Federal prosecutors on Thursday unveiled more charges in a widespread, ongoing investigation of “staggering, industrial-scale” Medicaid fraud in Minnesota that’s likely to reach into the billions of dollars.
The newest indictments allege defendants bilked a Medicaid-funded housing stabilization services program operating in Minnesota, billing for services they didn’t perform, with the money used for global travel and international real estate.
Another set of indictments accuses two men from Philadelphia of committing what Joe Thompson, first U.S. assistant attorney for Minnesota, described as “fraud tourism” — creating two companies that submitted $3.5 million in fraudulent Medicaid claim for nonexistent housing support services in Minnesota.
Thompson said the pair dropped into Minnesota because they’d heard the program was “easy money.”
Separately, Thompson said another defendant had been charged in a scheme to defraud a federally funded program intended to help children with autism — an operation, he said, provided “kickbacks to parents” to have their children diagnosed with autism spectrum disorder and enrolled for services they didn’t need or weren’t provided, tallying more than $6 million in fraud.
At a press conference unveiling the latest charges, Thompson suggested that fraud might have siphoned at least half of the $18 billion spent in Minnesota since 2018 in the 14 Medicaid programs viewed as high risk for abuse, although the dollar amounts tied to prosecutions so far are closer to $300 million.
He said the scale of what’s been seen here isn’t happening in any other state.
“The fraud is not small. It isn’t isolated. The magnitude cannot be overstated,” Thompson told reporters Thursday.
“What we see in Minnesota is not a handful of bad actors committing crimes. It’s a staggering industrial-scale fraud. It’s swamping Minnesota and calling into question everything we know about our state.”
Every day, he said, investigators “look under a rock and find a new $50 million fraud scheme.”
Responding to questions, Thompson said there was no indication that any of the money fraudulently obtained went to directly fund terrorism. While some money might have made it indirectly to the terror group al-Shabab, there is “no indication that defendants were sending money to terrorist organizations or supporting terrorist organizations in that way,” he said.
‘Little risk, few consequences’
The new charges Thursday involved six additional people alleged to have been part of schemes to defraud the autism aid and Housing Stabilization Services programs.
Abdinajib Hassan Yussuf, 27, is accused of defrauding the Early Intensive Development and Behavior Intervention benefit, or EIDBI. Yussuf ran Star Autism Center in St. Cloud, and allegedly stole $6 million, using some of it to buy a semitrailer truck and send more than $200,000 to Kenya.
Prosecutors say Star Autism claimed to provide one-on-one therapy to children with autism but hired unqualified “behavioral technicians” that were “often 18- or 19-year-old relatives, with no formal education beyond high school and no training or certifications related to the treatment of autism.”
In a related case, Asha Hassan, who ran a Minneapolis autism clinic, pleaded guilty Thursday morning to stealing $14 million from the program.
Prosecutors on Thursday also charged three people — Hassan Ahmed Hussein, 28, Ahmed Abdirashid Mohamed, 27, and Kaamil Omar Sallah, 26 — with defrauding the housing stabilization program. Hussein and Mohamed allegedly stole $750,000 through their St. Paul company, Pristine Health. Sallah allegedly stole another $1.3 million through another company.
The housing stabilization program was meant to help people with disabilities find and keep housing, but relatively few people got help. And the payouts kept growing, peaking at $105 million in 2024. This year they finally dropped after Gov. Tim Walz canceled the program when prosecutors found that most of the payouts were fraudulent.
The extremely rapid growth in payouts turned out to be a red flag. State lawmakers originally estimated that the Housing Stabilization Services program, which started in 2020, would cost $2.6 million a year. But in 2021, it paid out nearly $28 million — 10 times the original estimate.
In the “fraud tourism” case, the U.S. Attorney’s Office alleges that Anthony Waddell Jefferson, 37, and Lester Brown, 53, both of Philadelphia, carried out a scheme to defraud Minnesota’s Housing Stability Services Program, becoming providers “despite living on the other side of the country and having no network in or connections to Minnesota or its communities.”
They registered two limited liability companies with the Housing Stability Services Program where they were supposed to “provide housing consulting, transitioning, and sustaining services to qualifying people in need. Instead, they defrauded the program,” prosecutors allege.
The pair flew repeatedly to the Twin Cities, visiting shelters and subsidized housing facilities to recruit people, marketing themselves as the “housing guys.” Jefferson hired family and associates to create “fake client notes purporting to document services provided.
Jefferson and Brown are expected to plead guilty to submitting $3.5 million in phony claims.
“These defendants came here not to enjoy our lakes, our beautiful summers or our warm people. They came here because they knew and understood that Minnesota was a place where taxpayer money could be taken with little risk and few consequences,” Thompson told reporters Thursday.
Beyond the six new people charged, federal agents also executed a search warrant relating to fraud in an additional state program, the Integrated Community Services program, the U.S. Attorney’s Office said.
Investigators went to a company called Ultimate Home Health Services. In the search warrant unsealed by a judge Thursday today, authorities said the company’s owners allegedly ripped off another Medicaid program called Integrated Community Supports, which is meant to provide help with household tasks for people who otherwise live independently.
Ultimate Home Health allegedly submitted more than $1.1 million in fraudulent claims between June of 2024 and this past August. But so far prosecutors have yet to charge its owners.
A blow to Minnesota’s ‘self-esteem and confidence’
Fraud in federally funded programs came to light in a huge way in 2022 after federal prosecutors charged dozens of people linked to Feeding Our Future, a Minnesota nonprofit that prosecutors said was a conduit for some $250 million in illegal payments made to people who claimed to be feeding needy children during the COVID-19 pandemic but used the money instead on luxury cars, vacation homes or other lavish personal spending.
Since the Feeding Our Future scandal broke, fraud claims and charges have mushroomed into other federally funded social programs administered by the state.
Feeding Our Future surfaced again Thursday. Along with pleading guilty to stealing from the autism program, Asha Hassan pleaded guilty to stealing $465,000 from federal nutrition programs as part of the Feeding Our Future scam.
The fraud, Thompson told reporters, “Eroded our collective sense of statewide self-esteem and confidence.”
News of the latest charges ignited a predictable political fury Thursday. Candidates for governor and top Republican lawmakers blamed Walz for not doing enough to address the fraud that got through state agencies.
“Minnesota’s fraud problem is indeed Minnesota’s fraud problem. If people could easily defraud other states, they wouldn’t single out Minnesota,” said Republican Senate Minority Leader Mark Johnson.
Added House Speaker Lisa Demuth, a GOP candidate for governor: “This administration has failed on fraud.”
Walz recently named a former judge and criminal investigator to be the state’s first director of program integrity in state government, part of a fresh set of efforts to contain a spiraling problem of fraud in Minnesota programs.
The governor late Thursday afternoon applauded the new fraud charges, saying they validated the state’s earlier decision to audit and pause payments on the 14 high-risk Medicaid programs and to shut down Housing Stabilization Services.
“We will not tolerate fraud, and we will continue to work with federal partners to ensure fraud is stopped and fraudsters are caught,” he said in a statement.
