A House Republican investigation concluded Monday that Minnesota Gov. Tim Walz and Attorney General Keith Ellison ignored years of warnings about as much as $9.3 billion in social services fraud, retaliated against whistleblowers and repeatedly misled the public about what they knew and when.
A report released by the House Committee on Oversight and Government Reform exposes how senior Minnesota state officials, including Democrats Mr. Walz and Mr. Ellison, were aware of widespread taxpayer fraud in federally funded social programs for years, possessed the authority to stop payments and ban fraudulent providers, but routinely failed to act. As a result, billions of American taxpayer dollars were potentially paid to fraudulent actors.
The Washington Times reached out to Mr. Walz and Mr. Ellison for comment.
The report said Mr. Walz and Mr. Ellison were aware of credible and systemic fraud in Minnesota’s social services programs as early as 2019 but failed to take action to protect taxpayer funds.
Former state Department of Human Services Commissioner Tony Lourey, who served at the start of the Walz administration, testified that he briefed Mr. Walz’s Chief of Staff Chris Schmitter about fraud in two major programs — the Child Care Assistance Program and the Non-Emergency Medical Transportation program — in early 2019, and that the fraud situation was so serious it was threatening passage of the state budget.
“There was a broad awareness, in order to get a budget through the legislature, these issues needed to have broad bipartisan agreement that we have the tools and authority needed to run programs properly and avoid fraud,” Mr. Lourey testified to House investigators.
Mr. Lourey also testified that nothing prevented the state DHS from acting, saying, “I don’t recall barriers that we felt limited us in our ability” to stop payments to suspected fraudulent providers.
The report also included testimony and documents showing that Minnesota state leaders consistently failed to address known fraud concerns and retaliated against employees who sought to protect taxpayer funds, allowing criminal schemes to flourish and diverting critical resources from vulnerable Americans.
According to the report, after raising concerns about substandard contracts, DHS whistleblower Faye Bernstein was placed on investigatory leave and moved under the direct supervision of Shireen Gandhi — whom the report described as her “minder.” Ms. Bernstein said she was “shamed and then excluded from further meetings on the topic” when she raised fraud concerns. Ms. Gandhi dismissed the claim, testifying that “generally, people are — the minute they report something, they are very sensitive, and anything can be perceived as retaliation.”
More broadly, after DHS’s internal fraud tip line was de-anonymized under Ms. Gandhi’s watch as Deputy Commissioner, whistleblowers reported their tips were being routed to Human Resources and used against them. When they created an anonymous external email to report concerns, DHS blocked it.
One DHS manager, Emmanuel Nwala, explicitly threatened to use military intelligence training to identify and locate anonymous whistleblowers by their IP addresses — and was later promoted to a leadership role.
The House report also found that Minnesota state agencies had clear authority to suspend or stop payments to providers suspected of fraud without direction from courts, law enforcement, or the federal government — but failed to act.
Republican lawmakers say Minnesota officials continued directing taxpayer dollars to Feeding Our Future and other high-risk entities despite identifying serious program deficiencies, enabling hundreds of millions in federal funds to flow to fraudsters.
After declaring Feeding Our Future in “serious deficiency” for failure to comply with federal program requirements, the Minnesota Department of Education placed a stop-payment order on the organization — then voluntarily lifted it just nine days after an April 21, 2021 court hearing, even though the judge never ordered payments to resume.
Assistant Commissioner Daron Korte confirmed the decision in his transcribed interview with the committee.
“I think we could have [unilaterally terminated funds]. You know, we could unilaterally make that decision, but we just knew, with Feeding our Future, it was going to end up in court and had the potential to be overturned,” Mr. Korte said.
Hundreds of millions in federal taxpayer dollars continued flowing to Feeding Our Future for another eight months — until the FBI executed search warrants in January 2022. Judge Guthmann later issued a rare public statement confirming the payments were never court-ordered, saying he “never ordered the Department of Education to resume payments to Feeding Our Future in April 2021, or at any other time” and that “all of the Minnesota Department of Education food reimbursements to FOF were made voluntarily, without any court order.”
The report found that concerns about litigation and accusations of discrimination — not legal barriers or law enforcement directives — were the cited reasons for continuing payments to suspected fraudsters.
In total, the failures enabled an estimated $300 million in federal child nutrition funds to be lost, with potentially $9 billion in Medicaid-related funds lost or placed at serious risk.
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