Minnesota pauses payments to 50 housing stability providers amid fraud investigation

CBS News

3 days ago

Minnesota Gov. Tim Walz said Monday he paused payments to dozens of the state's housing stabilization providers as federal agents investigate a "massive" fraud scheme connected to the program.
Under a new Minnesota law that went into effect earlier this month, state agencies have the authority to withhold funding from organizations for up to 60 days if there is significant evidence to suggest they have committed fraud.
A search warrant filed with the U.S. District Court for Minnesota details a fraud investigation tied to the Housing Stabilization Services, a newer Minnesota Medical Assistance benefit, which is set up to help find and maintain homes for people with disabilities and the elderly.
What was estimated in 2020 to cost taxpayers $2.5 million a year had topped $100 million. The FBI called the housing program "extremely vulnerable to fraud."
Walz told reporters Monday he used the "tools" approved by the Minnesota Legislature to stop payments to "most of the people involved in this program." He later said that 50 of the state's largest housing stability providers "will not be paid."
He expects some of them will sue to receive their payments. Others, he said, will have to be patient for their funds to come through.
"There is going to be legitimate organizations and legitimate need for people in good programs that are gonna just have to be a little bit slower and a little more barriers in place. Because it's proven right now the folks can find the loopholes," he said.
The Minnesota Department of Human Services confirmed they stopped payments to 43 providers on Monday. Payments to seven others had been paused prior to that week as a result of a "billing data analysis" and "investigations conducted by the DHS's Office of Inspector General."
"In March, DHS initiated a comprehensive data analytics project, reviewing HSS provider data, including billing records, in new ways. As a result, we have stopped payments and provided information to our law enforcement partners," said temporary DHS Commissioner Shireen Gandhi in a statement to WCCO. "Any HSS providers scheming to steal from our public programs are being stopped from receiving further public payment and with the help of law enforcement partners, they will be prosecuted to the fullest extent of the law."
Starting in August, housing stabilization providers will be subject to additional documentation requirements, the DHS said in a statement.
The new Minnesota law to allow agencies to withhold funds was passed in the wake of the $250 million Feeding Our Future scandal, which prosecutors have called the largest pandemic fraud case in the country. Autism support centers are also subject to a separate fraud investigation.
The ringleader of the food fraud scheme, Aimee Bock, was convicted of conspiracy to commit wire fraud and conspiracy to commit federal programs bribery for taking millions of dollars meant to feed hungry children.
Seventy people are charged in the scheme, of whom 48 have been convicted.
"These people are being arrested and they're going to prison," Walz added on Monday. "And right now the people involved in this, you will be going to prison. The U.S. attorney is on it."Caroline Cummings
contributed to this report.