ST. PAUL — Eight people have been charged with wire fraud for collectively billing Medicaid about $8 million for services they allegedly did not provide in what a federal prosecutor called a massive “fraud scheme” related to the state’s defunct housing stabilization program.
This is only the first wave of charges, said Acting U.S. Attorney Joseph Thompson at a press conference Thursday, Sept. 18.
Minnesota became the first state in 2020 to leverage Medicaid dollars to help older adults and people with disabilities find and maintain housing, but the program is “riddled with fraud,” Thompson said. Program costs have ballooned suspiciously since its inception, and “most of it is fraud, as far as I can tell,” Thompson said.
Analysts predicted the program would cost about $2.6 million annually. But in 2021, the program paid out over $21 million in claims. It then ballooned to $42 million in 2022, $74 million in 2023 and $104 million in 2024, according to the U.S. Attorney’s Office.
In the first six months of 2025, the program paid out another $61 million.
The latest charges are another instance of the alleged defrauding of a Minnesota public program, joining the looting of a pandemic-era food aid program and the state’s autism program.
“Minnesota is drowning in fraud,” Thompson said.
The federal charges were leveled against: Moktar Hassan Aden, 30, Mustafa Dayib Ali, 29, Khalid Ahmed Dayib, 26, Abdifitah Mohamud Mohamed, 27, Christopher Adesoji Falade, 62, Emmanuel Oluwademilade Falade, 32, Asad Ahmed Adow, 26, and Anwar Ahmed Adow, 25.
Thompson said the defendants targeted vulnerable people, many of whom were being released from drug or alcohol rehab facilities, and signed them up to purportedly help them find stable housing.
“Most of these individuals did not receive the stable housing they so desperately needed. The money was simply stolen,” Thompson said.
Many of the Housing Stabilization Services providers also had one or more companies billing other Medicaid programs, like the Early Intensive Developmental and Behavioral Intervention Program operated through autism treatment providers. As the Reformer first reported in 2024, the feds are investigating that program, too.
“The level of fraud in these programs is staggering. Unfortunately, our system of trust but verify no longer works. These programs have been abused over and over to the point where the fraud has overtaken the legitimate services,” Thompson said.
The Department of Human Services, which administers the Housing Stabilization Services program, said in a statement that the agency has been collaborating with law enforcement to root out fraud.
“Let today’s actions serve as a warning to anyone who steals from Minnesota taxpayers: You will be prosecuted to the fullest extent possible by our law enforcement partners,” said Shireen Gandhi, temporary DHS commissioner, in a statement.
One of the largest Housing Stabilization Services providers was Brilliant Minds Services LLC, with which four of the defendants — Aden, Ali, Dayib and Mohamed — were affiliated. It was housed at the Griggs-Midway building in St. Paul, which also has over 20 businesses connected to the Housing Stabilization Services program.
According to court documents, from 2020 to 2024, Brilliant Minds Services claimed to serve 350 people and billed the program $2.3 million. But the company only provided a fraction of their claimed services, prosecutors allege.
From April 2023 to May 2025, each of the four defendants affiliated with Brilliant Minds Services personally pocketed between $300,000 to $400,000, according to court documents.
DHS in its statement said it stopped payments to Brilliant Minds in May, the same month KARE 11 first reported about the suspected fraud.
Thompson said he will bring more charges in the coming weeks and months, but he said the state must do more at the front end to stop fraud.
“The state and its politicians are starting to take notice about the problem. It’s time for everyone to speak up and stand up to confront the problem before it’s too late,” Thompson said.
The widespread fraud is expected to be a major Republican talking point during the 2026 election, especially as Gov. Tim Walz seeks a third term.
Just hours before a Minnesota House panel examining fraud in public programs was to meet Wednesday, Walz put out a fresh plan.
The Walz administration moved to shutter the housing program last month, following FBI search warrant raids in July.
And, the assistant commissioner of the Department of Human Services who oversaw the housing program was apparently fired before he could testify to the House committee Wednesday.
The chair of the committee is a leading GOP contender for governor, Rep. Kristin Robbins.
Minnesota Reformer is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Minnesota Reformer maintains editorial independence. Contact Editor J. Patrick Coolican for questions: info@minnesotareformer.com.
