Federal prosecutors dropped a bombshell assessment on Thursday regarding the extent of fraud within Minnesota’s Medicaid system, suggesting that billions of dollars may have been stolen in what officials are now calling “industrial-scale” theft.
According to U.S. Assistant Attorney Joe Thompson, as much as half of the estimated $18 billion spent by the state since 2018 on 14 specific Medicaid programs could have been siphoned off by fraudulent actors. The revelation came as prosecutors unsealed new charges in an investigation that has continued to widen in scope.
“The fraud is not small. It isn’t isolated. The magnitude cannot be overstated,” Thompson said, describing the situation as “swamping Minnesota and calling into question everything we know about our state.”
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The Rise of “Fraud Tourism”
Thompson introduced a new term to describe the mechanics of the theft: “fraud tourism.” Investigators allege that the state’s systems were so porous they attracted criminals from across the country specifically to exploit them.
Among the newly charged are Anthony Waddell Jefferson and Lester Brown, two men based in Philadelphia. Prosecutors accuse them of establishing companies solely to bill Minnesota’s Housing Stabilization Services (HSS) program for services that were never provided. The pair allegedly submitted roughly $3.5 million in false claims.
“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 noted.
Additional charges were filed against Hassan Ahmed Hussein and Ahmed Abdirashid Mohamed, who are accused of funneling approximately $750,000 in fraudulent HSS claims through their own company.
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The Department of Human Services (DHS) terminated the HSS program in October due to rampant abuse. Originally designed to help the elderly and disabled maintain housing with a projected annual cost of $2.6 million, the program’s spending exploded to nearly $104 million by 2024.
Targeting Vulnerable Communities
A separate indictment targeted Abdinajib Hassan Yussuf, the president and CEO of Star Autism Center LLC. Yussuf faces wire fraud charges connected to the Early Intensive Developmental and Behavioral Intervention Autism program.
According to court documents, Yussuf and others allegedly recruited Somali children by offering kickbacks to their parents in exchange for enrollment. The company then reportedly billed Medicaid for treatments that were never administered. Authorities estimate this specific scheme resulted in more than $6 million in improper reimbursements.
Political Fallout
The scale of the alleged theft—potentially billions, rather than the $1 billion previously estimated—has intensified pressure on Governor Tim Walz’s administration.
In late October, Gov. Walz announced an audit of payments for 14 Medicaid services, including a pause on payments for up to 90 days where anomalies are found. However, critics argue the response is too little, too late.
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“Today’s news is possibly the most disturbing news we’ve had so far in exposing the massive schemes that defrauded Minnesotans,” said State Senate Minority Leader Mark Johnson. “Minnesota’s fraud problem is indeed Minnesota’s fraud problem. If people could easily defraud other states, they wouldn’t single out Minnesota.”
Johnson added that the “mounting failures” to stop the cash bleed are costing taxpayers daily.
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