State Shuts Down Housing Program After Massive Fraud Scheme Drains Over $100 Million

(KNSI) – The Minnesota Department of Human Services announced Friday that it will shut down the Housing Stabilization Services Program after widespread fraud allowed millions in taxpayer dollars to be stolen.

DHS Inspector General James Clark said the decision came after investigations revealed “too many fraudulent, unqualified bad actors have likely stolen money from our state’s taxpayers, and also cheated Minnesotans who need housing services.”

The program was originally expected to cost $2.6 million per year. Instead, it grew to over $100 million before being shut down due to fraud concerns.

House Speaker Lisa Demuth, R-Cold Spring, called the shutdown “the right decision, but too little, too late.”

“Once again, state agencies failed to catch fraud in real time,” Demuth said. “Instead of stopping it, they’re scrambling after the fact, after millions of taxpayer dollars have already been stolen.”

Demuth criticized the Walz administration for what she called a pattern of allowing fraud in state programs. She said officials “ducked accountability by simply shutting down the program, penalizing the people who needed it most.”

Representative Kristin Robbins, R-Maple Grove, chairs the House Fraud Prevention and State Agency Oversight Policy Committee. She described the shutdown as “a stunning admission of just how deeply broken this program has become under the Walz administration’s watch.”

Robbins, Demuth and other Republicans have been raising concerns about the Department of Human Services’ lack of oversight since hearings began last winter. They have called for a federal audit of DHS, saying the agency “has failed in its duty to protect taxpayers and vulnerable Minnesotans.”

Robbins suggested the fraud goes beyond the “few raids and arrests made public so far.” She promised her committee would continue pushing for transparency and accountability across state agencies.

The Housing Stabilization Services Program was designed to help disabled and senior Minnesotans avoid being kicked out onto the streets or institutionalization. However, fraud became so widespread that officials could no longer guarantee the program’s integrity. The shutdown will hurt legitimate participants who relied on the services. The full scope of the fraud and its impact on people who needed help remains unclear.

___