The Minnesota Department of Human Services has taken North Minneapolis’ Zion Baptist Church to court, alleging the church mishandled roughly $2.48 million in state grant funding and failed to document how large chunks of the money were spent. In a civil complaint, the agency accuses Zion of billing problems and weak oversight of a 17-member “Wellness Collaborative” that received grant payments through the church. DHS is asking a judge to order repayment of public funds and to award damages for money it says either went to ineligible uses or has no supporting documentation.
The complaint, filed April 6 in Hennepin County District Court on behalf of DHS by the Minnesota Attorney General’s Office, says the department paid Zion $2,483,958 under two contracts covering October 2022 through April 2025, and that DHS later terminated the second contract for cause on April 30, 2025. The filing cites examples such as duplicate billing, invoices without dates or client information, and spreadsheets that the state says cannot substantiate the services that were claimed. The complaint and related court materials are posted by KSTP.
What auditors found
The lawsuit rides on the heels of a January performance audit by the Office of the Legislative Auditor that found broad failures inside DHS’s Behavioral Health Administration. Auditors reported that agency staff, during the review, sometimes backdated or created documents, and that DHS had made payments before agreements were fully executed. The OLA said it could not always verify that services were delivered, citing missing progress reports, inadequate monitoring of grantees, and other internal-control breakdowns. The full findings and recommendations are available from the Office of the Legislative Auditor.
How the state says money was handled
According to the complaint, Zion acted as the fiscal hub, routing grant funds to a 17-member network called The Wellness Collaborative. The state says Zion relied on memoranda of understanding instead of enforceable contracts with these subrecipients and did not properly monitor what they were doing with state money. The filing points to patterns that raised eyebrows for auditors, including identical round-dollar invoices in which 14 agencies each billed exactly $40,000 in a single month, mismatched service codes, and spreadsheets with key metadata missing.
State reviewers also flagged instances in which current or former Zion staff were paid in dual roles, both as contractors for the church and as owners of agencies that received money from Zion. Those allegations, along with specific examples of questioned invoices and documentation problems, were detailed in a report by the Star Tribune.
Church response and community ties
Pastor Brian Herron, president of Zion Baptist Church, has pushed back on the state’s narrative, telling reporters he was “puzzled” and “taken aback” by the accusations. Herron said Zion submitted both programmatic and financial reports under the guidance of DHS grant staff and maintains that the church tried to follow state instructions. Zion and Herron are long-standing fixtures in north Minneapolis civic life, which has added a layer of neighborhood tension as residents weigh the church’s community role against the state’s claims. Herron’s comments were reported by the Star Tribune.
Legal claims and what DHS is asking
The lawsuit, brought in DHS’s name and signed by the Attorney General’s Office, alleges breach of contract and unjust enrichment. The state argues it is entitled to recover public funds that were “not used for an eligible purpose or for which no documentation of eligible use exists.” The complaint asks for monetary damages in an amount greater than $50,000, and for any other relief the court considers appropriate, including repayment of disbursements the state deems ineligible. The filing also includes a demand for a jury trial. See the public court documents and the complaint (PDF) for details.
Why this matters locally
Lawmakers and auditors say the Zion case is a high-profile illustration of the same internal-control problems the OLA spotlighted across DHS grant programs, such as single-source awards without strong documentation and payments made before agreements were properly executed. DHS has told legislators it is rolling out reforms, has cancelled the Zion contracts, and is reviewing records tied to the grants at issue. The OLA report and legislative committee files outline recommendations for tighter controls, more competitive sourcing, and stronger monitoring designed to cut down on fraud, waste, and abuse…