Minnesota Democrats are axing a housing aid program amid growing evidence of massive fraud throughout the increasingly diverse state.
The Minnesota Department of Human Services is set to end the Housing Stabilization Services program after allegations of massive fraud and theft of public funds have turned up in a federal probe, CBS News reported.
The investigation into the housing fraud in Minnesota only adds to the growing number of fraudulent and mismanaged state programs, including the hundreds of autism clinics that wasted tens of millions in state tax dollars, and the $250 million fraud in a coronavirus relief program that was supposed to pay for food for children.
The crime-racked housing program, which kicked off in 2020, was meant to help people with disabilities and the elderly purchase and maintain a home. But authorities soon found out that the program ended up being no less than a “massive scheme to defraud” the state, according to a filing made in a federal court by federal investigators.
The program was originally estimated to cost state taxpayers $2.5 million annually when it launched in 2020, but by its second year had already ballooned to $21 million. And as 2024 came to a close it had soared to an outrageous $104 million.
FBI investigators said that the program was “extremely vulnerable to fraud.”
“Since Minnesota became the first state to offer Medicaid coverage for Housing Stabilization Services, dozens of new companies have been created and enrolled in the program,” reads the federal search warrant served on the Minnesota Department of Human Services. “These companies, and the individuals that run them have taken advantage of the housing crisis and the drug addiction crisis in Minnesota to prey on individuals who need help getting on their feet as they recover from drug addiction.”
Despite the massive fraud and waste, Minnesota Democrats and Democrat Gov. Tim Walz’s administration are vowing to “fix” the program and relaunch it, though Walz did issue a press release claim that he “fully supports” shutting down the fraud-racked program for now.
“Until the legislature can redesign this program, it is simply too susceptible to fraud to continue. This effort is one of many that the Administration is making to prevent fraud, tighten controls, catch and penalize criminal activity, and ensure state services go to only those who truly need them,” Walz said.
Minnesota Senate Republican Leader Mark Johnson excoriated Walz for the fraud and his response to the investigation.
“Today we learned Governor Walz is shutting down a housing program riddled with fraud, not to fix it, but to prevent any more embarrassment. Instead of holding anyone accountable, they’re pulling the plug before an audit can expose just how badly they mismanaged millions in taxpayer funds,” Johnson said.
No charges have yet been filed as the federal investigation into the fraud and abuse in ongoing.
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