Minnesota to shut down housing program because ‘too many fraudulent, unqualified bad actors have likely stolen money’

The Minnesota Department of Human Services (DHS) announced Friday it plans to shut down a housing assistance program after investigations revealed “too many fraudulent, unqualified bad actors have likely stolen money from our state’s taxpayers.”

Last month, federal authorities raided several organizations suspected of participating in a “massive scheme to defraud” Minnesota’s Housing Stabilization Services (HSS) program, a program administered by DHS but funded by Medicaid.

Since then, DHS has suspended payment to 77 entities who participated in the program.

After consulting with DHS’ inspector general, DHS Temporary Commissioner Shireen Gandhi announced that her agency will be terminating the HSS program entirely. In a letter sent to federal authorities, Gandhi requested assistance in ending the program.

“As I made clear in my letter to [federal authorities], our own data analysis has shown that this program does not have the necessary controls to stop bad actors, and we are urging [federal authorities] to approve our request to end this program as swiftly as possible,” said Gandhi.

According to DHS, the housing assistance program helps “people with disabilities, including mental illness and substance use disorder, and seniors find and keep housing.”

In a press release, DHS described its decision as an “unprecedented step,” and DHS Inspector General James Clark said the move was regrettable yet necessary.

“As our [Office of the Inspector General] data and investigations have revealed, too many fraudulent, unqualified bad actors have likely stolen money from our state’s taxpayers, and also cheated Minnesotans who need housing services,” said Clark.

Republicans were quick to respond to the news.

“Friday afternoon’s surprise announcement from the Walz Administration is the right decision, but it’s too little, too late,” said House Speaker Lisa Demuth. “Once again, state agencies failed to catch fraud in real time. Instead of stopping it, they’re scrambling after the fact, after millions of taxpayer dollars have already been stolen.”

Senate Minority Leader Mark Johnson said the Walz administration was terminating the program “to prevent any more embarrassment,” and Rep. Kristin Robbins said the move was “a stunning admission of just how deeply broken this program has become under the Walz administration’s watch.”

While DHS is ending the program for now, the agency said it will work with legislators and other partners to redesign and relaunch the housing assistance program.

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