Minnesota Gov. Tim Walz removed Shireen Gandhi from her role as commissioner of the Minnesota Department of Human Services on Monday, one day before she was set to face an official confirmation hearing, as his administration faces a continuing firestorm over major fraud losses tied to state-run social services funding.
Walz moved Gandhi back into a deputy commissioner role inside the same agency, while naming John Connolly to fill her old job, Fox News Digital reported.
The core problem isn’t complicated: Minnesota runs programs meant to help vulnerable people. Taxpayers expect the state to guard that money. Instead, lawmakers are now debating “hundreds of millions” in losses, and Walz is scrambling to reshuffle leadership right as public scrutiny spikes.
Walz cast the shake-up as a management fix. He told Minneapolis’ FOX affiliate, “[W]e are focused on stability and results,” and he added, “Today, we’re building on our success by putting an even stronger structure in place; adding leadership, improving oversight, and ensuring these programs are managed with the discipline and accountability Minnesotans expect. That’s how we protect care and deliver for families.”
But the timing tells its own story. Walz had tapped Gandhi as the official head of DHS in February, after she had served as acting commissioner since early 2025. Now she’s out of the commissioner’s chair on the eve of her hearing, yet still on the payroll as a deputy.
The controversy hangs heavily over Housing Stabilization Services (HSS), a program DHS shut down in October under Gandhi’s leadership. The program had originally been estimated to cost under $3 million, yet HSS disbursements totaled more than $100 million in 2024, the reporting said.
Fox News noted that federal officials considered the “vast majority” of those more than $100 million in 2024 HSS disbursements to be fraudulent, an extraordinary accusation for any program that is supposed to be monitored by a state agency that handles Medicaid and other assistance.
A Minnesota House probe described how providers used names of eligible beneficiaries to obtain funds through inflated or fake reimbursement claims.
That’s the kind of scheme that doesn’t just “happen.” It grows when oversight fails, when warnings go unheeded, when paperwork gets rubber-stamped, and when political leadership won’t treat program integrity like a core duty.
Walz didn’t just remove Gandhi. He also “came out swinging against the White House” after her demotion, blaming Dr. Mehmet Oz, the federal Medicaid administrator, and President Donald Trump for playing “politics with Minnesotans’ health care,” Fox News reported.
Gandhi, for her part, defended her record after being pushed out of the top spot. She pointed to what she called “aggressive and proactive work to protect Minnesota’s Medicaid program for Minnesota’s most vulnerable people, to detect and prevent fraud, to prevent federal cuts to funding, and to improve internal culture at the agency.”
Still, Republicans in the state didn’t treat Walz’s move as reform. They treated it as damage control.
State Sen. Paul Utke, R-Park Rapids, accused Walz of picking the wrong person to lead an agency he says has been drowning in fraud. “We could have avoided this entire circus had Gov. Walz seriously considered who was best-equipped to lead DHS in the first place; someone who denies the existence of fraud was never fit to lead the agency experiencing the most fraud our state has ever seen,” Utke said.
Utke also criticized the decision to keep Gandhi inside DHS even after stripping her of the commissioner title: “Keeping [Gandhi] on board as a deputy commissioner does a disservice to every single taxpayer that has lost money to the fraud she has totally failed to address.”
The Walz administration’s defense leans on the idea that it is building “a stronger structure,” improving oversight, and delivering accountability. But that claim runs into a basic political problem: Walz elevated Gandhi in February and then removed her right before she had to answer questions in a public confirmation process.
That’s why the Washington Examiner’s reporting hit a nerve. In detailing Walz’s decision to permanently appoint Gandhi, the Washington Examiner reported that a third-party audit found that more than 90% of claims submitted by early autism intervention centers were potentially noncompliant or suspicious, and that weak DHS policies may have contributed to hundreds of millions in improper spending. The Examiner also reported that records from KARE 11 showed DHS received repeated fraud warnings, including a tip that a provider was paying homeless people to be falsely listed as clients, and no action was taken. In that context, a leadership shuffle starts to look less like accountability and more like a political survival tactic.
And that isn’t just theory. The Examiner quoted House GOP Floor Leader Harry Niska saying: “Promoting her sends the wrong message at a time when Minnesotans are demanding real accountability... That’s not accountability. That’s failure rewarded.”
For readers following fraud and accountability fights nationwide, including the Justice Department’s own wide fraud caseload, as we’ve covered in DOJ investigations into thousands of cases targeting taxpayer funds, Minnesota is a reminder that the first line of defense isn’t Washington. It’s state leadership, agency management, and basic controls that prevent bad actors from gaming the system.
Even if Connolly brings steadier management, Minnesotans still deserve clear answers about what actually changed, and what didn’t, when Walz moved Gandhi out of the commissioner seat but kept her at DHS.
Fox News also noted key gaps that remain unclear in public reporting: the absolute date of Walz’s Monday removal, what exact title Gandhi holds now after being returned to a deputy commissioner role, and which body was supposed to conduct the confirmation hearing.
The fraud allegations themselves still raise hard questions. Federal officials viewed the “vast majority” of more than $100 million in 2024 HSS disbursements as fraudulent, but the specifics of what evidence they relied on wasn’t detailed in the reporting.
And the political messaging gets messy fast. DHS created a fraud “fact-check” website. Fox News said it “at times tried to dispute the existence of a fraud issue in the state,” citing Washington Examiner reporting about the site. That’s an odd posture for an agency tasked with “discipline and accountability.”
It’s also politically risky in a state where voters already see a steady drumbeat of fraud-related headlines, whether about government programs or elections, like our recent report on a Minnesota felony case tied to alleged noncitizen voting and broader fights over clean voter rolls, including disputes over dead voters remaining on registration lists.
Walz’s defenders may argue that reassigning leaders is what executives do when an agency needs to change course. But the timeline here, acting commissioner in early 2025, official appointment in February, removal on Monday, confirmation hearing set for the next day, looks like Minnesota’s leadership class reacting to pressure, not preventing the disaster in the first place.
Meanwhile, the fraud fight isn’t abstract. Fox News said the alleged fraud network described in its reporting was connected to the Somali community in Minneapolis. That detail matters because it underscores how often fraud concentrates in tight networks that know how to exploit weak controls, and how reluctant politicians can be to confront it plainly when it risks political backlash.
And Minnesota Democrats can’t keep treating “fraud” like a talking point that only comes up when it’s useful against an opponent. Readers have watched other Minnesota political figures face their own fraud-related controversies and claims, including the recent swirl around Rep. Ilhan Omar that we’ve covered in Vance’s immigration-fraud accusation and talk of legal remedies.
Walz may insist he’s “building on our success,” but when taxpayers hear “hundreds of millions” and see a commissioner removed right before she has to testify, they don’t see success. They see a government that waited too long to take fraud seriously.
Accountability doesn’t start when the hearing cameras turn on; it starts when leaders choose competence over convenience, and stop rewarding failure inside taxpayer-funded agencies.