U.S. House report: Minnesota officials failed to stop fraud

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(The Center Square) – A new U.S. House oversight report alleges Minnesota officials were aware of "rampant" fraud risks in taxpayer-funded social programs for years but failed to act, allowing potentially billions of dollars in taxpayer funds to be lost.

The 205-page report, released by the U.S. House Committee on Oversight and Government Reform and titled “The Cost of Doing Nothing: How Tim Walz and Keith Ellison Fueled Minnesota’s Fraud Explosion,” is culmination of a year-long investigation that included hearings, whistleblower testimony and document reviews.

It concludes that Minnesota state leaders had authority to suspend payments to providers suspected of fraud but often declined to do so without a final legal determination, even as warning signs grew across multiple high-risk programs.

The Republican majority committee asserts that:

"Testimony and documents obtained to date establish a consistent pattern: fraud warnings were elevated to the most senior levels of the Minnesota state government, meaningful corrective action was delayed or avoided, and payments continued long after credible signs of fraud emerged," the report says.

House Oversight Committee Chairman James Comer, R-Ky, said in a statement accompanying the report that Minnesota Gov. Tim Walz and Attorney General Keith Ellison are responsible for one of the “most stunning oversight failures” ever examined by the committee.

“Today’s report is the culmination of months of investigative work and reveals hard evidence showing how the Walz Administration failed to stop widespread fraud, allowing criminals to enrich themselves at the expense of American taxpayers,” Comer said. “Billions of dollars were stolen because Minnesota state leaders turned a blind eye to rampant fraud and retaliated against state employees who dared to raise concerns. It is now clear the Walz Administration chose to protect the system rather than protect the taxpayer.”

The report alleges state officials were aware of credible fraud concerns as early as 2019 but did not take decisive action. It also claims that federal law enforcement agencies, including the FBI, did not instruct Minnesota officials to continue payments to suspected fraudulent providers, contradicting prior explanations offered by state leaders.

"Instead of trying to stop widespread fraud, Gov. Walz’s Administration retaliated against employees who tried to raise concerns, going to great lengths to keep them quiet, including intimidation through regular check-ins with high-level agency officials and threats of surveillance," the report says. "Concern among senior officials within DHS only arose after they recognized it would receive negative media attention."

The committee estimates roughly $300 million in federal child nutrition funds were lost in just the Feeding Our Future scheme, while broader taxpayer-funded fraud totals could be as much as $9 billion across multiple programs.

“Gov. Walz and Attorney General Ellison knew about the fraud in federal programs administered by the State of Minnesota much earlier than they admitted,” the report concluded. “Gov. Walz and Attorney General Ellison clearly did not protect taxpayer dollars, but it is still an open question as to whether this was incompetence, willful blindness, or worse.”

The findings build on an earlier report from Minnesota House Republicans, who conducted their own two-year investigation through the now-dissolved House Fraud Prevention and State Agency Oversight Committee.

As previously reported by The Center Square, that report also concluded that state agencies and Democrat officials failed created a "culture of fraud."

Rep. Kristin Robbins, R-Maple Grove, who chaired the committee, highlighted similar concerns about Minnesota’s current political administration earlier this year.

“They weren't just sort of unaware of the fraud,” Robbins previously told The Center Square. “They were aware of it and actively allowing it to continue or suppressing people who are trying to call it out.”

On Monday, Robbins quickly pointed to this new U.S. congressional report as validation of the state committee's findings.

“[The] report confirms what our hearings and whistleblowers have been demonstrating for two years,” Robbins said in a post to social media. “Walz, Ellison and their admin knew about the fraud . . . failed to stop the theft of billions of taxpayer dollars . . . failed to hold anyone accountable . . . retaliated against whistleblowers.”

Along with the report, Comer sent a letter to U.S. Vice President J.D. Vance requesting a federal review of Minnesota’s social service programs through the federal Task Force to Eliminate Fraud, which was established by President Donald Trump in March.

In the letter, Comer urged a “thorough review of all of Minnesota’s social services program integrity measures, oversight processes, reimbursements, and enrollment from 2019 to the present." 

Comer's letter added that:

"The state’s consistent failure to act decisively in the face of known fraud allowed brazen criminal schemes to flourish and diverted resources away from the vulnerable populations these programs were intended to serve."

Additionally, the report urges the Department of Justice and “all relevant law enforcement and regulatory agencies” to conduct a “thorough review of Minnesota’s social services program reimbursements and enrollment verification processes and procedures from 2019 to the present.”

It further recommends that federal agencies, including the U.S. Department of Agriculture, Department of Health and Human Services and Centers for Medicare and Medicaid Services, look at implementing rules to strengthen program integrity requirements for state-run programs, including the federal nutrition program, Child Care and Development Block Grants and Medicaid.

“Further legislative efforts at the federal level are necessary to prevent this massive waste, fraud, and abuse of federal dollars from ever happening again,” the report states.

The Walz administration and Ellison’s office have previously disputed similar allegations. The Center Square requested comment from both the governor’s office and the attorney general’s office regarding the report’s findings. Neither office responded prior to publication, and, as of Monday afternoon, neither had issued a public statement addressing the report.