Minnesota Gov. Tim Walz removed and reportedly demoted the head of the state agency that oversees disbursement of social services program funding like Medicaid and housing assistance, after a months-long firestorm over hundreds of millions lost to fraud.
The Minnesota Department of Human Services (MNDHS) was cast into the national spotlight after citizen journalists uncovered a massive, wide-ranging alleged fraud network connected to the Somali community in Minneapolis, where businesses were taking state funds without evidence of actual childcare or other services being provided.
MNDHS Commissioner Shireen Gandhi was booted from her leadership role on Monday, one day before she was set to face an official confirmation hearing local reports described as a “gauntlet,” given the towering fraud scandal gripping the agency.
Gandhi had been an acting commissioner since early 2025, until Walz tapped her as the official head of MNDHS in February.
After being returned to a deputy commissioner role within MNDHS, Gandhi oversaw an agency that drew immediate federal attention after news of the wide-ranging fraud scandal affecting her and other Walz administration departments broke.
Under Gandhi’s leadership, MNDHS shut down its Housing Stabilization Services (HSS) program in October as ballooning year-over-year payouts led to findings of fraud, with providers using names of eligible beneficiaries to obtain funds through inflated or fake reimbursement claims, according to a Minnesota House probe.
Originally estimated to cost under $3 million, HSS disbursements totaled more than $100 million in 2024, which federal officials considered the “vast majority” to be fraudulent.
A state auditor also alleged that MNDHS had fabricated or backdated documents going back to before Gandhi was commissioner that exacerbated the daycare scandals. In an interview with Minneapolis’ NBC affiliate, Gandhi admitted that MNDHS had not acted fast enough to quash the HSS scandal.
Gandhi also appeared to criticize federal Medicaid administrator Dr. Mehmet Oz and the administration after MNDHS created a fraud “fact-check” website that the Washington Examiner reported at times tried to dispute the existence of a fraud issue in the state.
Following her demotion, Walz came out swinging against the White House, blaming Oz and President Donald Trump for playing “politics with Minnesotans’ health care.”
“[W]e are focused on stability and results,” Walz told Minneapolis’ FOX affiliate.
“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,” Walz told the outlet.
In a separate release, Gandhi said she remains honored to have led the agency under Walz and to have overseen “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.”
Fox News Digital reached out to Walz and MNDHS for additional comment.
When Walz made her commissionership official in February, he called it the “hardest job” in the state and said Gandhi could have decided to retire but did not.
Minnesota Republicans also responded by blasting Walz for shuffling the deck versus providing “steady leadership” in fighting the statewide fraud scandal.
“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,” state Sen. Paul Utke, R-Park Rapids, said in a statement.
“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 MNDHS deputy administrator in charge of Medicaid, John Connolly, will fill Gandhi’s old role.
