Minnesota Governor Tim Walz is addressing growing concerns after federal investigators launched a sweeping fraud investigation into the state’s Housing Stabilization Services program, a Medicaid-funded initiative designed to help older adults and people with disabilities, including those struggling with substance use disorders and mental illness, secure stable housing.

The FBI executed search warrants at eight locations across the Twin Cities, targeting five service providers accused of billing Medicaid for services that were either not provided or grossly misrepresented. Authorities say the alleged schemes exploited a program meant to protect some of the state’s most vulnerable residents.

Walz: “If You Commit These Crimes, You Will Be Caught”

Governor Walz, who has been outspoken on the issue of fraud in Minnesota’s social programs, stressed that his administration is working closely with federal authorities.

“If you’re going to commit these crimes in Minnesota, you are going to get caught,” Walz said in an interview with WCCO last month.

He added that new oversight mechanisms have been implemented, including the appointment of a new Inspector General and updated tools to detect Medicaid abuse. However, he admitted that the state still needs more advanced resources to stay ahead of increasingly sophisticated fraud schemes.

“I wish we would have gotten a little more out of this legislative session,” Walz noted. “There are AI tools out there that could help us detect fraud earlier and prevent it from happening in the first place.”

Federal Prosecutors Warn of Widespread Problem

Acting U.S. Attorney Joe Thompson confirmed that Minnesota is facing a serious and systemic fraud problem, echoing concerns raised by his predecessor, Andrew Luger. Thompson said the generosity of Minnesota’s safety-net programs can make them a target for abuse.

“The Housing Stabilization Services program has proven to be extremely vulnerable to fraud,” Thompson said, emphasizing that investigators will continue to follow the evidence wherever it leads.

The targeted locations reportedly included facilities in St. Paul and Roseville, as well as other sites in the Twin Cities metro area. Officials have not yet named the providers under investigation, but court filings indicate a pattern of fraudulent billing practices that could have siphoned off millions in taxpayer dollars.

Balancing Compassion With Accountability

Walz acknowledged that Minnesota’s long-standing reputation as a generous state sometimes leaves it open to exploitation.

“We want to make sure children get food and families have housing support,” Walz said. “But good intentions don’t protect us from bad actors. That’s why we need to remain vigilant and ensure that every dollar goes to those who truly need help.”

Next Steps in the Investigation

The FBI has not announced any arrests yet, but sources familiar with the investigation say indictments could follow as prosecutors review the evidence gathered during the raids. If the fraud allegations are proven, those involved could face significant federal charges, including wire fraud and Medicaid fraud, both of which carry steep penalties.

Meanwhile, Walz pledged that his administration will continue tightening oversight, investing in modern detection tools, and working with federal agencies to close loopholes.

“This is about protecting the people who rely on these services,” Walz said. “We will not tolerate anyone who tries to cheat the system at the expense of vulnerable Minnesotans.”