Demuth, Klobuchar both say state fraud response should lead to firings

MINNEAPOLIS — Republican gubernatorial nominee Lisa Demuth called for the firing of two Walz administration officials on Monday following a Minnesota Star Tribune report about the state’s handling of fraud, while DFL nominee Amy Klobuchar said she would fire officials who failed to stop fraud and would overhaul state government more broadly.

The responses came after a Star Tribune investigation detailed how Gov. Tim Walz and his top advisers failed to connect warning signs that emerged across state government until fraud had spread through multiple programs.

The report, which drew from more than 1,000 pages of congressional testimony and interviews with key figures in and around state government, also found that the Walz administration missed an opportunity after the pandemic-era Feeding Our Future scandal to uncover fraud elsewhere.

In a news conference at the State Capitol, Demuth called for the “immediate firing” of assistant state Education Commissioner Daron Korte and former Walz adviser Leah Montgomery, who is now deputy commissioner of the Department of Children, Youth and Families.

Demuth faulted Korte for being aware of irregularities with Feeding Our Future as early as 2020 but failing to prevent the nonprofit from continuing to receive public money. As for Montgomery, Demuth said she should be ousted for previously referring to fraud as a Republican talking point in conversations with DFL legislators.

Demuth said the report “underscores the need to clean house in our state government once and for all.”

“The Walz administration can’t point to a single person who has been fired over the fraud that has skyrocketed over the last eight years,” she said.

In a statement Monday, Walz’s spokesman said the governor “installed new leadership at the Department of Human Services and the Department of Education” following the fraud scandals.

Former Human Services Commissioner Jodi Harpstead told congressional investigators she resigned voluntarily after telling Walz’s office she did not have the fraud-fighting background needed to lead a more aggressive response.

Korte and Montgomery declined to comment through the governor’s office.

Klobuchar also weighed in on the Star Tribune’s report, saying fraud “should have been caught much earlier and taken much more seriously.”

“That’s why I have made clear that on Day One, I will launch a top-to-bottom audit of state government to root out fraud, replace decades-old technology to stop fraud before it happens, and strengthen criminal penalties to make sure people who commit fraud go to jail,” Klobuchar said in a statement Monday. “I will not wait to take action, and that includes firing people who were in charge and failed to stop the fraud and replacing them with new leadership that will deliver results.”

Klobuchar noted that her fraud-fighting plan has been endorsed by former U.S. Attorney for Minnesota Andy Luger. Luger’s office prosecuted 70 defendants in the Feeding Our Future case.

Luger, who has been supporting Klobuchar’s campaign for governor, said in a statement that Klobuchar’s fraud plan “is exactly what the state needs to tackle and prevent fraud going forward.”

Demuth has argued that Klobuchar was mostly silent about the state’s fraud scandal until she launched her campaign for governor.

Klobuchar and Demuth have both released anti-fraud plans that call for stronger screening of providers, more unannounced inspections, closer analysis of suspicious billing data and better coordination between state agencies, among other things.

But their plans offer different assessments of why the system failed. Klobuchar’s proposals are mainly focused on rebuilding the state’s systems for detecting and preventing fraud. Demuth argues that the leaders overseeing those systems were also part of the problem. She has vowed to replace all commissioners and deputy commissioners and to put her lieutenant governor in charge of the state’s fraud response.

Demuth’s running mate, Ryan Wilson, said Monday that the Star Tribune report illustrated the importance of having a point person on fraud in the governor’s office.

Walz delegated much of the oversight of state programs to commissioners and senior staff, rarely immersing himself in the details of the programs his administration oversaw, former aides and advisers told the Star Tribune.

Walz’s longtime chief of staff, Chris Schmitter, operated in a similar fashion, telling congressional investigators that state agencies didn’t typically bring individual fraud allegations to his attention because “that’s not the level of granularity that the office generally can get into.”

That approach left Walz’s office with limited visibility into red flags that were emerging across state programs.

Under Demuth’s plan, Wilson said he would be empowered to oversee fraud across all state agencies and “make sure that lessons being learned … are filtering down.”

“And when things bubble up, that it’s getting to Gov. Demuth and that it is being acted on, so we don’t see the kind of stuff that we saw in this story,” Wilson said.

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