Claims from current and former Minnesota state employees that have been vetted by state lawmakers allege their bosses ignored and rebuked fraud warnings for years, retaliated against the employees who raised the alarms and protected leaders who oversaw the fraud-laden programs, according to a whistleblowers’ letter obtained by The Center Square.
The claims are made in an unsigned letter to Congress as it investigates fraud schemes that bilked government assistance programs for hundreds of millions of dollars in the state.
Some employees claimed they were accused of racism, in part because the money was flowing to “diverse communities,” the letter said. Most of those who have been federally indicted for the fraud schemes are of Somali descent.
Minnesota state Rep. Kristin Robbins – a Republican who leads a state investigation into the fraud and has communicated with the letter’s authors –submitted the letter as part of her testimony to federal lawmakers this month. Its contents have not been previously reported.
Specifically, the letter focused on the state’s Housing Stabilization Services program, which awarded taxpayer dollars to organizations to ensure housing for older residents and those with disabilities, significant mental illness and substance-abuse disorders.
That program – initially estimated to cost less than $3 million each year when it launched in 2020 – swelled to about $104 million in 2024 and was on track to surpass that figure in 2025 before the program was shuttered, according to federal court records.
More than a dozen people have been indicted in recent months for fraud schemes related to the program.
Eric Grumdahl, an assistant commissioner for the Department of Human Services who oversaw the program, was fired in September, shortly before he was expected to testify before a state committee that is investigating the fraud.