Federal prosecutors on Thursday announced a new wave of charges in what officials describe as an unprecedented, large-scale Medicaid fraud investigation in Minnesota — a scheme that could ultimately involve billions of dollars in taxpayer funds.
The latest indictments focus on fraud within Minnesota’s Medicaid-funded Housing Stabilization Services program, where defendants allegedly billed for services never provided and spent the proceeds on luxury travel and overseas real estate investments.
Another case involves what federal officials labeled “fraud tourism.” Two men from Philadelphia are accused of traveling to Minnesota to exploit the program after hearing it was “easy money.” Prosecutors say the pair created two companies that submitted $3.5 million in fraudulent Medicaid claims for nonexistent housing services.
Joe Thompson, the first assistant U.S. attorney for Minnesota, said the scope of fraud uncovered in the state is unmatched nationwide.
“The fraud is not small. It isn’t isolated,” Thompson said. “This is staggering, industrial-scale fraud that’s overwhelming Minnesota and calling into question how these programs were administered.”
In a separate indictment, prosecutors charged another defendant in a scheme involving a federally funded autism services program. Thompson said the operation allegedly provided kickbacks to parents to have children diagnosed with autism spectrum disorder and enrolled in unnecessary or nonexistent services, resulting in more than $6 million in fraud.
At a press conference, Thompson suggested that fraud may have siphoned off a significant portion of the $18 billion Minnesota has spent since 2018 on 14 Medicaid programs considered high-risk. While prosecutions so far total roughly $300 million, he said the true scale could be far greater.
Among those newly charged is Abdinajib Hassan Yussuf, 27, who allegedly stole $6 million through Star Autism Center in St. Cloud. Prosecutors say the clinic billed for intensive autism therapy while employing unqualified staff and used the money for personal purchases and overseas transfers. In a related case, Asha Hassan, who ran a Minneapolis autism clinic, pleaded guilty Thursday to stealing $14 million.
Three other defendants — Hassan Ahmed Hussein, Ahmed Abdirashid Mohamed, and Kaamil Omar Sallah — are accused of defrauding the Housing Stabilization Services program of more than $2 million through separate companies.
The housing stabilization program, intended to help people with disabilities secure housing, saw payouts balloon from an expected $2.6 million annually to $105 million in 2024. Gov. Tim Walz ultimately shut the program down after prosecutors determined that most payments were fraudulent.
In the “fraud tourism” case, Anthony Waddell Jefferson and Lester Brown of Philadelphia allegedly registered companies in Minnesota, recruited clients from shelters, and submitted fake service records. Prosecutors say they plan to plead guilty to submitting $3.5 million in fraudulent claims.
Federal agents also executed a search warrant related to another Medicaid program, Integrated Community Supports, alleging more than $1.1 million in fraudulent claims by Ultimate Home Health Services, though no charges have yet been filed.
The widening investigation follows the massive Feeding Our Future scandal uncovered in 2022, involving $250 million in fraudulent federal nutrition funds. That case resurfaced Thursday when Asha Hassan also pleaded guilty to stealing $465,000 from federal food programs.
The new charges sparked political backlash, with Republican lawmakers blaming the Walz administration for oversight failures. Walz responded by praising the prosecutions and pointing to new state efforts to strengthen program integrity.
“We will not tolerate fraud,” Walz said. “We will continue working with federal partners to stop fraud and hold offenders accountable.”
