An official that oversaw a state housing services program accused of being the target of widespread fraud is no longer working for the Minnesota Department of Human Services, a spokesperson confirmed.

Eric Grumdahl, who had been serving as the DHS assistant commissioner for homelessness and housing supports, left the agency on Tuesday. The reason for his exit is unclear. The department, in a statement to WCCO, cited state law that says the reasons for an employee's separation is not public data. 

His departure, though, came on the eve of a Minnesota House Fraud Prevention and State Agency Oversight Committee meeting focused on Housing Stabilization Services, a Medicaid program at the center of a federal fraud investigation. Federal agents in a search warrant outlined a scheme to steal taxpayer money by filing bogus claims that companies stated providers worked with clients when they actually received little or no services.

When the program started in 2020, the estimate was that it would cost taxpayers about $2.5 million a year. But by 2021, costs reached $21 million, and last year they ballooned to $104 million.

On Wednesday, lawmakers on the fraud prevention committee questioned Shireen Gandhi, temporary commissioner of DHS, and the agency's Inspector General James Clark about the housing program. 

Gandhi did not share anything more about Grumdahl's departure when asked. 

"They keep rearranging the deck chairs. So this is the first time, rather than sending someone to a different part of the agency, they've actually terminated someone," Rep. Kristin Robbins, R-Maple Grove, told reporters after the hearing. 

DHS is working to terminate the housing program altogether because it "does not have the necessary controls to stop bad actors." This summer they halted payments to 115 providers that had received $100 million over six years, Clark told lawmakers. 

He was brought into the agency in March after working in the attorney general's Medicaid fraud unit and said he changed its approach to handling its response to fraud. Previously officials waited until investigations were complete or until law enforcement accepted a referral before they stopped the money from going out the door.

That shifted in May. There are currently 1,000 open investigations at DHS, he said. 

"Before, the priority was to protect criminal investigations. Now the priority is to immediately stop potentially fraudulent money from going out the door," Clark said. "There is risk there, but I think it is the right approach to immediately stop money and not have these investigations play out over several years."

He said the concern is jeopardizing investigations because fraudsters are aware they are being monitored, which could prompt them to destroy records, delete emails and tamper with witnesses. State law, he said, requires providers to be notified if payments to them are suspended due to allegations of fraud. 

He also suggested potential law changes to enable the department to conduct risk assessments if a provider is capable of offering the services or has a history of doing so. 

Democrats on the GOP-led panel have criticized the work of the committee as a "partisan exercise" that does not put forward solutions to the problem of fraud. They said there should also be scrutiny on managed care organizations, which oversee most people enrolled in state health care programs.

"Sure, this committee can receive presentations from various people. The question is, does that actually get turned into action? And thus far, since January, the answer is no, and it continues to be true," said Rep. Dave Pinto, DFL-St. Paul. 

Democratic Gov. Tim Walz issued a new executive order Wednesday directing his agencies to double down on fighting fraud to "leverage" new laws passed in the 2025 session to allow data sharing across state agencies. 

The directive also calls for an external review of DHS operations to "recommend structural changes that prioritize fraud prevention."

But Republicans have said the moves by the governor to tackle the issue come too late.

Robbins, who is running to challenge Walz in the governor's race, argued that DHS could have done more sooner to crack down on the crimes.

"I feel frustrated that we have to have so much media attention and so much public pressure before they do what they could have always been doing and save Minnesotans and vulnerable citizens hundreds of millions of dollars," she said.