Minnesota Governor Tim Walz is issuing an executive order directing state agencies to step up their efforts in fighting fraud.
It comes on the same day the House Fraud Prevention Committee held a hearing on more fraud within the Minnesota Department of Human Services, where officials ignored multiple warning signs according to an investigative report by KARE-11.
The questions Wednesday were involving a now-terminated, Medicaid-funded program that helped elderly and disabled residents find housing.
“We have no tolerance for fraud in the State of Minnesota,” said Gov. Walz. “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. While we will continue to urge the legislature to take further action, this executive order gives our agencies additional tools to safeguard taxpayer dollars.”
Temporary DHS Commissioner Shireen Gandhi testifying they have since changed their fraud investigation process.
"We had a past practice of waiting to stop payments until investigations had concluded," says Ganhdi. "And investigations are time-intensive, and were taking too long. So we flipped that. We flipped that, and decided we were going to stop payments as soon as there was a credible allegation of fraud."
Inspector General at the Minnesota Department of Human Services, James Clark, told the committee that greedy people and businesses have learned how to exploit their programs. He also said they have a provider vetting problem.
"We need to make it much, much harder for fly-by-night unqualified providers to gain access to our programs. When I came on board DHS, and we still are, primarily a tip-based investigation system," Clark explained. "Responding to tips is important and we need to react to tips, but we can't just take a reactive approach in our fight against fraud. We need to be proactive."
The committee holding the hearing is chaired by Republican State Representative Kristin Robbins, who is running against Walz in next year's election.
"If there is a credible allegation of fraud on a provider within DHS Program X, they should be cut off of every other program, in every agency," said Republican representative Patti Anderson.
Also, the Minnesota Department of Human Services says Eric Grumdahl, who had been serving as its assistant commissioner for homelessness and housing supports, is no longer there. That development “stunned” Robbins, who says she was notified about Grumdahl's alleged firing just hours ahead of meeting she chairs.
“This is yet another example of DHS and the Walz Administration dodging accountability for their failures. I would have expected Assistant Commissioner Grumdahl to attend the hearing and answer questions today, but DHS never intended for him to come. While I’m glad to see they are finally starting to hold individuals running these programs accountable for fraud, doing it the day before the public hearing just shows how DHS tries to hide what is going on from legislators and the public,” Rep. Kristin Robbins (R-Maple Grove), the committee chair, said in a statement.
In August, citing allegations of widespread fraud, the Minnesota Department of Human Services announced that it's was to terminate Housing Stabilization Services. The FBI was looking into a massive scheme to defraud the state program as well.
The department was questioned about what they have been doing to go after people fraudulently taking money from the state. Republicans questioned why things like visiting addresses with multiple providers or other checks have not occurred.
“We need to know that people are doing their due diligence that our staff was able to do, that reporters have been able to do, that citizens have been able to do, that the department doesn’t seem able to do,” Robbins said.
Added Rep. Walter Hudson (R), “We have a running car with the keys in it unattended and we’re surprised when it gets stolen.”
Clark said the Human Services Department has become “more aggressive” in going after fraud, including, since May 2025, proactively suspended payments at signs of fraud and notifying law enforcement.
Rep. Emma Greenman (DFL) said the state is “very, very vulnerable” with so many services being outsourced to entities more focused on profit.
“We need to think about how government could do this differently, how the public could be doing it differently so that publicly provided services are publicly accountable and potentially publicly provided. … We have to meet the needs of our communities that doesn’t create a vector for private sector fraud.”