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By Joshua Rhett Miller
Senior Reporter
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Several dissatisfied employees at the Minnesota Department of Human Services, including a former whistleblower, are calling for an immediate change in leadership amid the “shocking prevalence of fraud” allegedly linked to the state agency, Newsweek has learned.
Faye Bernstein, a compliance reporting specialist who previously reported concerns about the legality of DHS contracts, portrayed a toxic work environment with low morale as state and federal investigations continue into widespread alleged fraud in government programs.
Bernstein, 60, said a basic tenet of compliance allows employees like herself to feel comfortable and even encouraged to expose regulatory loopholes or flaws, like she says she did six years ago.
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“This kind of environment is exponentially more important in a government agency because every single penny belongs to the public,” Bernstein wrote Newsweek in an email. “Minnesota DHS functions in the opposite manner—employees who suggest improvements or, heaven forbid, report fraud, often face significant retaliation. The messenger is shot.”
In 2019, Bernstein said she alerted Minnesota DHS officials to “very sloppy contracting practices” that were not legally compliant, but not what most people would consider fraud. She says she was later escorted out of the building, faced a lengthy investigation, got trespassed from all DHS-owned or leased property and received an involuntary transfer to a new position.
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“So, today, if someone asks me if they should report fraud within DHS, I say no, no, no,” Bernstein told Newsweek. “It’s career suicide plus a whole lot more.”
Bernstein believes Democratic Minnesota Governor Tim Walz deserves the recent backlash he’s received from President Donald Trump, after the president derided Minnesota as a “hub of fraudulent money laundering activity” where “refugees from Somalia are completely taking over” in a statement released on December 1.
“To ask whether Governor Walz deserves to be criticized for the fraud that has taken place in Minnesota is a ridiculous question—of course he does!” Bernstein wrote. “He deserves to be criticized for the bad and equally praised for the good that has happened in Minnesota while he was at the helm. After all, he is really just an employee of our state and his performance review is what it is.”
Walz, who is currently seeking a third term in the governor's mansion, has a 53 percent approval rating among registered voters in Minnesota, which ranks 33rd among governors nationwide, according to a Morning Consult poll released in October.
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Bernstein believes revamped DHS leadership could be a welcome boost for Walz’s bid to become Minnesota’s longest-serving chief executive.
“There has to be accountability,” she continued. “Accountability for the fraudsters is relatively easy—we have seen the criminal justice system handle the Feeding Our Future fraudsters pretty well, and I have confidence that this current group of fraudsters will be handled similarly well.”
But Bernstein wonders about the people within state government who knew or should have known about the alleged fraud, which federal prosecutors say exceeded $1 billion.
“When I look at those people, I ask myself whether they noticed the vulnerabilities in our systems and just looked the other way, or did they actually not notice?” Bernstein said. “I have spent the last six years thinking about this and I’ve decided it’s most often the latter.”
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Bernstein said she had repeatedly encountered colleagues in DHS leadership positions who were “simply not qualified” for their roles, including an assistant commissioner who seemingly did not understand alleged financial management she found.
“And then when I see this person promoted to chief of staff, I can reasonably assume that she also would not be qualified for that position,” Bernstein said. “It doesn’t mean they are a bad person, they are just an employee who is not qualified for a position.”
A new direction at the 7,000-employee agency is “desperately needed,” a way to acknowledge that those in charge “have made a mess of things,” Bernstein said.
“Their salary is based on their ability to do their tasks precisely in the way my salary is based on my ability to do my tasks,” she said of agency administrators. “The shocking prevalence of fraud coming from DHS programs means that leadership hasn’t done their assigned tasks adequately. Who would suggest they should be rewarded for that? It’s nonsensical to think they are coated in some sort of Teflon that protects them.”
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Bernstein isn’t alone among DHS workers who want greater transparency and more accountability. Another Minnesota DHS employee who asked not to be identified due to fear of reprisal relayed a dejected atmosphere fueled by listless, apathetic managers within the “absolutely dysfunctional” agency.
“We have completely incompetent leaders,” she told Newsweek. “It’s, like, egregiously bad.”
The three-year DHS and longtime state employee said she holds Walz responsible for missing signs of the massive alleged fraud.
“Walz’s administration has to be aware of what’s been going on and they’ve done nothing to address it,” she said. “It’s horrible; it really is.”
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Additional Minnesota DHS employees reached by Newsweek who initially expressed interest in providing their concerns did not respond to subsequent requests for comment or canceled interviews altogether, citing retaliation concerns.
Walz’s office did not respond to repeated inquiries requesting a response to claims made by Bernstein and her colleagues. The outspoken 20-year DHS employee said she believes the fraud amounts are “getting exaggerated a bit” and won’t be known for a few years.
“It’s too easy for people to keep padding the amount with no real evidence to support that,” Bernstein told Newsweek. “But I’m confident it’ll be at least a billion when all is said and done.”
DHS Temporary Commissioner Shireen Gandhi was unavailable for an interview last week, a spokesperson said. Newsweek contacted the agency seeking a response to an X account purportedly representing nearly 500 state employees who allege Walz “systematically retaliated against whistleblowers” and discredited fraud reports.
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“Walz is 100% responsible for massive fraud in Minnesota,” a post on November 29 alleged. “We let Tim Walz know of fraud early on, hoping for a partnership in stopping fraud but no, we got the opposite response.”
Staff who witnessed and reported fraud were “shutdown, reassigned and told to keep quiet,” according to the post.
“Sometimes more, the post continued. “Leadership did not want to appear to discriminate against certain communities and were unwilling to take action, such as stopping fraud, that would have an adverse impact on their image.”
The operator of the account, which has nearly 50,000 followers, did not respond to repeated inquiries seeking additional details. Minnesota DHS officials noted the profile did not represent the views of the agency.
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“Individuals may choose to share their personal opinions through social media or other platforms,” the agency told Newsweek in a statement. “Any perception that employees are being discouraged from raising issues, or that efforts are being made to identify those who speak up, is false and runs counter to our values and expectations. The Minnesota Department of Human Services has strong policies and procedures in place to protect employees who report concerns or potential misconduct, consistent with state and federal whistleblower protections. Retaliation of any kind is strictly prohibited.”
The agency is “fighting fraud in our state day-in and day-out,” officials said.
“We’re stopping the flow of money before it goes out the door by implementing prepayment review, disenrolling inactive providers, designating programs as high-risk and responding to investigations and data trends to take immediate action in stopping payments,” the statement continued. “Criminal cases are turned over to law enforcement and the data and information we have shared is, in turn, used to prosecute these criminals. We follow the evidence, and we work with state and federal law enforcement agencies to ensure criminals are prosecuted.”
Concerned citizens can report suspected fraud through a state website. The agency also included a message sent by Walz to all state employees in January about building a “culture of compliance” and how to report suspected wrongdoing.
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“Remember, it’s everyone’s job to prevent, identify, and report fraud and to create a culture of compliance,” Walz wrote in the message. “We can’t do it without you.”
State and DHS officials have taken several steps since May to fight fraud throughout Minnesota, including increased oversight of autism services and some housing services providers. The agency also terminated its Housing Stabilization Services program in August and Walz issued an executive order directing state agencies to take new steps to thwart fraud, including expanded authority to stop bogus payments.
“We have no tolerance for fraud in the state of Minnesota,” Walz said in September. “Abuse of taxpayer dollars takes resources away from the people who need them most. If you commit fraud in Minnesota, you will be prosecuted and held accountable to the fullest extent of the law. While we will continue to urge the legislature to take further action, this executive order gives our agencies additional tools to safeguard taxpayer dollars.”
Walz on Friday also appointed a new anti-fraud watchdog, Judge Tim O’Malley, who will work across state government to strengthen fraud prevention.
“Today we are building on the work of the last several years and strengthening Minnesota’s defenses against fraud,” Walz said in a statement. “If you commit fraud in Minnesota, you will be caught and prosecuted to the fullest extent of the law.”
Trump’s criticism of Walz and Somali migrants has dovetailed with a recent immigration crackdown in Minnesota, which has the largest Somali population nationwide. Federal prosecutors first uncovered the Feeding Our Future fraud scheme in 2022, with 47 defendants initially charged for allegedly exploiting $250 million from a federally funded child nutrition program during the pandemic.
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The number of defendants in the ongoing probe has since grown to 78, federal prosecutors in Minnesota announced in November. Two months earlier, Acting U.S. Attorney Joseph Thompson uncovered additional fraud allegedly linked to housing stabilization and autism program conspiracies.
Seventy-nine of 86 defendants in the three cases are of Somali descent, according to the U.S. Attorney’s Office for Minnesota, the Associated Press reported Monday.
The founder of the Feeding Our Future nonprofit organization, Aimee Bock, 45, who is white, was convicted by a federal jury in March.
“From Feeding Our Future to Housing Stabilization Services and now Autism Services, these massive fraud schemes form a web that has stolen billions of dollars in taxpayer money,” Thompson said in September. “Each case we bring exposes another strand of this network. The challenge is immense, but our work continues.”
An audit due in late January will provide a more complete estimate, but Walz has acknowledged the $1 billion figure “certainly could be” accurate, the Associated Press reported.
The cumulative alleged fraud uncovered to date is actually closer to $152 million, according to a review of court records by the Minnesota Star Tribune. That figure includes $24 million across two DHS-run Medicaid initiatives tied to housing services and autism therapy for children, as well as $128 million linked to Feeding Our Future programs, which had been administered by the Minnesota Department of Education.
That total is expected to rise, however, as state and federal investigations continue. Another report by KMSP citing Justice Department figures estimates fraudsters in the three major cases bilked $822 million from services overseen by Minnesota.
Republican Minnesota State Representative Kristin Robbins, who is running for governor, said most state residents have no confidence in Walz’s ability to “actually stop fraud” or oversee genuine reform within social service programs.
“Only because of extreme pressure from national media, our federal law enforcement partners and the committee have they finally very belatedly said they’re taking steps,” Robbins told Newsweek of Walz’s administration. “But they had the authority to stop payment for credible allegations of fraud in statute all along.”
Robbins, who chairs the Minnesota House’s Fraud Prevention and State Agency Oversight Policy Committee, said she believes ongoing probes into the three sprawling schemes will uncover "multiple" billion dollars of wrongdoing, reflecting a “culture of fraud” that pervades the executive branch.
“It’s very frustrating to the public,” she said. “I feel like it’s going to take new leadership in the governor’s office and in all of these agencies to restore trust.”
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