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 they suspect is fraud.

“Every day we look under a rock and find a new $50 million fraud scheme,” First Assistant U.S. Attorney Joe Thompson said. “The magnitude of the fraud in Minnesota cannot be overstated. Staggering amounts of money 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.

The latest fraud revelations come amid growing national scrutiny, with the Trump administration condemning Gov. Tim Walz for fraud under his watch. The DFL governor, who is running for a third term, faces several Republican challengers who similarly criticized him for insufficient oversight of social services programs.

On Thursday, Walz said in a statement that “this is exactly the type of strong action we need from prosecutors to ensure fraudsters are put behind bars.

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

Anthony Waddell Jefferson, 37, and Lester Brown, 53, are Philadelphia residents who heard Minnesota’s housing stabilization program was “easy money” and traveled to the state to enroll in the program, Thompson said. They reportedly got more than $3.5 million in fraudulent payments through two businesses, Chozen Runner LLC and Retsel Real Estate LLC.

Other people charged for Housing Stabilization Services fraud include Kaamil Omar Sallah, 26, who operated SafeLodgings Inc. He claimed to have personally provided more than 3,600 hours of billable service in 2024. Sallah reportedly has fled the country.

Hassan Ahmed Hussein, 28, and Ahmed Abdirashid Mohamed, 27, were also charged. Hussein and Mohamed owned Pristine Health LLC. They reportedly spent much of their $750,000 in fraudulent claims on international travel, including visits to Dubai, Sydney and Saudi Arabia.

Attempts to reach defendants in many of the cases went unanswered Thursday.

“The amount of these payments was contingent on the services DHS authorized a child to receive — the higher the authorization amount, the higher the kickback," the documents state.

Another woman, Asha Farhan Hassan, 28, 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.

Attorney General Keith Ellison called the charges and guilty plea an important step to combat fraud, and thanked 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,” he said in a statement. “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.”

At the Minnesota Department of Human Services, which oversees these programs, DHS Inspector General James Clark said in a statement that “speculation that half of Medicaid payments for some services are fraudulent is shocking.”

He said he has previously asked the U.S. Attorney’s Office to share fraud evidence and wants an immediate meeting to talk about working together to stop criminals.

Investigators also searched Integrated Community Supports provider Ultimate Home Health Services LLC in Bloomington on Thursday morning. The company billed Medicaid but did not provide services to multiple people, according to the search warrant affidavit.

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. According to the U.S. Attorney’s Office, payments in the Integrated Community Supports program have grown from $4.6 million in 2021 to more than $170 million last year.

At DHS, the agency flagged 14 programs in October, including those three, as “high-risk” and has added additional scrutiny to payments to providers.

She said the agency is sharing information to support prosecutors’ efforts and emphasized steps the department has taken to tighten oversight and protect programs, such as enhancing prepayment reviews.

As Thompson looks at provider claims data for the 14 high-risk programs, he said he sees “more red flags than I see legitimate providers.” He said he hopes his office will get additional staff to look into fraud cases.

A number of Somali Minnesotans have been charged in social services fraud cases, and Thompson said many of the potential fraudsters he is investigating but has not yet charged are the same ethnicity.

A significant amount of stolen taxpayer dollars have been sent to other countries, Thompson said, noting investigators have traced a lot of money to real estate purchases in Nairobi, Kenya, where he said there is a large Somali diaspora.

Local Somali community leaders have pushed back against the notion that fraud is rampant in the Somali community, while also stressing that fraudsters — who they note took advantage of Somali Minnesotans — need to be held accountable.

Thompson said he believes Minnesota is a national outlier, and “you don’t see fraud on this scale in other states.”

But, he said, just how much of the Medicaid payments through those 14 programs has been fraudulent is “the 18-billion-dollar question.”