Critics blast new VP nominee Tim Walz for 'massive' COVID-19 fraud 'under his watch'

With Tim Walz joining Democratic presidential candidate Kamala Harris on the campaign trail as her newly selected running mate, critics are blasting the Minnesota governor for what they claim was his failure to prevent a massive COVID-19 fraud scheme that has ensnared the state government.

According to federal charges filed over the past couple of years, at least 70 people were part of a wide-ranging criminal conspiracy that exploited two federally-funded nutrition programs to fraudulently obtain more than $250 million in one of the largest COVID-era fraud schemes anywhere in the nation.

The defendants allegedly used a Minnesota-based nonprofit organization called Feeding Our Future to avoid tough scrutiny from the Minnesota Department of Education, which was supposed to be conducting oversight of the programs.

On Tuesday, shortly after Walz was announced as Harris' running mate, the Minneapolis Star-Tribune newspaper published a story saying the case was one of the leading "vulnerabilities for Walz." By then, the pro-Trump group MAGA Inc. had already blasted out an email calling Walz "an incompetent liberal" for, among other things, "allow[ing] one of the largest fraud schemes to happen under his watch."

"Governor Walz and the people he directly hired and oversaw lost half a billion dollars to fraud in a few short years as governor," Joe Teirab, a pro-Trump Republican and former federal prosecutor running for Congress in the Minneapolis suburbs, posted to X on Monday night, just hours before Harris picked Walz. "Imagine fraud at that scale nationwide."

So far, more than 20 people have pleaded guilty or been convicted for their roles in the fraud scheme. None have been sentenced yet. Two of those charged were found not guilty, and most are still awaiting trial.

"Defendants falsified documents, they lied, and they fraudulently claimed to be feeding millions of meals to children in Minnesota during COVID," Assistant U.S. Attorney Joseph Thompson said at a press conference in June, after the first trial in the case concluded. "This conduct was not just criminal. It was depraved, and brazen."

But it may have also been preventable, according to a state audit released in June.

"[T]he failures we highlight in this report are symptoms of a department that was ill-prepared to respond to the issues it encountered with Feeding Our Future," said the 103-page report, detailing the findings of a limited "special review" by Minnesota's Office of the Legislative Auditor.

The state agency not only "failed to act on warnings signs known to the department prior to the onset of the COVID-19 pandemic and prior to the start of the alleged fraud," but its "actions and inactions created opportunities for fraud," the auditor said.

The report said that while officials inside the Minnesota Department of Education (MDE) had at times expressed concerns about the nonprofit, they felt hamstrung in acting on their concerns due to "operational challenges" during the pandemic, including limited ability to visit sites in person, and due to a "litigation and public relations campaign" from Feeding Our Future that included allegations of discrimination.

"While we acknowledge these factors created challenges for the department, we also believe MDE could have taken more decisive action sooner in its relationship with Feeding Our Future," the audit report said.

According to the report, after laundering tens of millions of dollars, the fraudsters allegedly used shell companies to buy luxury cars, boats and jewelry, to travel and pay off debts, and to purchase properties in Minnesota and around the world.

After the report's release, Walz said his administration can always "do better," and said, "We certainly take responsibility" for any failures that took place.

The report, which hardly mentions the governor at all, does not find any specific fault with Walz or his immediate office. But Teirab and other critics say Walz still deserves at least some of the blame for the massive fraud.

"He owns what happens within his administration," said Jim Schultz, a Minnesota business advocate and outspoken Republican who two years ago narrowly lost a race to become the state's next attorney general.

"There was this massive fraud under his watch," Schultz told ABC News on Tuesday. "To this day, he has never fired anybody, nobody's been rebuked."

Walz has said there have been leadership changes within state government, including at MDE, since the fraud occurred.

Teirab, who says he "helped investigate and prosecute the Feed Our Future fraudsters" when he was still a prosecutor at the U.S. attorney's office in Minnesota several years ago, wrote on X last week, "Tim Walz was asleep at the wheel, allowing a quarter-BILLION in fraud."

A few weeks after five of the defendants were convicted of federal fraud charges in June, the Justice Department indicted five individuals for allegedly trying to bribe a member of the jury in the midst of deliberations, saying they offered the jury member $120,000 in exchange for a not guilty verdict.

One of those who allegedly took part in the bribery scheme was one of the defendants acquitted during the trial.

The Feeding Our Future case is not the only fraud scheme that has impacted Walz's administration.

In June, another audit found that a second state agency failed to adequately oversee a program to pay frontline workers impacted by the COVID-19 pandemic. Auditors reportedly estimated that more than $200 million may have been paid to people committing fraud or otherwise ineligible to receive payments from the program.

"This wasn't malfeasance," Walz said in response to both audits in June, according to Minneapolis-St. Paul ABC News affiliate KSTP-TV . "Both of these cases, there's not a single state employee that was implicated doing anything that was illegal. They simply didn't do as much due diligence as they should have."

According to Teirab's campaign, a number of Medicaid-related programs have also suffered from fraud and waste under Walz.

A spokesperson for the Harris-Walz campaign did not respond to a request for comment from ABC News.