(The Center Square) – The Minnesota Department of Human Services has filed a civil lawsuit against a north Minneapolis church, alleging it misused millions in taxpayer-funded grants intended for mental health, substance abuse and violence prevention services.
According to the complaint, Zion Baptist Church accepted about $2.48 million between October 2022 and April 2025 through two state grant contracts but failed to meet key requirements tied to those funds.
The lawsuit, which was filed earlier this month in Minnesota District Court, alleges the church breached its contract with the state and was unjustly enriched by retaining funds without sufficient evidence the services were provided.
Court documents state that Zion was required to use the funds for approved expenses, maintain documentation and provide proof of services upon request.
However, the Minnesota Department of Human Services claims the church submitted records with “numerous inconsistencies, billing irregularities, and other documentation problems.”
The state agency is seeking to recover grant funds it says were not used as intended.
In a statement to The Center Square, DHS clarified the case is a civil action, not a criminal prosecution, and emphasized its role in overseeing grant funding.
“The Minnesota Department of Human Services holds grantees accountable for the services they agreed to provide in their grant contracts,” the agency said. “Complete and accurate documentation is critical to the integrity of Minnesota’s human services.”
DHS added that failures to meet those standards can waste limited state resources and prevent residents from receiving essential services.
“Minnesotans depend on these important services to fully participate and thrive in their communities,” the agency said. “When grantees fail to deliver contracted services, limited state funds are wasted and residents denied the crucial services they need.”
According to the complaint, Zion worked with a network of 17 sub-recipient agencies known as The Wellness Collaborative to deliver services. However, DHS alleges the church failed to properly oversee those organizations or document their work.
An audit conducted by the agency’s Office of Internal Controls and Accountability identified several issues, including insufficient documentation to verify services, failure to complete a required audit and concerns about how staff were paid.
“Zion’s documentation also failed to substantiate that its staff worked hours that it claimed, and in at least one instance showed that a Zion staff member submitted billing for identical time periods as a Zion employee on the one hand and as providing services through their own business on the other,” the lawsuit alleges.
The lawsuit claims at least five current or former staff members also received grant funds as contractors while also operating sub-recipient agencies paid through the same grants. Three of those individuals and their associated agencies received nearly $1 million — about 40% of total grant payments, according to the complaint.
Investigators also found what they described as “irregular” billing patterns. In some cases, DHS said it could not determine whether services billed to the state were even ever provided.
DHS is asking the court to award monetary damages, costs and any additional relief deemed appropriate. The agency has also requested a jury trial.
