Minnesota Gov. Tim Walz says walking away from a third term is how he accepts responsibility for the state’s fraud scandal, critics call it deflection after years of weak oversight.
On a Friday episode of “The Lever” podcast, the Democratic governor said fraud undermines faith in government and that he would not seek another term in part because the scandal would be used against others and the broader system. Fox News Digital reported his remarks and the sharp pushback that followed.
Walz framed the decision as accountability. He also said his office lacked the power to stop payments to suspected fraudsters on its own and needed lawmakers to give him that authority. He conceded his administration should have closed loopholes sooner.
That admission lands against a long-running Minnesota fraud story that has already produced prosecutions, guilty pleas, and federal pressure over Medicaid dollars. Voters watching the state have seen the pattern in cases ranging from large program abuse to smaller schemes, including Medicaid fraud cases built on fabricated records.
Walz did not deny the damage. He said even a dollar of fraud is too much. Then he argued the amount already prosecuted and sent to jail is smaller than what President Donald Trump has sought for a ballroom project, a comparison meant to shrink the political sting.
He went further. Fraud and corruption, he said, hand Republicans a ready argument to cut programs he defends, including aid for children and services for autistic kids.
"The problem with fraud and corruption, both of them undermine faith in government, and that plays right into Republicans' hands. Do they like fraud? I would argue they do because it undermines federal. It makes a reason to cut these programs. They hate these programs that feed children. They hate these programs that, you know, work with autistic children. So, man, what a gift to them. ‘See, they don't work. It's tax dollars. Let's close them down.’"
He also claimed every state faces fraud and that most have more of it than Minnesota. In his telling, the Trump administration seized on a “perfect storm”, blame directed at Somalis, at a past rival, and at a high-tax state that sends more money to Washington than it gets back. He still said Minnesota should have done more.
Walz tied his exit from the 2026 race to that political risk. He said he decided not to run again after the murder of Melissa Hortman and certainly before Christmas, because opponents would use the fraud fight to attack other Democrats and the system itself.
"It's one of the reasons I accept responsibility for that. I think, you know, I had decided, probably after the murder of Melissa Hortman, certainly before Christmas, that we weren't going to run again because I said, ‘They're going to use this to attack others and to attack the system.’"
He announced in early 2026 that he would not seek a third term. In the podcast telling, stepping aside is the proof he is owning the failure.
Julian Epstein, former chief counsel for House Judiciary Democrats, rejected that account when he spoke with Fox News Digital. He said a governor already has power to halt payments when fraud evidence appears and can send cases straight to state and federal prosecutors.
"These excuses insult our intelligence. The governor has ample authority to stop payments when there's evidence of fraud. The governor can also refer the evidence to state and federal prosecutors for immediate action. The reality here is that this systemic fraud seemed to be going on for over a decade with officials like Tim Walz and Peggy Flanagan doing almost nothing about it."
Epstein raised a harder question: whether senior officials looked away because the people benefiting from the fraud were voting for them, giving money, or helping politically, and whether any benefit ran directly or indirectly to those officials. Those remain allegations, not findings in the available record he addressed.
Theo Wold, a former acting assistant attorney general, was blunter. He said foreigners and criminals drained billions in public funds while Democrats ran the state, and that the new line is to deflect blame onto Republicans.
"They were in charge while foreigners and criminals pilfered billions in public funds, and Democrats let it all happen. Now they deflect and blame Republicans. You can’t make it make sense."
Wold added that Republicans want government to serve American citizens, while leaders like Walz, in his view, keep broken programs in place because waste and opacity protect favored networks. That is his charge, not a court judgment.
Fox News Digital sought comment from Walz and the White House and received no immediate response.
Walz pointed to cases already charged and people already jailed. He treated that as evidence the system is working, even as he admitted back doors stayed open too long. Critics hear something else: enforcement after the fact, not prevention when the money was flowing.
Minnesota’s fraud fight has not stayed local. Federal officials have moved money and oversight in response to program abuse, and state leaders have protested those steps as political punishment, a clash visible when the Trump administration froze hundreds of millions in Medicaid funds.
Related reporting has also tracked how large fraud figures hang over Minnesota elections and Democratic brands statewide, including coverage of how a multibillion-dollar fraud cloud looms over the state’s federal races.
Walz’s podcast defense tried to nationalize the problem and shrink Minnesota’s share of it. He said other states are now learning from Minnesota’s experience. Epstein’s counter is that the failure ran for more than a decade under officials who had tools they did not use.
The governor’s own words leave little doubt about the core concession: more should have been done sooner. The dispute is whether declining another campaign equals responsibility, or whether responsibility required stopping the payments, referring the cases, and forcing the issue while the losses were still mounting.
Public attention has also stuck to Walz’s posture during the scandal’s peak, including moments that fueled online criticism such as a widely mocked golf video released while the fraud fight intensified. Image management does not close audit gaps.
Separate investigative threads in Minnesota have focused on Somali-linked fraud networks and the political figures tied to the broader ecosystem, a lane that has drawn congressional scrutiny in reporting on how earmarks and influence claims wrapped around those schemes. Walz’s podcast comments touched the same raw nerve when he listed “blame Somalis” among the attacks he said Republicans prefer.
Strip away the spin and the conflict is straightforward. Walz says he needed new legislative power to halt suspect payments. Epstein says the governor already could stop money and call prosecutors. Only one of those views can guide a chief executive facing active fraud.
Walz says walking away from reelection is acceptance of responsibility. His critics say responsibility would have looked like earlier referrals, faster payment stops, and less patience for programs that became easy marks. He himself said the back doors should have been closed sooner.
He also said fraud erodes trust in government. On that point, the record he described and the criticism he drew land in the same place: when billions can be drained and the political answer arrives as a farewell tour, taxpayers hear the failure first and the spin second.
Leaving the ballot is not the same as cleaning up the books. Minnesota families still pay for leaders who discovered urgency after the losses and the headlines.
