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MN Housing Stabilization Services fraud investigation: State lawmakers react, push for reforms

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Updated  July 18, 2025 8:40am CDT
Crime and Public Safety
FOX 9
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The Brief

    • State lawmakers reacted to the housing fraud investigation, with some calling it a "concern" and others renewing calls for enhanced oversight.
    • Some Republicans said a bill that would have added a government watchdog was a missed opportunity; a Democrat expressed skepticism over it.
    • The FBI raided eight homes and businesses across the metro on Wednesday morning as part of an investigation into a multimillion-dollar fraud scheme.

(FOX 9) - Minnesota lawmakers on both sides sharply criticized the suspected housing fraud that is under investigation but disagreed on how to prevent it in the future.

Lawmakers concerned after FBI fraud investigation

The investigation:

The FBI raided more than a half-dozen homes and businesses across the metro on Wednesday as part of a sprawling probe into suspected fraud. 

According to court documents, providers billed Medicaid for millions of dollars worth of services they never rendered. Housing Stabilization Services, which was created in 2020, allows Medicaid to cover expenses for finding housing for vulnerable adults, including seniors and those with disabilities or addiction issues. 

Federal investigators said the program is "extremely vulnerable to fraud."  According to a search warrant, 14 providers collected $22 million over a 16-month period. In all, the program has cost taxpayers $302 million since its inception. During that time frame, it was estimated to cost about $12 million.

Prosecutors have not yet filed charges.

What they're saying:

"I think we really have to go back to that hard work of focusing on internal controls. Are they flagging stuff on the front end? It is so hard to claw back this money once it’s gone," said State Rep. Kristin Robbins, a Republican of Maple Grove. "We need to catch this on the front end, so that we’re not pouring hundreds of millions of dollars out there, and it’s not doing Minnesotans any good."

She renewed calls for a failed bill introduced in the last session that would have added a government watchdog.

But one of her Democratic colleagues said the measure was flawed.

"That proposal would’ve added an additional statewide inspector general on top of the inspector general that we’re federally required to have in the Department of Human Services," explained State Rep. Dave Pinto, a Democrat of St. Paul. "The more cooks you have in the kitchen, the more complicated things can be. So, I’d have some concerns about that."

What's next:

Lawmakers said discussions about additional oversight as well as reforms to the housing program are likely in the next session.

Crime and Public SafetyMinnesota