Federal prosecutors charge six more people in ‘staggering’ social services fraud scandal

Federal prosecutors announced new charges Thursday as they continue to investigate a massive fraud crisis across Minnesota’s social services programs, adding that 14 Medicaid-funded programs have cost $18 billion since 2018, more than half of which is fraud.

“Every day we look under a rock and find a $50 million fraud scheme,” First Assistant U.S. Attorney Joe Thompson said. “The magnitude of the fraud in Minnesota cannot be overstated. It’s staggering amounts of money that have been lost.”

Thompson couldn’t cite specifics on how much of the $18 billion is fraudulent, saying “the answer is far too much.”

Thompson announced charges against six people he said have defrauded two programs: Housing Stabilization Services, which assists people with finding and maintaining housing, and an early autism intervention program.

In total, they reportedly stole more than $11.6 million in Medicaid funds.

“This is exactly the type of strong action we need from prosecutors to ensure fraudsters are put behind bars,” Gov. Tim 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.”

Among the five people charged with scamming the housing stabilization program were two men Thompson called “fraud tourists.”

The U.S. Attorney’s Office also announced charges against a second person in the Early Intensive Developmental and Behavioral Intervention program. They said Abdinajib Hassan Yussuf, 27, received about $6 million in Medicaid funds through the St. Cloud-based Star Autism Center LLC, which the FBI searched last December.

Another woman, Asha Farhan Hassan, was charged in September with stealing $14 million from the autism program. She was also charged with participating in the Feeding Our Future meal fraud scheme. She pled guilty Thursday to one count of wire fraud for her participation in those schemes.

“Today’s charges and guilty plea are an important step in combatting fraud and protecting our tax dollars,” Attorney General Keith Ellison said in a statement, thanking federal partners and staff in his office who worked on the investigations. “Minnesotans are a generous people, and we believe in supporting folks who need a helping hand. It boils my blood that fraudsters are taking advantage of that generosity, and my office and I will gladly partner with all those who are also committed to holding fraudsters accountable.”

Investigators also searched an Integrated Community Supports provider. According to KARE 11, Ultimate Home Health Services LLC in Bloomington was searched Thursday morning. No one answered the phone Thursday at the organization when a Minnesota Star Tribune reporter called.

That program helps people with disabilities live independently and — like the housing stabilization and autism programs — have seen explosive growth in recent years.

How much of the Medicaid payments through those 14 programs has been fraudulent is “the 18-billion-dollar question,” Thompson said. He said Minnesota is a national outlier, and “you don’t see fraud on this scale in other states.”

However, other states have seen major Medicaid fraud cases, including a $2.5 billion scheme in Arizona that targeted Native American people seeking addiction treatment, according to the Arizona Center for Investigative Reporting and ProPublica.