Official overseeing defrauded housing program no longer works for state

A state official overseeing housing instability programs is no longer with the Minnesota Department of Human Services as the agency responds to reports of widespread fraud targeting its programs.

Eric Grumdahl was the assistant commissioner of the Homelessness, Housing and Support Services Administration at DHS. His last day was Tuesday, DHS said.

Grumdahl oversaw employees administering the embattled Housing Stabilization Services program, which DHS temporary Commissioner Shireen Gandhi told legislators has seen an overwhelming level of fraud.

DHS is working to terminate the program and says it has cut off payments to 115 providers that have collectively billed the state for more than $100 million. It’s not clear how much of that $100 million may have been fraudulent.

Rep. Kristin Robbins, who chairs the Minnesota House Fraud Prevention and State Agency Oversight Policy Committee and is running for governor, cast the separation as a firing, saying the state was finally seeing accountability for the fraud in DHS programs.

“They keep rearranging the deck chairs,” said Robbins, R-Maple Grove, “and people have to take responsibility for changing these programs or they need to move on from the state government.”

Robbins presided over a meeting of the committee Wednesday and said she received word of Grumdahl’s separation only a couple of hours before legislators convened.

“So his appointment ended interestingly the day before the fraud committee over the little department that he was running that has, according to [U.S. Attorney for Minnesota] Joe Thompson, rampant fraud,” Rarick said. “How convenient.”

Democrats on the committee said they were glad to see new leadership at the agency regardless of the reason for Grumdahl’s departure.

“We know this is a pivot point,” said Rep. Emma Greenman, DFL-Minneapolis. “We need to do this in a different way. ... I think that hearing my GOP colleagues, on the one hand castigate them, and, when people leave and we have new leadership, castigate them too — it’s like, you can’t win. It’s just about taking shots.”

Greenman called the hearing a “partisan exercise,” and DFLers have said the committee is focused more on publicly condemning agencies than working on policy to prevent state government fraud.

“Sure, this committee can receive presentations from various people,” said Rep. Dave Pinto, DFL-St. Paul. “The question is does that actually get turned into action? And thus far ... the answer is no.”

Offices of several providers were searched this summer by federal law enforcement officers in what they referred to as a “massive” fraud scheme.

Gov. Tim Walz on Wednesday announced he had signed an executive order meant to combat fraud that will strengthen data-driven reviews of billing, increase transparency and create a coordinating council between inspectors general of different agencies.

In a news release, Walz said fraud “takes resources away from the people who need them most.”

“While we will continue to urge the Legislature to take further action, this executive order gives our agencies additional tools to safeguard taxpayer dollars,” he said.

The level of fraud in state government has become a frequent criticism of Walz among Republican legislators, and Robbins has made it a centerpiece of her bid for the GOP nomination to run against Walz next year.