Federal prosecutors, led by Acting U.S. Attorney Joseph H. Thompson, estimate that fraud in Minnesota’s Medicaid-funded social services programs exceeds $9 billion, representing half or more of the approximately $18 billion billed across 14 high-risk programs since 2018. These schemes involve fake providers billing for non-existent services in areas such as child nutrition programs, autism treatment through the Early Intensive Developmental and Behavioral Intervention (EIDBI) program, housing stabilization via Housing Stabilization Services (HSS), integrated community supports, and other Medicaid waivers intended for vulnerable populations including low-income individuals, disabled Americans, and children.
This builds on the earlier Feeding Our Future case, the largest pandemic-era child nutrition fraud scheme in U.S. history, where fraudsters stole approximately $250 million (with some estimates up to $300 million) by falsely claiming to provide meals to needy children. Over 90 individuals have been charged in that case alone, with more than 70 convictions or guilty pleas secured, and numerous ongoing trials and asset forfeitures. Many defendants used proceeds for luxury vehicles, real estate, international travel, and other personal gains.
Across related cases, a total of 98 defendants have been charged by federal authorities, with 64 convictions as of early 2026. Investigations involve multiple agencies, including the FBI, IRS, Treasury Department, Homeland Security Investigations, and the Department of Health and Human Services Office of Inspector General. Audits by the Minnesota Office of the Legislative Auditor have repeatedly identified oversight failures at the Department of Human Services (DHS), including weak internal controls, missing or late progress reports, incomplete financial reconciliations, backdated documentation created after audit requests, and insufficient monitoring of grants exceeding $425 million in behavioral health programs alone between 2022 and 2024.
Specific fraud tactics include hiring unqualified staff (such as untrained relatives as behavioral technicians in autism programs), paying kickbacks to parents for enrolling children, billing for services to deceased or ineligible recipients, falsifying records, and exploiting low barriers to entry in programs like HSS, which ballooned from a budgeted $2.6 million annually to over $100 million yearly despite minimal requirements. The state has shut down HSS, paused payments to suspected providers, frozen new enrollments in high-risk categories, and hired third-party auditors and a former FBI agent to lead fraud prevention.
Tim Walz got caught in the escalating scrutiny over his administration’s handling of these fraud schemes including allegations of ignored warnings from auditors and whistleblowers dating back years, inadequate safeguards, and retaliation against state employees who raised concerns (such as threats of termination without unemployment benefits or career-damaging transfers) which led him to announce on January 5, 2026, that he would not seek reelection for a third term. While Walz has disputed the $9 billion figure as sensationalized, emphasized his administration’s anti-fraud efforts (including new legislation for data sharing, licensing requirements, and payment suspensions), and praised federal charges, critics argue the scandals
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