The state investigation into a proposed housing development for Somali-American families in Lakeville can move forward with some limitations, a judge ruled on Thursday, ordering developers to hand over more information about the project.

The Minnesota Attorney General’s Office launched a probe of Nolosha Development earlier this year based on allegations that the company misled customers about plans to build 160 homes on nearly 40 acres of land off of Interstate 35.

Investigators say developers collected more than $1 million from prospective homebuyers despite not having completed the purchase of the land.

At the Hennepin County Government Center on Thursday, lawyers for Nolosha asked Judge Christian Sande to stop the state’s investigation, blaming any allegations of wrongdoing on a disgruntled former intern of the company.

“The state is literally trying to gin up complaints by harassing customers from a stolen customer list,” said David Aafedt, an attorney representing Nolosha.

Lawyers for the state pushed back, arguing that Nolosha and its CEO Abdiwali Abdullahi were improperly withholding information despite a civil investigative demand from the AGO.

“If we ignore complaints from the public that this is the biggest Ponzi scheme, that would be like a dereliction of our duty and our legislative mandate to investigate business fraud in Minnesota,” said Mark Iris, assistant attorney general.

While Judge Sande did not stop the state’s investigation, he did find that some of the investigators’ questions of Adullahi and others went too far and is now limiting the scope of the investigation to only whether Nolosha violated state law regarding deceptive business practices and whether it misled customers.

Nolosha now says it is getting closer to completing the purchase of the land in question which has been tied up in separate legal action connected to the federal fraud investigation of Feeding Our Future.

Abdullahi is not connected to that case and on Thursday, members of the Somali community packed the courtroom in support of Nolosha Development.

“The entire East African community in the Twin Cities knows what’s going on. And the silence is deafening,” Aafedt said. “If people were really being fed false promises or misled, their phone would be ringing off the hook.”

Nolosha says it has now submitted plans to the City of Lakeville to move the project forward, but the city told 5 INVESTIGATES those plans were only “preliminary” and that “no engineering plans have been prepared or submitted.”

State investigators said Nolosha originally told customers that homes would be “move-in ready” by Nov. 2023.

“I understand there are delays with projects and that’s not the thrust of our investigation,” Iris said. “The thrust is consumer fraud and misrepresentations to the public.”