The story just keeps getting uglier and uglier.

The new interim staff report on Minnesota’s fraud describes criminal activity that was enabled by a horrifying pattern of spineless government incompetence and systemic failure.  Some say Minnesota is just the tip of the iceberg.  Best guess?  Government, both state and federal, is rife with it.

According to the March 4, 2026 House Committee on Oversight and Government Reform report, “The Cost of Doing Nothing: How Tim Walz and Keith Ellison Fueled Minnesota’s Fraud Explosion,” there was a massive failure in “governance and oversight” that allowed “known fraud and criminal schemes to flourish,” even as resources were diverted away from “the vulnerable populations these programs were intended to serve.”

Since 2018, it is estimated that “half or more of the $18 billion in total expenditures was fraud.”  After the Trump administration threatened to withhold federal funding for Department of Human Services (DHS) programs “because of widespread fraud,” Minnesota “froze all provider enrollment for the high-risk programs in January 2026.”

The Investigation

The committee built the record with transcribed interviews with “nine current and former state officials spanning the Minnesota Department of Education (MDE) and the Department of Human Services (DHS), including former and temporary DHS commissioners and Walz’s former chief of staff.”  Document production was limited: Walz’s office “produced 48 documents and email communications (totaling 177 pages), and Ellison’s office produced 11 documents (including one duplicate) totaling 97 pages.”

The report references 98 charged individuals tied to widespread fraud in Minnesota.  It says 85 are Somali, and “more than 60 have been found guilty in court.”  These criminal actors hijacked 14 Medicaid programs designated “‘high risk’ for fraud by DHS.”

The committee focused on four high-risk programs with the most indictments and confirmed fraud: Housing Stabilization Services (HSS), Early Intensive Developmental and Behavioral Intervention (EIDBI), Integrated Community Supports (ICS), and Non-Emergency Medical Transportation (NEMT).

HSS

HSS is a DHS-run, Medicaid-funded program created in 2019 via a §1915(i) State Plan Amendment to cover certain housing-related services without capping enrollment.  Projected at $2.6 million a year, it ballooned to roughly $108 million by 2024, growing from 278 providers and 8,126 recipients ($27.7 million) in 2021 to 883 providers and 21,679 recipients (over $105 million) in 2025.  The report says fraudsters targeted vulnerable people leaving rehab and billed Medicaid for services never delivered (drawing even out-of-state actors).  DHS moved to terminate HSS on August 1, 2025, citing credible allegations involving 77 providers and a lack of “necessary tools” to stop bad actors.

EIDBI

The EIDBI benefit provides services for Medicaid-eligible children and young adults (21 and under) with autism spectrum disorder (ASD) and related conditions, requiring a comprehensive multidisciplinary evaluation to establish medical need.  Between 2019 and 2024, the program expanded rapidly: Providers allegedly grew from 41 to 328 (about a 700% increase), while enrollment rose from 791 recipients costing $20.4 million in 2019 to 5,705 recipients, costing more than $342 million.  The report notes DOJ allegations that fraudsters targeted parents in Minnesota’s Somali community to recruit children into treatment centers, helped obtain fraudulent autism diagnoses, and paid parents monthly kickbacks (roughly $300–$1,500) tied to approved service levels.  It also states that Minnesota allowed EIDBI providers to operate without a license until early 2026.

ICS

ICS is a Minnesota Medicaid program for adults with disabilities that exploded in size, from 28 providers serving 164 recipients ($4.6 million) in 2021 to 458 providers serving 2,444 recipients (over $170 million) by 2024.  The report cites DOJ-confirmed fraud and alleges serious beneficiary harm, including a recipient’s death from neglect (Rick Clemmer, March 2025) and a disabled woman’s eviction after caregivers allegedly sublet her apartment and stopped paying rent (June 2025).

NEMT

NEMT is a high-risk Medicaid program with a documented fraud history.  A federal HHS inspector general report found that DHS improperly claimed over $1.8 million in Medicaid reimbursement and failed to properly document services.  Separately, Nick Shirley’s reporting highlighted suspicious NEMT providers operating from unlikely locations and shared addresses, often with little visible evidence of active vehicle use.

Core allegations

The committee found a pattern of reckless and irresponsible behavior by government employees and senior state-level officials.  The report alleges that Walz and Ellison knew about fraud in MDE nutrition programs as early as April 2020 and knew about fraud in DHS programs, including the Child Care Assistance Program (CCAP) and non-emergency medical transportation, as early as spring 2019.  Walz and Ellison were also aware of fraud across additional “high-risk” Medicaid programs but failed to act there as well, despite their public statements suggesting they knew little or nothing about fraud in those programs.

The report states that agencies had the authority to stop or suspend payments without court orders, law enforcement input, or federal direction but continued to make payments “voluntarily.”  In 2021, MDE had suspended payments to the Feeding Our Future (FOF) program based on “serious deficiencies,” but FOF sought to “resume payments and pay sanctions.”  A Sept. 23, 2022 press release from Ramsey County judge John Guthman stated that he never ordered payments to resume and that Walz’s statement to the contrary was “false.”

Walz doubled down in a March 4 House Oversight hearing, stating that the agency “believed the court had ordered it to restart the payments.”  Rep. Jim Jordan (R-Ohio) replied by reading the judge’s rebuke from the same 2022 press release, stating he never ordered that the payments be resumed.  Walz also claimed publicly that the FBI directed state officials to continue payments to FOF or other suspected fraudulent providers, but the report disputes that claim as well.

When asked why MDE continued payments to providers alleged to be fraudulent, whistleblowers associated with the agency cited “fear of litigation” and being perceived as racist.  The report concludes that MDE lacked adequate oversight mechanisms and, instead of owning the stop-the-fraud mission, blamed USDA regulations and FOF’s network for perpetuating the fraud.

DHS also “lacked oversight mechanisms, sufficient internal controls and failed to take responsibility for stopping fraud.”  In certain programs, DHS ignored responsibility for integrity “because of pressure to get money out the door.”  The committee also found that DHS had the authority to unilaterally impose stop-payments on providers facing credible fraud allegations, yet it allegedly failed to do so for years after those warnings surfaced.

During that period, Governor Walz’s hand-picked DHS commissioner (2019–2025) reportedly did not believe she was qualified to tackle fraud, even as the affected programs were increasingly exploited on her watch.  DHS officials, according to the report, consistently passed the buck to the Office of Inspector General or the Division of Internal Audit, despite both being direct reports to the DHS commissioner.

Whistleblowers who expose government waste, fraud, and abuse too often pay a price for telling the truth.  In Minnesota, DHS whistleblowers reportedly said they “experienced retaliation for reporting,” and they feared that raising concerns would “automatically” route to the commissioner or Human Resources.  According to the report, DHS whistleblowers also alleged retaliation by Governor Walz.  The report adds that whistleblowers alleged that Walz “spent millions surveilling staff” and “hired private investigators or law firms to silence staff.”

The report notes that “then-temporary DHS Commissioner Shireen Gandhi confirmed that DHS used outside entities to investigate DHS staff in her transcribed interview.”  It also notes that “dozens of whistleblowers” were told not to report fraud because “they would be called “racist” or “Islamophobic,” and it would hurt the state.  Notably, the report notes that some of the “best whistleblowers” were also “in the Somali community.

Wendi Strauch Mahoney, American Thinker