Minnesota Governor Tim Walz removed the state’s top human services official just one day before she faced a confirmation hearing described as a “gauntlet” over a massive fraud scandal that saw hundreds of millions in state funds vanish through fake childcare and housing assistance claims.

Commissioner Ousted Amid Federal Investigation

Shireen Gandhi, who led the Minnesota Department of Human Services since early 2025, was demoted to deputy commissioner on Monday. The move came as federal officials investigated widespread fraud in programs Gandhi oversaw, including a housing assistance initiative originally budgeted at under three million dollars that ballooned to over one hundred million dollars in disbursements during 2024. Federal investigators determined the vast majority of those payments were fraudulent, with providers using names of eligible beneficiaries to submit inflated or completely fabricated reimbursement claims for services never rendered.

Citizen journalists first uncovered the alleged fraud network connected to businesses in Minneapolis that claimed state Medicaid and childcare funding without providing evidence of actual services. The Department of Human Services shut down its Housing Stabilization Services program in October after the scale of the fraud became apparent. A state auditor subsequently alleged that the agency had fabricated or backdated documents predating Gandhi’s commissionership, further deepening the scandal that drew immediate attention from federal Medicaid administrator Dr. Mehmet Oz and the Trump administration.

Walz Blames Federal Officials

Following Gandhi’s demotion, Governor Walz attacked the White House and accused Oz and President Trump of playing politics with Minnesota healthcare. Walz defended his decision by claiming the state is building a stronger oversight structure with improved accountability. Gandhi, in her own statement, said she remained honored to have led aggressive and proactive work protecting the state’s Medicaid program for vulnerable populations. She also appeared to dispute the fraud’s existence through a department fact-check website, according to reports.

Republicans Demand Accountability

Minnesota Republicans criticized Walz for shuffling leadership rather than providing steady guidance during the crisis. State Senator Paul Utke argued that Walz should have carefully considered who was best equipped to lead the agency from the beginning, noting that someone who denies fraud’s existence was never fit to oversee an agency experiencing the state’s worst fraud scandal on record. When Walz officially appointed Gandhi as commissioner in February, he called it the hardest job in state government and praised her decision not to retire. Now, with federal investigators examining the full scope of the fraud, questions remain about who will ultimately be held accountable for the hundreds of millions lost.