Federal prosecutors revealed Thursday that Minnesota’s Medicaid system may have lost up to $9 billion to fraud since 2018, describing an “industrial-scale” scheme that has turned the state into a national target for criminal exploitation.
By yourNEWS Media Newsroom
MINNEAPOLIS — Federal authorities escalated their investigation into Minnesota’s Medicaid fraud crisis Thursday, alleging that as much as half of the $18 billion spent on 14 vulnerable programs since 2018 may have been stolen by fraudsters. U.S. Assistant Attorney Joe Thompson called the scale of the theft “staggering” and “industrial,” warning that Minnesota has become a “magnet for fraud”—so much so that prosecutors coined the term “fraud tourism“ to describe out-of-state criminals flocking to exploit the system.
“The fraud is not small. It isn’t isolated. The magnitude cannot be overstated,” Thompson said during a press conference announcing new charges in the ongoing probe. “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 those charged are Anthony Waddell Jefferson and Lester Brown, both based in Philadelphia, who allegedly submitted $3.5 million in false claims to Minnesota’s Housing Stabilization Services (HSS) program. Prosecutors say the pair set up shell companies to defraud the state, epitomizing the “fraud tourism” phenomenon.
Additional charges were filed against Hassan Ahmed Hussein and Ahmed Abdirashid Mohamed, accused of submitting $750,000 in fraudulent HSS claims through their company. The HSS program, designed to help elderly and disabled individuals secure housing, was terminated in October after costs exploded from a projected $2.6 million annually in 2020 to $104 million by 2024.
In a separate case, Abdinajib Hassan Yussuf, CEO of Star Autism Center LLC, was charged with wire fraud for allegedly recruiting Somali children with kickbacks to parents, then billing Medicaid for $6 million in services never provided.
The new charges bring the estimated total losses to over $9 billion, far exceeding earlier projections of $1 billion. In response, Gov. Tim Walz announced in October that his administration would audit payments for the 14 programs and pause payments for up to 90 days if anomalies were detected. Critics, however, argue the measures are insufficient.
“Today’s news is possibly the most disturbing we’ve had so far in exposing the massive schemes that defrauded Minnesotans,” said state Senate Minority Leader Mark Johnson in a statement. “Minnesota’s fraud problem is indeed Minnesota’s fraud problem. If people could easily defraud other states, they wouldn’t single out Minnesota.”
Johnson and other Republicans have intensified calls for Walz’s resignation, accusing his administration of failing to curb the fraud. “The mounting failures by Governor Tim Walz to stop fraud are costing taxpayers more every day,” Johnson added.
The scandal has exposed systemic vulnerabilities in Minnesota’s Medicaid oversight, raising questions about whether the state’s programs are uniquely susceptible to exploitation—or if similar fraud is simply going undetected elsewhere. With investigations ongoing, prosecutors warn that the full extent of the losses may still be unfolding.
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