A Minnesota safety net program was so easy to scam, it attracted tourists, Assistant U.S. Attorney Joe Thompson said Thursday, Dec. 18.
Two Philadelphia men, Anthony Waddell Jefferson, 37, and Lester Brown, 53, heard that Minnesota’s Housing Stabilization Services program was “easy money,” so they traveled to Minnesota, enrolled their companies into the program, returned to Philly and submitted fraudulent claims from there, Thompson said in a news conference announcing charges against the two men and several others. They obtained $3.5 million in Medicaid payments through this “fraud tourism,” Thompson said.
The extent of fraud in Minnesota human services programs — which has become infamous across the country — is even higher than the public knew.
Providers in 14 “high-risk,” state-run Medicaid programs being audited by the state have billed $18 billion since 2018, and “half or more” is possibly fraudulent, Thompson said.
“The fraud is not small. It isn’t isolated. The magnitude cannot be overstated,” Thompson said. “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.”
It’s unclear how much of the $18 billion in the 14 Medicaid services comes from state taxpayer dollars; around 36% of all Minnesota Medicaid dollars comes from the state, while the rest is funded by the federal government.
Federal prosecutors also charged three other individuals who allegedly defrauded House Stabilization Services and two individuals for defrauding an autism treatment program called Early Intensive Development and Behavior Intervention. Federal prosecutors have already charged eight people in HSS and one person for defrauding the autism program.
The Department of Human Services in August shut down the Housing Stabilization Services, citing “credible allegations of fraud.”
In a statement, DHS Inspector General James Clark called Thompson’s “speculation” that at least half of the $18 billion is fraudulent “shocking.”
“I’ve previously sent letters to the U.S. Attorney’s Office asking them to share evidence of fraud and I’m requesting a meeting immediately to discuss how we can partner to stop criminals now,” Clark said.
Messaging from temporary DHS Commissioner Shireen Gandhi didn’t mention the gap in evidence between state and federal investigators.
“I am grateful for the U.S. Attorney’s actions to prosecute criminals attacking and stealing from Minnesota’s programs,” said Gandhi in a statement preceding Clark’s. “We will continue to support their efforts by sharing any data and information we have that can hold these criminals accountable.”
Thompson said that there’s no indication that fraudsters have sent money to terrorist groups, contrary to a November article saying that Minnesota taxpayer dollars have funded the Somali terrorist group al-Shabaab — a claim that has led to President Donald Trump’s current attacks on Minnesota’s Somali-American community.
Thompson added that money from fraud could have indirectly ended up in the hands of al-Shabaab, which taxes businesses in the areas of Somalia it controls.
New federal investigation into fraud in disability program
Federal agents raided the Bloomington office of another provider, Ultimate Home Health Services, Thursday morning, executing a search warrant that is the first indication of a federal investigation into Integrated Community Supports, another state-run Medicaid program.
Integrated Community Supports started in 2021 and is designed to help disabled adults live more independently in apartments rather than in an institution. The program is vulnerable to fraud and has seen soaring cost increases since it began, paying out $170 million in 2024 compared to $4.6 million in 2021, according to the search warrant filed by the feds.
The ongoing federal investigation found that, instead of providing services, many Integrated Community Supports providers simply rented apartments to Medicaid recipients and billed the program for services they didn’t provide, Thompson said. The program allows providers to bill hundreds of dollars a day, often adding up to $100,000 to $200,000 a year, per client, he said.
Ultimate Home Health Services billed the program $1.1 million between June 2024 and August 2025 for services for multiple individuals it didn’t provide, according to a statement from the U.S. Attorney General’s office and the search warrant.
The search warrant also referenced a KARE 11 report from November about a man found dead in the care of Ultimate Home Health Services in March. Though the provider was billing DHS for 12 hours of one-on-one care for the man, an employee of Ultimate told St. Paul Police that he only checked on him once a day.
Following the report, the Department of Human Services suspended Ultimate Home Health Services’ payments and license in December, citing that the agency found in October that Ultimate Home Health wasn’t adequately providing services and failed to properly report cases of maltreatment and the death of a person.
As of late November, DHS has withheld payments to more than 17 Integrated Community Supports providers suspected of fraud or affiliated with allegedly fraudulent providers, according to a statement at the time from DHS. Amid DHS’s effort to crack down on fraud in the Medicaid program, attorneys for program recipients have criticized the state agency for neglecting its responsibilities toward disabled people who depend on the program for critical services.
The Thursday raid drew the attention of immigrant rights activists, who have been closely tracking Immigration and Customs Enforcement activity. Many responded to the scene of the raid, but the majority dispersed after it became apparent that the activity was not immigration-related.
A handful of observers watched as agents loaded boxes of evidence into vans, leaving behind a broken office door window and damaged door frame.
Democrats’ response
Fraud has roiled Minnesota politics in recent years and it will continue to dominate headlines through the midterm elections. Shortly before Thursday’s press conference, Gov. Tim Walz and House and Senate Democrats criticized the House Fraud Prevention and State Oversight Committee for “playing politics” with fraud.
During a fraud committee hearing Wednesday Rep. Kristin Robbins, R-Maple Grove, alleged that DHS paid state money to a defendant in the Feeding Our Future case through the assisted living program while they were awaiting trial.
Democrats criticized her for presenting her allegations in a public forum rather than going to state investigators.
Walz on Thursday praised the federal charges and said Minnesota doesn’t tolerate fraud.
“This is exactly the type of strong action we need from prosecutors to ensure fraudsters are put behind bars,” Walz said in a statement. “This infuriating greed and criminal activity is why we took action earlier this year to shut down Housing Stabilization Services and hired an outside firm to audit these programs and stop payments to fraudulent providers.”
Madison McVan contributed reporting.
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.
