Federal prosecutors said Thursday that Minnesota may have lost billions of dollars to fraud in its Medicaid program, marking the latest escalation in a sprawling investigation.
U.S. Assistant Attorney Joe Thompson alleged that as much as half of the roughly $18 billion Minnesota has spent since 2018 on 14 Medicaid programs considered especially vulnerable to abuse may have been diverted by fraudsters. Speaking as prosecutors announced new charges, Thompson described the misconduct as “staggering” in both scope and sophistication.
“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.”
Among the newly charged are Anthony Waddell Jefferson and Lester Brown, who prosecutors say submitted about $3.5 million in false claims to the state’s Housing Stabilization Services (HSS) program. Federal officials allege the two men, both based in Philadelphia, created companies to exploit Minnesota’s Medicaid system—what Thompson characterized as “fraud tourism.”
“Minnesota has become a magnet for fraud, so much so that we have developed a fraud tourism industry — people coming to our state purely to exploit and defraud its programs,” Thompson said.
Additional charges were filed against Hassan Ahmed Hussein and Ahmed Abdirashid Mohamed, who prosecutors allege submitted roughly $750,000 in fraudulent HSS claims through their company.
Minnesota’s Department of Human Services terminated the HSS program in October, citing widespread fraud concerns. The program was originally designed to help older adults and people with disabilities secure and maintain housing. In 2020, it was projected to cost taxpayers about $2.6 million annually, but by 2024, spending had surged to around $104 million.
In a separate case, Abdinajib Hassan Yussuf was charged with wire fraud tied to the Early Intensive Developmental and Behavioral Intervention Autism program. Prosecutors allege Yussuf—identified as the president and CEO of Star Autism Center LLC—and others recruited Somali children by offering kickbacks to parents in exchange for enrollment, then billed Medicaid for services that were never provided. Authorities say the alleged scheme produced more than $6 million in improper reimbursements.
The latest charges add to a widening list of cases in Minnesota, where federal officials have previously estimated total losses at more than $1 billion.
In late October, Gov. Tim Walz announced that his administration would audit payments across 14 Medicaid services and pause payments for up to 90 days if anomalies were found. The steps have not calmed criticism, with opponents arguing the response has been insufficient and some calling for the governor’s resignation.
“Today’s news is possibly the most disturbing news we’ve had so far in exposing the massive schemes that defrauded Minnesotans,” state Senate Minority Leader Mark Johnson said in a statement Thursday. “Minnesota’s fraud problem is indeed Minnesota’s fraud problem. If people could easily defraud other states, they wouldn’t single out Minnesota.”
“The mounting failures by Governor Tim Walz to stop fraud is costing taxpayers more every day,” Johnson added.
