Governor Walz Declares War on Public Benefit Fraud in Minnesota
Following a series of investigations revealing hundreds of millions of dollars in misappropriated taxpayer funds from vital safety net programs, Minnesota Governor Tim Walz took decisive action on January 3, 2025. He signed an executive order establishing a centralized fraud unit and proposed comprehensive legislation aimed at curbing the theft of public money intended to support children, low-income individuals, and the elderly.
The executive order creates a new fraud investigation unit within the Bureau of Criminal Apprehension (BCA), transferring investigators from the Department of Commerce to bolster its capabilities. Further, the Governor’s plan includes a nine-member expansion of Attorney General Keith Ellison’s Medicaid fraud unit.
Beyond the executive action, Governor Walz introduced legislation designed to enhance the state’s ability to combat fraud. Key proposals include granting state agencies broader authority to halt payments to suspected fraudsters, leveraging artificial intelligence to identify fraudulent patterns, and strengthening penalties for convicted offenders. The proposed legislation introduces a new “theft of public funds” statute, increasing criminal penalties by 20% compared to existing theft laws, and criminalizes kickbacks to deter collusion between state employees and fraudulent actors. The Governor acknowledged that the state’s traditionally generous and trusting culture may have inadvertently contributed to increased fraud vulnerabilities.
This initiative comes on the heels of FBI raids on two autism providers suspected of massive overbilling, a case linked to the infamous “Feeding Our Future” scandal—a $250 million theft of federal funds allocated for child nutrition during the pandemic. The FBI investigation revealed connections between several defendants charged in the “Feeding Our Future” scheme and the implicated autism clinics.
Governor Walz’s proposal faces a challenging legislative landscape. With a narrowly divided Senate and a Republican-controlled House, bipartisan support will be crucial for the legislation’s passage. House Speaker-designate Lisa Demuth, R-Cold Spring, criticized the Governor’s plan as “smoke and mirrors,” pledging a comprehensive Republican alternative focused on independent oversight and accountability. The ultimate success of Governor Walz’s ambitious fraud-fighting measures will depend on navigating this politically charged environment and garnering the necessary consensus to protect Minnesota’s public funds.
By Michelle Griffith, Minnesota Reformer, January 3, 2025
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