A new report in Minnesota highlights how a former bureaucrat involved in granting a church millions of dollars later went to work as a consultant for the church.
The audit also says that the church failed to provide necessary reporting for hundreds of thousands of dollars of state funding.
Both the church and the former bureaucrat deny any wrongdoing, and gave their side of the story to The Daily Signal.
According to the report, issued by the Office of the Legislative Auditor last week, a grantee—later identified as Zion Baptist Church in North Minneapolis—”could not provide us detailed invoices or program participant data to support a payment of $672,647.78″ from the Department of Human Services’ Bureau of Health Administration “for a single month of work.”
Zion Baptist Church contracted with 14 subcontractors, two of which the legislative auditor visited. The church reportedly paid $40,000 to each of the subcontractors, without specifying rates per service unit.
Those subcontractors failed to show who they served with the money they received. One of them said “the grantee told them they did not need to keep detailed participant records.”
Finally, the grant manager “who approved the $672,647.78 payment left DHS a few days after approving it and later started to provide consulting services to the grantee,” the report stated.
The administration accepted all but one of the legislative auditor’s recommendations for reform, acknowledging multiple administrative failures.
“Immediately upon learning of issues related to the grantee in question, the Minnesota Department of Human Services‘ Office of Internal Controls and Accountability began a thorough audit of the grant, grantee, and all grant payments,” the Department of Human Services told The Daily Signal in a statement Wednesday.
The department said it “immediately” stopped payments and terminated the contract upon seeing the report. It also said staff referred the case and the former staffer to the Bureau of Criminal Apprehension.
“We also referred the case to the Attorney General’s Office for civil action to recover funding,” DHS said, adding it is working “to begin recoupment of grant funds that were inappropriately spent.”
Zion Baptist Church Responds
Marques Armstrong, a deacon at Zion Baptist Church and program director at The Wellness Collaborative, told The Daily Signal the church was compliant in submitting “programmatic and financial reports” for the grant.
“Zion Baptist Church has, in full compliance with the grant agreement, submitted all required quarterly programmatic and financial reports for the duration of the grant period, spanning approximately four years,” he told The Daily Signal in a statement Wednesday. “These reports documented services delivered, outcomes achieved, and subcontractor activity, as required under the contract.”
Armstrong did not respond when The Daily Signal asked if he would provide the documents, or proof that the state’s human services department received them.
He claimed the department reassigned Zion’s grant “without notice to a different division” within the Behavioral Health Administration. “During this transition, it became apparent that the newly assigned personnel were unfamiliar with both the grant’s scope and our program’s structure.”
The church hired the state’s grant manager as a consultant for this reason, he said.
This “strictly advisory” position helped Zion navigate the department’s “administrative confusion.” The church hired this person “to protect the integrity of the program and ensure continued compliance, not to circumvent oversight,” he said.
Armstrong said the human services department reassigned the grant to yet another team, which had not reviewed the church’s records. He also insisted that subcontractors were paid for “defined deliverables,” and that Zion submitted appropriate documentation.
“Any claim that services cannot be verified is inconsistent with the documentation we provided and raises concerns about DHS’s internal review and recordkeeping processes, not a lack of compliance on our part,” he said.
He acknowledged that DHS reportedly backdated documents related to Zion’s grant, but he said Zion had no role in altering the documents.
“Zion Baptist Church has cooperated fully with all oversight requests and remains confident that a fair and complete review of the full record will demonstrate compliance, transparency, and faithful execution of the grant’s intent,” he concluded.
The Grant Manager Weighs In
Dana Nelson identified herself to The Daily Signal as the former DHS employee who approved the initial payment and who went on to consult with Zion. Nelson said she left
Nelson said she worked with Zion Baptist to draft the workplan and deliverables for the grant contract, but she “did not have any part of” drafting the actual contract or executing it.
Nelson said Armstrong and Pastor Brian C. Herron reached out to her “and asked if I had any capacity to consult with them to ensure they remained in compliance with their grant.”
She said she met with Armstrong and with her former supervisor “to ensure there were no conflicts with me doing this prior to any work done.” She said she performed “less than part-time” hours with Zion.
Whistleblower Response
Minnesota House Rep. Marion Rarick, a Republican on the House fraud committee who is in regular contact with whistleblowers, shared a whistleblower’s response to Zion Baptist Church’s claims.
“The corruption within Minnesota state agencies under [Gov. Tim] Walz is pervasive,” Rarick told The Daily Signal.
The whistleblower said that even if Zion Baptist Church’s claims are true, several questions remain.
“Zion Baptist Church was selected through a single-source award,” the whistleblower wrote. “The grant was approved without competitive bidding, without a documented solicitation, and without a written justification explaining why a competitive process was not used.”
Department of Human Services staff raised serious concerns about subcontractors during the grant period, but supervisors directed them “not to pursue further questioning,” and approved a grant extension.
The whistleblower said key questions remain, such as the justification for avoiding a competitive process for the grant, whether DHS performed due diligence on the subcontractors, whether subcontractors were for-profit entities, and why staff concerns were not pursued.
The whistleblower also listed four grants that Zion Baptist Church received, two of which were sole source (without competition) and together totaled more than $3 million.
“Is Zion some great place?” the whistleblower asked, noting the multi-million-dollar sole-source grants. One one contract of more than $1.4 million, the church “did just a bad job performance” and the state “cancelled it early.”
“That was definitely the most egregious thing I have seen, maybe in my whole time working at OLA,” Judy Randall, a 27-year veteran at the Office of Legislative Auditor, told the local NBC affiliate.
