Walz Pressed On Federal Probe Of State Fraud Allegations
Minnesota Gov. Tim Walz wasted no time stepping into controversy after launching his campaign for a third term. Less than 24 hours later, his administration came under heavy scrutiny for presiding over yet another massive fraud scandal tied to taxpayer-funded programs.
The latest debacle centers on the Housing Stabilization Services program, a Medicaid-funded initiative that was supposed to help seniors and the disabled find housing. Instead, the program ballooned from a modest $2.6 million annual cost in 2017 to a staggering $107 million by 2024, according to the Minnesota Reformer. Last month, Department of Human Services (DHS) temporary commissioner Shireen Gandhi asked federal officials to shut the program down, citing “credible allegations of fraud” and “exponential growth in spending.”
Republicans in the state legislature, who have been sounding the alarm on rampant fraud for years, scheduled a hearing Wednesday to grill DHS officials over why the abuse went unchecked for so long. Just 45 minutes before the hearing began, Walz scrambled to announce an executive order creating a new Inspector General Coordinating Council under the Bureau of Criminal Apprehension. But the move raised more questions than answers, as the council’s authority remains vague and its independence doubtful.
Walz defended his record, insisting his administration has strengthened oversight. “If you’re going to commit these crimes in Minnesota, you are going to get caught,” he told WCCO last month. He further boasted about new tools, including data-sharing, internal inspectors general, and even suggested artificial intelligence could play a role.
“We have no tolerance for fraud in the state of Minnesota,” Walz said in a statement. “Abuse of taxpayer dollars takes resources away from the people who need them most. If you commit fraud in Minnesota, you will be prosecuted and held accountable to the fullest extent of the law.”
But Minnesotans have heard those promises before — and the results tell a different story. The Walz era has already been marred by multiple scandals involving fraudsters exploiting federal and state programs. From the infamous Feeding Our Future scheme that siphoned off hundreds of millions in COVID relief dollars, to Medicaid billing scams and abuse in the state’s autism program, the pattern is clear: fraud flourishes under Walz’s watch.
Rep. Kristin Robbins (R-Maple Grove), chair of the House Fraud Prevention and State Agency Oversight Committee — and a declared candidate for governor — accused Walz of playing politics with his latest executive order.
“Releasing this executive order just before today’s House Fraud Prevention and State Agency Oversight hearing appears more like a distraction than a solution,” Robbins said. “Our committee will continue pressing for accountability and real reforms to protect taxpayers and ensure state programs serve those truly in need.”
Robbins revealed that DHS Commissioner Gandhi confirmed the assistant commissioner who oversaw Housing Stabilization Services is no longer with the department. Robbins characterized it as a firing; Gandhi downplayed it as the “appointment” ending.
DHS Inspector General James Clark testified Wednesday that payments to 115 providers in the program have been suspended after billing the state roughly $100 million over six years. He admitted DHS had previously continued payments even when fraud was suspected, claiming the agency didn’t want to tip off perpetrators. Now, Clark said, they will adopt a more “aggressive” stance, halting payments immediately and looping in law enforcement.
Meanwhile, Gandhi confirmed the program is slated to be terminated on Oct. 20, pending federal approval.
The scandal underscores growing frustration among Minnesotans who see rampant abuse of taxpayer funds and a governor whose leadership has allowed it to spiral out of control. With Walz asking voters for another term, the question now is whether his administration’s failures on fraud will define the campaign.