Minnesota state workers in charge of taxpayer-funded grants were caught mismanaging money and even fabricated critical documents to cover their tracks, a damning audit has found.
Employees with the Minnesota Department of Human Services’ (DHS) Behavioral Health Administration — tasked with doling out some $200 million in grants to treat alcoholism and drug addiction each year — produced key documents that were created after auditors requested them, legislative auditor Judy Randall found.
Randall characterized it as a “systemic effort” to produce backdated documentation.
“Frankly, in the 27-plus years I’ve been with the OLA [Office of the Legislative Auditor], I’ve never seen this before,” Randall told state lawmakers earlier this week.
“I will say we’ve had suspicions periodically, but we’ve never been able to prove it, to document it, and we did in this case,” she added. “It’s very troubling.”
The report assessed the more than $425 million worth of grants doled out to some 830 groups between July 1, 2022, and Dec. 31, 2024.
In addition to the potential falsification of documents, auditors also found evidence of state workers mismanaging grant money.
In one instance, auditors zeroed in on a company that received $672,000 a month without providing information on the services provided. The grant manager in charge of doling out that money later went to work as a paid consultant for that firm.
The audit also found that there was incomplete documentation for 63 of 71 grant agreements. In some cases, there was no documentation, and reconciliations were finished after the last payments were made.
Auditors also found evidence that at least two grant recipients were overpaid and that other firms got money before signing a grant agreement.
The audit drew the attention of House Oversight Committee Chairman James Comer (R-Ky.), whose panel held a public hearing Wednesday to investigate the rampant fraud in Minnesota.
“It sounds like Gov. Tim Walz’s Department of Human Services may have been fabricating evidence by creating documentation after the fact to mislead auditors,” Comer observed Wednesday.
The stunning findings have prompted Minnesota’s DHS to open an investigation.
“I was shocked to hear this information in the exit conference, and it is absolutely unacceptable that any staff would provide anything other than an accurate representation of the work done to an auditor,” DHS Temporary Commissioner Shireen Gandhi testified Tuesday after the findings were revealed.
“DHS is swiftly and thoroughly investigating the concerns raised and we are keeping the OLA [apprised] of that and will share all information appropriate with the OLA so that they can see for themselves the investigation and the result.”
Minnesota has been facing a firestorm over massive fraud that has gripped the state for years.
Late last month, assistant US Attorney Joe Thompson estimated that since 2018, there could have been as much as $9 billion worth of theft from taxpayers. Skeptics have argued that Thompson might be overstating the problem.
The Justice Department has charged 98 people since 2022, including 85 individuals of Somali descent. Sixty-four of them have been convicted.
Minnesota Gov. Tim Walz (D) abruptly dropped his bid for reelection Monday amid fallout from the growing scandal.
