Minnesota investigating more companies linked to those charged with Medicaid fraud

Minnesota officials are investigating five additional companies linked to individuals recently indicted for allegedly bilking the state’s Medicaid program.

State officials also acknowledged this week they are scrutinizing another indicted provider that received millions in payments for other state services.

The Minnesota Department of Human Services confirmed the fraud investigations after the Minnesota Star Tribune asked about ties between providers charged with fraud in a state housing program and additional businesses. The Star Tribune discovered the relationships after comparing names in state business records and then confirming ownership with DHS.

The disclosures come just weeks after the U.S. Attorney’s Office in Minneapolis indicted eight individuals for allegedly defrauding the state’s Housing Stabilization Services program. The scrutiny of the additional companies and billing suggests that the fraud investigations within Minnesota programs will likely widen.

Federal prosecutors say the Housing Stabilization Services indictments are the first wave of such providers to be charged. Authorities also allege that fraud schemes have grown more sophisticated and can affect multiple programs.

Last month, the new inspector general for DHS, James Clark, told lawmakers “fraud is the business model” for many companies swindling Medicaid funds. It’s not one-off or rogue employees, he said.

“Greedy people and businesses have learned how to exploit our programs,” Clark said.

Three others facing indictments — Mustafa Ali, Abdifitah Mohamed and Anwar Adow — registered a combined five additional companies in state programs on top of the ones listed in their federal charges.

This week, DHS said it had stopped payments to Ali, Mohamed and Adow’s five other companies last spring as federal and state authorities investigated them for alleged fraud detailed in their indictments totaling $3.7 million. The Star Tribune requested billing data for the companies, but the department said it could not provide that information in time for publication.

“Every year, we investigate hundreds of allegations of Medicaid fraud in the system,” DHS said in a statement. “As part of our process, we look at the individuals accused of perpetrating fraud in one company and examine any other businesses in which they may be involved. Sometimes one investigation can result in withholding payments for multiple providers.”

The fraud allegations go beyond housing services and include DHS’s Early Intensive Developmental and Behavioral Intervention (EIDBI) program, which provides services to young people with autism, and Integrated Community Supports, which helps adults with disabilities live independently. DHS has stopped payments to numerous providers in both programs.

Gov. Tim Walz’s administration has found itself under scrutiny for its response to widespread fraud in state government. The Medicaid fraud investigations come after the Feeding Our Future scheme siphoned $250 million in federal funds.

Attorney Robert Richman, who represents both Emmanuel Falade and Mohamed, said he is awaiting discovery from prosecutors so he can evaluate the evidence.

“The pending indictments are merely unproven allegations, not evidence,” he said. “We do not intend to try their cases in the press.”

Ryan Pacyga, an attorney representing Christopher Falade and Ali, said Ali’s additional companies never billed the state for any services. He declined to comment on Falade’s case.

Adow’s attorney, Patrick Cotter, declined to comment.

The Falades, a father and son, were registered to provide services through Medicaid that include housing stabilization, case management, mental health, homemaking and companion services.

After initially saying it couldn’t confirm whether it stopped Medicaid payments to Faladcare beyond housing, DHS said this week that “there are pending investigations into all of Faladcare’s services” and that it stopped all Medicaid payments to the company.

According to search warrants and indictments, companies tied to the Falades and other indicted individuals submitted fake or inflated bills for their services. Some clients claimed to not know services were being billed on their behalf while others said they received some — but not all — of the services that the providers claimed.

Mohamed and Ali were indicted for their roles in allegedly defrauding the state through Brilliant Minds Services LLC and Foundation First Services LLC. Adow owns and was indicted for his alleged involvement in Liberty Plus LLC.

The Star Tribune also found they’re tied to additional businesses. According to DHS:

DHS confirmed this week that the additional companies were cut off from payments this spring — before the FBI searched locations tied to Brilliant Minds, Foundation First and Liberty Plus — because of credible allegations of fraud.

Federal prosecutors charged one person last month for allegedly participating in the Feeding Our Future scheme and defrauding the state’s EIDBI program.

The Department of Human Services has halted payments to 17 providers of Integrated Community Supports, citing “credible allegations of fraud.”