Minnesota Gov. Walz Removes DHS Commissioner Shireen Gandhi Amid Fraud Scandal

Minnesota Gov. Tim Walz removed the head of the state agency overseeing social services funding such as Medicaid and housing assistance, then reportedly demoted her, following a months-long controversy over hundreds of millions lost to fraud.

The Minnesota Department of Human Services drew national attention after citizen journalists exposed an alleged fraud network tied to Minneapolis's Somali community. Businesses there collected state funds without providing actual childcare or other services.

Commissioner Shireen Gandhi lost her leadership role on Monday, a day before a confirmation hearing that local reports called a gauntlet amid the scandal. She had served as acting commissioner since early 2025 and became the official head in February.

After her return to a deputy commissioner position, Gandhi led an agency that attracted federal scrutiny over the fraud affecting her department and others in the Walz administration.

Under Gandhi, the department shut down its Housing Stabilization Services program in October. Ballooning payouts prompted a Minnesota House probe that found providers using names of eligible beneficiaries for inflated or fake reimbursement claims.

Originally budgeted at under $3 million, the program paid out more than $100 million in 2024. Federal officials said the vast majority went to fraud.

A state auditor claimed the department fabricated or backdated documents dating before Gandhi's tenure, worsening daycare scandals. In an interview with Minneapolis's NBC affiliate, Gandhi said the agency did not act fast enough on the housing scandal.

Gandhi also seemed to criticize federal Medicaid administrator Dr. Mehmet Oz and the administration. The department's fraud fact-check website at times disputed the existence of a fraud problem, according to the Washington Examiner.

Walz blamed Oz and President Donald Trump for playing politics with Minnesotans' health care. "We are focused on stability and results," Walz told Minneapolis's 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."

In a statement, Gandhi said she felt honored to lead the agency under Walz and oversee aggressive work to protect Minnesota's Medicaid program, detect and prevent fraud, avoid federal funding cuts, and improve internal culture.

When naming Gandhi commissioner in February, Walz called it the hardest job in the state. He noted she could have retired but chose not to.

Republicans criticized Walz for shuffling leadership instead of providing steady direction against the 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," said state Sen. Paul Utke, R-Park Rapids.

"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."

John Connolly, the department's deputy administrator in charge of Medicaid, will take Gandhi's former role.