuck G, allow this scam to continue. So unfair to Republicans, and not Constitutional,” Trump wrote on Truth Social.
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“I am hereby asking Senate Majority Leader John Thune, a fantastic guy, to get something done, ideally the termination of Blue Slips. Too many GREAT REPUBLICANS are being, SENT PACKIN’. None are getting approved!!!”
Alina Habba, another Trump-appointed U.S. attorney, announced on Dec. 8 that she would step down as the top federal prosecutor in New Jersey after an appeals court ruled she, too, was unlawfully serving in the role.