[ST. PAUL, MN] – Governor Tim Walz today signed an executive order creating a centralized state fraud investigations unit operated by law enforcement at the Bureau of Criminal Apprehension. The Governor also announced a new legislative package to prevent, detect, investigate, and penalize fraud in state programs. 

“As long as there have been programs aimed at helping people, there have been fraudulent actors looking to steal from those who need them most. Our job is to stay one step ahead of them. We’re coupling new tools, like AI, with old fashioned police work, to slam the door shut on theft,” said Governor Walz. “Minnesotans rightly have no tolerance for misuse of taxpayer dollars. This plan directs every single state agency to work together to better prevent, detect, investigate, and punish fraud.”

Strengthened investigation and enforcement authority

• Create a centralized state fraud investigations unit through Executive Order to combat fraudulent activity impacting state programs. The Minnesota Department of Commerce's fraud investigators will move to the Bureau of Criminal Apprehension to create a Fraud and Financial Crimes Unit.
• Adding nine staff members to the Attorney General’s Medicaid Fraud unit.
• Give agencies expanded authority to stop payments from going to people and entities suspected, charged, or convicted of fraud or financial crimes.

Better detection and oversight

• Use artificial intelligence to detect and prevent fraud. MNIT will partner with industry experts to create a pilot that would analyze data to help detect and flag payment anomalies for Medicaid providers through the Department of Human Services (DHS).
• Create a provisional license system for Early Intensive Developmental and Behavioral Intervention providers and require more frequent re-validation visits.
• Add additional staff at Minnesota Management and Budget to help state agencies improve internal controls, mitigate risks, and build fraud awareness.
• Add additional employees to expand DHS’s capacity to prevent and detect fraud and ensure proper billing.
• Enhance oversight of Charter Management Organizations and tighten procurement and contract bidding integrity for Charter Schools.

Increased Criminal Penalties

• Create a new “Theft of Public Funds” statute that increases criminal penalties by 20% compared to the existing “Theft” statute.
• Make providing kick backs a state crime, and give the Attorney General investigative authority

This package is expected to have a net cost of approximately $39 million in FY 26-27 and $15 million in FY 28-29.

“AI has the potential to revolutionize the fight against fraud by detecting patterns, predicting risks, and protecting resources with unparalleled speed and accuracy,” said Commissioner of Minnesota IT Services Tarek Tomes.

“Fraud and other financial crimes harm every Minnesotan. They drive up prices of needed products, steal our tax dollars, reduce availability of funding for needed services, and more,” said Bureau of Criminal Apprehension Superintendent Drew Evans. “By combining state law enforcement resources, we will improve our ability to root out and prosecute these crimes with consistency, transparency and efficiency.”

These measures would build on the Governor’s previous efforts to combat fraud enacted in the 2023 legislative session, including:

• Expanded Admin Office of Grants Management to strengthen grants oversight, including allowing debarment of grantees for up to three years
• New MMB internal audit function to add an additional layer of oversight to state government processes and operations.
• Strengthened DHS Compliance to improve controls, oversight, and contract compliance
• Creation of an MDE Office of Inspector General
• Expanded MDE Audit and Internal Controls
• Strengthened MDE Grant Administration
• Strengthened MDH Federal Funds Oversight
• Enhanced Grants Oversight Capacity at the Arts Board