House Oversight Chair Comer Demands Minnesota Audit Files, Testimony in Expanding Social‑Services Fraud Investigation
House Oversight Chair James Comer has demanded all Office of Legislative Auditor files and a staff briefing and has summoned temporary Minnesota DHS Commissioner Shireen Gandhi for a transcribed interview on Jan. 30, 2026—warning compulsory process could follow—after an OLA performance audit found the DHS Behavioral Health Administration failed to comply with most tested requirements and lacked adequate internal controls over grant funds for July 1, 2022–2024 amid allegations that criminals stole roughly $9 billion from state social‑services programs. The action is part of a widening congressional probe, led by House Energy & Commerce, seeking records from Gov. Tim Walz and state officials dating back to at least 2019 and coordinating with CMS and DOJ reviews; Minneapolis Mayor Jacob Frey has acknowledged the crisis, Walz has ordered a third‑party Medicaid audit and paused some payments, while whistleblowers describe a “lack of guardrails” and troubling HR practices that DHS disputes, citing low improper‑payment rates.
📌 Key Facts
- House Oversight Committee Chair James Comer demanded a staff-level briefing and all underlying documents and communications related to the Minnesota Office of the Legislative Auditor’s (OLA) reviews of DHS, and he summoned temporary Minnesota DHS Commissioner Shireen Gandhi for an in-person transcribed interview on Jan. 30, 2026, warning compulsory process could follow if she does not appear.
- The House Energy & Commerce Committee announced Minnesota will be the first state targeted in an 'industrial-scale' social-services fraud investigation and sent a detailed records-demand to Gov. Tim Walz and DHS seeking audits, provider records, fraud referrals and internal communications dating back at least to 2019, with responses due by the end of the month; committee leaders framed the probe as 'just the beginning' and a potential national template for wider federal action.
- Committee staff have recently briefed with CMS and the DOJ, and the probe is explicitly tied to separate integrity reviews of Minnesota’s Medicaid programs being run by CMS Administrator Mehmet Oz.
- Oversight members allege criminals stole an estimated $9 billion in taxpayer funds across child nutrition, autism services, housing and Medicaid programs in Minnesota.
- A recent OLA performance audit found the DHS Behavioral Health Administration failed to comply with most tested requirements and lacked adequate internal controls over grant funds for the July 1, 2022–2024 period.
- DHS line-level compliance official and whistleblower Faye Bernstein said she observed contract‑risk problems before and during the audit period and described internal-culture issues — including HR directing staff to follow supervisors’ orders even when they believed directives were unlawful and labeling dissent as 'insubordination' — that help explain how weaknesses persisted.
- Minneapolis Mayor Jacob Frey told 'Meet the Press' the Minnesota fraud crisis is 'real' and said 'everybody could have done more to prevent fraud,' while stopping short of directly criticizing Gov. Walz and crediting Walz’s social programs and current efforts to build anti-fraud 'infrastructure.'
- Gov. Walz has ordered a third-party audit of Medicaid billing and paused some payments during the review; his office says he has 'worked for years to crack down on fraud' and has asked the legislature for more enforcement authority, and DHS points to low Medicaid improper-payment rates as evidence of internal controls — a claim Oversight members are likely to test against whistleblower accounts and the OLA audit.
🔬 Explanations (5)
Deeper context and explanatory frameworks for understanding this story
Phenomenon: Widespread oversight failures and fraud in Minnesota's state-administered behavioral health grant programs
Explanation: High staff turnover, frequent organizational changes, and leadership failures led to inadequate training and loss of institutional knowledge, resulting in deficient internal controls and non-compliance with grant management requirements
Evidence: Audit surveys showed 73% of staff lacked necessary training; leadership dismissed concerns until issues escalated; high turnover disrupted workflows and documentation, with unresolved findings from prior 2021 audits persisting
Alternative view: Some attribute failures to individual misconduct or conflicts of interest, but the audit emphasizes systemic deficiencies over personal failings
💡 Complicates the coverage's focus on 'culture of pervasive fraud and deception' by highlighting structural issues like turnover and training gaps rather than intentional malice, suggesting preventable systemic weaknesses
Phenomenon: Pattern of fraud in Minnesota's federally funded social services programs, contributing to broader scandals
Explanation: Rapid expansion of federal funding during the COVID-19 pandemic, with relaxed regulations for quick distribution, overwhelmed state oversight capacities and created opportunities for exploitation in programs like child nutrition
Evidence: Program spending increased dramatically overnight; federal waivers and guidance changes delayed investigations; state agencies like MDE lacked resources and authority for fraud prevention, allowing $250 million in fraud through entities like Feeding Our Future
Alternative view: Republican critics blame state leadership under Gov. Walz for negligence, while the article points to federal policy trade-offs and shared federal-state responsibilities
💡 Challenges the implicit narrative of isolated state failures by distributing blame to federal design and pandemic priorities, showing fraud as a result of systemic crisis-response trade-offs rather than just local incompetence
Phenomenon: Increased corruption and fraud in local government programs receiving large federal grants
Explanation: Federal grant windfalls overwhelm local oversight capabilities, erode government independence, and create undetected opportunities for fund diversion due to insufficient monitoring and audit procedures
Evidence: Analysis of 2005-2018 data showed a 28% increase in corruption charges following grant windfalls; factors like weak local audits amplify this by 83%, consistent with patterns in Minnesota's grant programs
💡 Complicates coverage by shifting from descriptions of specific fraud instances to broader economic incentives, suggesting Minnesota's issues are part of a national pattern driven by federal funding structures rather than unique local problems
Phenomenon: Institutional trust collapse
Explanation: According to a 2024 GAO report, federal agencies' inadequate implementation of fraud risk management frameworks, including insufficient preventive controls and data analytics, leads to persistent fraud in government programs, eroding public confidence in institutional effectiveness and accountability.
Evidence: The report analyzes survey data from 2018-2022 across federal agencies, revealing that while most agencies assess fraud risks, many lack dedicated anti-fraud entities and comprehensive strategies, resulting in billions in estimated improper payments.
Alternative view: Some analyses, such as a 2022 Brookings Institution article, suggest that misinformation and partisan claims about fraud amplify trust erosion more than actual incidents.
💡 This explanation shifts focus from partisan blame on specific leaders like Gov. Walz to systemic deficiencies in federal oversight, complicating narratives that portray the fraud as isolated to Minnesota's Democratic administration.
Phenomenon: Rise of populism
Explanation: According to a 2025 study by Martin Rode and Julio Revuelta published in Economic Policy, the rise of populist parties is fueled by public perceptions of corruption in established institutions, which populists exploit through anti-elite rhetoric, though their governance often fails to reduce corruption levels.
Evidence: The study uses panel data from 33 European countries between 2002 and 2022, employing fixed-effects regressions to show that increases in populist vote shares correlate with higher perceived corruption, but populist rule does not significantly decrease actual corruption indicators.
Alternative view: A 2020 Stanford University analysis argues that populism arises more from cultural backlash and economic insecurity than solely from corruption perceptions.
💡 This connects the Minnesota fraud scandal to broader populist exploitation of government failures, challenging the story's implicit narrative of one-sided Democratic incompetence by highlighting how such events are leveraged across political lines for anti-establishment gains.
📰 Source Timeline (5)
Follow how coverage of this story developed over time
- Confirms a line‑level DHS compliance official, Faye Bernstein, says she saw contract‑risk problems before and during the period covered by the scathing OLA audit that Comer cites.
- Provides specific internal‑culture allegations — HR telling staff they must follow supervisors’ orders even when they believe directives are unlawful, and use of 'insubordination' labels for resistance — that help explain how systemic weaknesses identified in the audit persisted.
- Highlights DHS’s public counter‑narrative that low Medicaid improper‑payment rates show strong internal controls, which Oversight members are likely to interrogate against whistleblower accounts and audit findings.
- House Oversight Chair James Comer sent a letter to Minnesota Legislative Auditor Judy Randall requesting a staff‑level briefing and all underlying documents and communications related to OLA’s reviews of DHS and alleged fraud.
- The letter specifically references a new OLA performance audit finding the DHS Behavioral Health Administration failed to comply with most tested requirements and lacked adequate internal controls over grant funds for July 1, 2022–2024.
- Comer separately summoned temporary Minnesota DHS Commissioner Shireen Gandhi for an in‑person transcribed interview on January 30, 2026, warning that compulsory process could follow if she does not appear.
- The committee reiterates its allegation that criminals in Minnesota have stolen an estimated $9 billion in taxpayer funds across programs for child nutrition, autism services, housing and Medicaid.
- House Energy & Commerce Committee Chair Brett (Brent) Guthrie announces Minnesota will be the first state in an 'industrial-scale' social-services fraud investigation focused on Medicaid and related programs.
- The committee sends a detailed records-demand letter to Gov. Tim Walz and DHS temporary commissioner Shireen Gandhi seeking audits, provider records, fraud referrals, and internal communications dating back to at least 2019, with responses due by the end of the month.
- Committee staff have recently briefed with CMS and DOJ, and CMS Administrator Mehmet Oz is running separate integrity reviews of Minnesota’s Medicaid programs that the Hill probe is explicitly tying into.
- The committee frames Minnesota as 'just the beginning,' signaling this investigation is intended as a national template for wider federal intervention into state-run Medicaid and social-services fraud.
- Minneapolis Mayor Jacob Frey, in a national 'Meet the Press' interview, explicitly acknowledged that the Minnesota fraud crisis is 'real' and said 'everybody could have done more to prevent fraud.'
- Frey avoided directly criticizing Gov. Tim Walz when asked if Walz did enough, instead crediting Walz’s social programs and pointing to current efforts to build new anti-fraud 'infrastructure.'
- The piece notes Walz has ordered a third-party audit of Medicaid billing and paused some payments during the review, and quotes a Walz spokesperson claiming he has 'worked for years to crack down on fraud' and asked the legislature for more enforcement authority.