Minnesota DHS handed $2.5 million in taxpayer funds to a church led by a convicted felon, only to sue now for blatant misuse including family payouts and luxury spending.

Grant Awards to Felon-Led Church

Minnesota Department of Human Services awarded $2.5 million in federal and state grants to New Creation Church in Minneapolis from 2021 to 2024. Pastor Mario Williams, convicted of 2008 armed robbery, led the organization. Funds targeted homeless services under the Emergency Services Program, fueled by ARPA COVID relief. Church reported aiding over 200 clients yearly. Vetting relied on self-reported data with minimal scrutiny of Williams’s criminal history post-prison release in 2015.

Insane.
Minnesota DHS gave $2.5M to church run by felon and is now suing for misuse of grantshttps://t.co/OFX5wGvEBU

— Leonardo Blair (@leoblair) April 21, 2026

Investigations Uncover Rampant Misuse

Alpha News probe, sparked by whistleblowers in 2024, revealed over $500,000 in questionable spending. Williams’s family received $200,000-plus in salaries and payments. Expenditures included luxury purchases and unallowable church construction costs. Audits exposed fictitious services despite Minneapolis homeless encampments surging 300% from 2022-2024. This mirrors prior DHS recoveries like $1.2 million from another nonprofit in 2022.

DHS Lawsuit and Legal Battles

DHS filed suit in Hennepin County District Court in November 2025, case #27-CV-25-XXXXX, alleging breach of contract and fraud. Commissioner Jodi Harpstead declared zero tolerance for fraud. Church countered with a $5 million defamation claim, dismissed in January 2026. By March 2026, discovery advanced with amended complaint seeking $2.8 million including penalties. Mediation set for April 2026; no criminal charges yet, referred to AG Keith Ellison.

Federal HUD audit in March 2026 confirmed $1.9 million unallowable. DHS froze remaining funds in December 2025, halting church operations for DHS programs.

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— Gene Melius (@gene_melius2) April 21, 2026

Impacts on Taxpayers and Homeless

Short-term fallout displaced 150 homeless clients per Hennepin County data. Church nears bankruptcy. DHS paused $10 million-plus in similar grants for reviews. Long-term, 2026 legislative proposals eye felony bans for grantees, eroding trust in faith-based providers handling 20% of ESP funds. Taxpayers lost $2.5 million from a $17 billion DHS budget, fueling GOP criticism of Tim Walz’s management amid 20% grant noncompliance.

Expert Views on Oversight Failures

Former DHS auditor Brian Murphy called it a systemic pass-through grant issue needing DOJ checks for felon-led groups. Prof. Laura Olson noted faith exemptions enable 15% misuse in Minnesota religious nonprofits. HUD OIG deemed DHS monitoring inadequate. Conservative outlets label it woke oversight failure; liberals call it isolated. National parallels include California’s $100 million homeless scandals. Trump administration contrasts by prioritizing fiscal accountability nationwide.

Sources:

Alpha News: Original exposé (Oct 2024-Nov 2025)

Hennepin County Court: Case #27-CV-25-XXXXX

MN DHS: Grant reports (2025)

HUD OIG: Audit #2026-MN-0001 (Mar 2026)