Walz taps new official to head off fraud, takes other steps to address lapses
Go Deeper.
Create an account or log in to save stories.
Like this?
Thanks for liking this story! We have added it to a list of your favorite stories.
A former judge and criminal investigator landed an assignment Friday as the first Director of Program Integrity in state government, part of a fresh set of efforts by Gov. Tim Walz to contain a spiraling problem of fraud in Minnesota programs.
Seeking to set up new defenses, Walz turned to Tim O’Malley, who was previously a judge in the Court of Administrative Hearings and past head of the Bureau of Criminal Apprehension. He also said a third-party entity known as WayPoint would partner with state agencies to implement fraud prevention programs.
“Minnesota's long standing high standards of integrity of public funds go hand in hand with a culture of generosity, you can't have one without the other,” Walz said at a Capitol news conference. “Any amount of fraud is too much.”
O’Malley said restoring public confidence will be among the tasks before him.
Turn Up Your Support
MPR News helps you turn down the noise and build shared understanding. Turn up your support for this public resource and keep trusted journalism accessible to all.
“Minnesotans deserve to know that their tax dollars are being put to good use, and they deserve to know that they can trust our public institutions,” he said. “We have work cut out for us to rebuild that trust.”
The WayPoint assignment will be to come up with consistent standards for investigating and reporting on suspected fraud, developing a government-wide prevention program and enabling data sharing among agencies to stop fraudsters working to bilk many programs at once.
O’Malley’s charge will be to work as a liaison across government to make sure strong barriers are in place and fraud is stopped in its infancy.
The moves are part of a stepped-up Walz administration effort to blunt avenues for fraud and change what has been a challenging narrative for his administration.
Walz said multiple times at his news conference that the buck stops with him for lapses that happened during his tenure.
“It's pretty obvious, fraud happened,” he said. “We need to take accountability: ultimately me,”
Fraud is a big political problem for Walz. It also has been cited by President Donald Trump’s administration as a reason for a recent immigration crackdown and an array of investigations into Minnesota’s management of federal dollars intended for social service programs.
Over the past five years, prosecutors and auditors have detected hundreds of millions of dollars in fraudulent payments to health care and nutrition program providers that didn’t result in services actually being delivered.
The biggest involves the Feeding Our Future nonprofit, an umbrella organization that authorities say ran a scheme that led to widespread abuse. Dozens of people have been charged with siphoning money that was supposed to go to meals for needy children during the COVID-19 pandemic, using the money instead on luxury cars, vacation homes or other lavish personal spending. Several have been convicted and sentenced to prison already, with more cases headed toward resolution.
Beyond that, the state has shuttered a program meant to help house people eligible for Medicaid after rapid spikes in enrollment raised concern about fraud activity. Another program related to autism services is also on the radar of investigators for similar reasons.
In recent months, Walz has called for an independent audit of high-risk Medicaid programs and said some payments would be paused as that takes place. A report is due early next year.
Temporary DHS Commissioner Shireen Gandhi says that her agency is busy working to ferret out fraud.
“I will tell you that we have over 1,300 open cases right now with our inspector general,” she said. “And over five the past five years, we've identified $50 million dollars for recovery for the Medicaid program.”
Last year, lawmakers gave the administration new power to cut off payments or claw back money if fraud is detected. Providers with a shady past could be excluded from future public program delivery.
No matter what, fraud is certain to be a prominent issue in the 2026 campaign.
Walz is seeking a third term. What his administration has or hasn’t done to prevent ripoffs of taxpayer money in government programs is perhaps his biggest liability.
A field of more than a dozen Republican challengers have routinely criticized Walz as not acting firmly or swiftly enough to shore up fraud defenses.
House Speaker Lisa Demuth, who is a GOP candidate for governor, wasn’t impressed with the Walz announcement.
“This move is too little, too late. He failed to root out fraud in his agencies, he failed to hold anyone accountable, he failed to take responsibility for what he allowed to happen, and now he wants to sweep all his failures under the rug,” Demuth said in a written statement. “The time for program integrity was years ago — now it’s time for accountability.”
Republican state Sen. Jordan Rasmusson questioned the effectiveness of the steps, calling them “all talk and no walk.”
“We don’t even have permanent DHS commissioner after nearly a year, but somehow, we have time to create and hire a new position to oversee every program?” Rasmusson said. “It’s yet another flurry of action without any real changes.”
DFL Senate Majority Leader Erin Murphy said the O’Malley appointment coupled with other steps would make a difference. She cited recent law changes that are meant to make fraud easier to detect and stop.
“We’re not done yet, and we will continue to work with state and local agencies to make sure they’ve got necessary resources in this fight,” Murphy said in a written statement.
Even some DFLers have pushed to create an independent Office of Inspector General to monitor the way programs are run, but bipartisan legislation to do that has stalled. It is likely to be reconsidered in the 2026 legislative session.
